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Royal Caribbean Cruises Company’s Strategic Policy

Introduction

This is the analytical evaluation of the strategies of Royal Caribbean Cruises Ltd. The main purpose of this study is to highlight the company’s arrears of strengths and weakness as well opportunities and serious threats for the company. This paper has mainly focused the related years of the case study. At first, the past strategies of the company have been indicated with special reference to the company’s motives and objectives. Then, the new strategies in response to the change in the environment of the cruise industry, including socio-economic factors, have been selected for the company to aid in achieving goals and objectives.

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The Firm and Industry

As far as the internal and external environment of Royal Caribbean Cruises Ltd. is concerned, the company introduced some new strategies which facilitated the company for continuous growth. The increase in the number of ships produced massive profits for the company and also augmented its competitive advantages. It was also the distinction of the company that it introduced the first automatically-operated cruise vacation reservation system, which provided customers with easy accessibility to the services of the company. The deployment strategies have been revised during the year of 2005 to target the maximum customers and to explore the new markets for attaining its goals. In addition to the refurbishment in the deployment strategies, the company’s cruise ships enhanced its destinations for covering maximum range of customers. During the year of 2005, the company was facing serious threats of high fuel prices and environmental troubles and that is why, the company replaced hydrogen light bulbs with LEDs and produced alternatives for the energy consumption. In addition to this, the up-gradation of vessel-performance software was also a series of change in the company’s policies. The new advertising policies ranked the company among the leading cruises because the promotion of the products enforced the strength of its brands among the on-board customers. Additionally, the development of new staterooms also attracted the elite community to go for its brands. The old venture between the Horizon and the Royal Caribbean Cruises Ltd. came to an end in the year of 2005 and a new venture was established between Royal Caribbean Cruises Ltd. and First Choice Holidays PLC, the top tourist company in the UK. The expansion of Enchantment of the Seas was made in the same year to enhance the number of berths in this cruise line. The negative media role demanded some vibrant changes in the marketing policies and the real direction of awareness among the consumers. The cruise vocational industry was going on rise among the leading profit gaining industries.

However, some socio-economic disasters produced serious threats to the economy of the industry. At the same time, it was the fortune of this industry that the customer demands could not be demolished with such disastrous environments. The unrest in the social scenario of the world, somehow, caused hindrances in the further growth of the industry. Food and water issues also caused threats for the industry, because the cruise lines had to ensure the safe and secure environment for the customers. Other changes in the company included the introduction of the first on-board rock-climbing walls, ice-skating rings and the inline skating tracks. The Enchantment of the Seas was renovated and restructured in this year, which also provided range of services for the customers. The collection of massive revenues aided the US economy in a better way and the company also enhanced its resources with the generation of such macro level revenues. A new program with the title of ‘Save the Waves’ was introduced in this year to ensure the safe and secure environment in all the ships of Royal Caribbean Cruises Ltd. Some strict policies were devised with zero-tolerance to focus on the safety and security. The new introduction of Genesis also caused much fame for the company, because it was the prototype of Freedom-class in the whole cruise industry. Similarly, the enactment of the new US laws also caused decline in the profit ratio of the company and the new accounting principles degraded the value of the company’s share. However, the company’s competitive advantages sustained its rank in the whole industry and the continuous growth of the company rejected all the threats to the industry. (Royal Caribbean Cruises Ltd., 2005 Annual Report).

Past Strategies and Select New Strategies

Royal Caribbean International was developed in 1968. The first trip of its ship ‘Song of Norway’ inaugurated this corporation. Later on, two more ships were lunched with the names of the Nordic Prince and the Sun Viking in the early 1970s, which laid the basis of fleet in this corporation. This company had also an edge of being the first cruise line that was developing ships from hot water. The growth went on continued in this organization and finally, this company got incorporated in 1985 as Royal Caribbean Cruises Ltd. in the Republic of Liberia. This company was also considered as a pioneer because it was giving the package of air traveling with cruises. The company was also considered as the pioneer for developing gigantic ships with modern services. One of its leading brands, the Celebrity Cruises, was designed to entertain the supreme class of the cruise vacation markets. Similarly, other outstanding services of this organization included modern vessels, gourmet dinning, top-notch services, extensive and luxurious spa facilities, large staterooms and reasonable staff in relation to the guests. In order to enhance its travelers, the company introduced the automatic booking system so as to facilitate the accessibility of services for the users. During the period of 1998 to 1992, the company augmented its size by launching Sovereign-class ships. Similarly, other categories of cruises were added to enhance the capacity, such as the introduction of six Vision-class ships between 1995 and 1998 to augment its fleet size, five Voyager-class ships between 1999 and 2003 and four Radiance-class ships between 2001 and 2004 and so on. Royal Caribbean also holds the policies of owning land properties for establishing offices in various regions and for other business purposes. The leasing activities of this company also aided to flourish its business. (Dittman, Case 24, p. 246-47).

In the year of 2002, 2.8 million people were the customers of Royal Caribbean Cruises Ltd. who cruised on 25 ships of Royal Caribbean International and Celebrity Cruises. This increase in the number of travelers caused a 38 percent increase in the net incomes of the company and produced the record revenues $3.4 billion. It has also been stated that the company had maximum expansion in the years of 2001 and 2002 by launching seven new ships and increasing the berths, which caused an attraction among the vacationers and the profile of the company was upgraded to its maximum at that time even after some uncertain geopolitical circumstances. The security policy of the company was the latest with respect to that time in which Sea Pass computerized photo ID system was operated in order to ensure the safe passage of the customers. The arrangement strategies of the company were flexible and this flexibility caused a boom in the economy of the company. The company established Rhapsody of the Seas and Galaxy on the Gulf of Mexico, while other winter deployments of the company in 2002 included Nordic Empress and Horizon in Tampa, Splendour of the Seas in Galveston and Grandeur of the Seas in New Orleans. The main strength of the company in 2002 was that this company included 575-760 balcony staterooms, while others included not exceeding to 280 balcony staterooms. Besides this, some new ideas of the wine bar Vintages, Boleros, Chops Grille, Ben & Jerry’s Ice-cream Parlor and Jade with the blend of Asian foods were promoted on Navigator of the Seas. Besides cruise offerings, Royal Celebrity Tours offered the amenities of land tours in Alaska, which increased the number of cruise guests. In 2002, the train cars, famous as ‘Wilderness Express’, were launched, which also augmented the number of cruisers. The environmental policies were updated with the latest technologies and ISO 14000 environmental standards were implemented as the environmental management system. Various trainings in this capacity were conducted to acknowledge the health and safety programs. (Royal Caribbean Cruises Ltd., 2002 Annual Report, p. 1-11).

In 2003, the deployment strategy of the company included the relocation of home ports and the restoration of short cruises in Los Angeles with a California-style renovation of the Monarch of the Seas. At the same time, Mariner of the Seas was launched at Port Canaveral to fulfill the needs of Central Florida’s vibrant tourism market. The major advancement of the company in the field of tourism was the renewal of the Celebrity Cruises product. The innovative style of marketing made the ordinary people as prime customers, which induced a significant knowledge of brand among the people and caused on-board enhancements. During the years of growth, the company has managed many partnerships for the promotion of brands, which have caused inspiration for the on-board customers. To enhance the corporate governance, the company has ensured the independence of its Board of governors and the company has fortified its code of conduct and ethics of business. (Royal Caribbean Cruises Ltd., 2003 Annual Report, p. 1-5).

In the year of 2004, Royal Caribbean Cruises Ltd. was the second largest cruise company with 29 cruise ships and 60,590 berths. In this year, Royal Caribbean International and Celebrity Cruises were the most potential and recognized brands in the cruise industry. The Celebrity Cruises were serving as the superior services for the industry of tourism. The company devised new policies to counter the economic losses and the high prices of fuel. The company intended to launch a new ship in Freedom-class, which was also claimed as the world’s largest cruise ship. In March, the company exposed its partnership with the world renowned entertainment organization Cirque du Soliel. Celebrity Xpeditions launched by the company explored the new glamorous spots of the world for the consumers and this product also produced its own line of proprietary wines. In this year, the company enhanced and ensured its presence at various new spots in response to the increasing demands. In December, the company altered its marketing policies by recruiting two distinct teams for the two brands i.e. Royal Caribbean International and Celebrity Cruises to demarcate the brands. In the environmental management, the year of 2004 was of much importance in the profile of the company, because the company took some serious steps for protecting the environment of oceans for which the company gained Excellence in Environmental Engineering Award by the American Academy of Environmental Engineers. (Royal Caribbean Cruises Ltd., 2004 Annual Report, p. 1-6).

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In the year of 2005, the company maintained its rank in the cruise industry and the brand promotion remained on the top of the company’s manifesto. The development of Project Genesis was made by the company in which the energy consumption was taken into special consideration with some major changes. The renewal of Enchantment of the Seas was made in this year, which enhanced the number of guests due to increase in staterooms. In the same year, Celebrity Cruises emphasized more to strengthen its brand status and the delivery of its product. For the effective communication about its brand promotion, Celebrity Treatment was designed by the company. In addition, the electronic media also became the source for the advertisement and promotion of this brand in the early days of this year. The company established its dedicated offices in Italy and Spain to interact with the Europe. Besides this, the redeployment was also included in the company’s policies. For the protection of environment, Advanced Wastewater Purification (AWP) systems were installed on six Royal Caribbean International and Celebrity Cruise ships. Enforcement of safety and security was also an important part of the company’s strategies in the year of 2005. (Royal Caribbean Cruises Ltd., 2005 Annual Report, p. 2-7).

Strategic Analysis and Choice

The company’s recent strategy focuses on:

  • Developing new state of the art products.
  • Continuing the past legacy of innovation.
  • Enhancing the R & D funding for the objectives.
  • More acquisitions.
  • Developing and building an efficient and aggressive marketing technique.
  • Reaching out to the overseas market.

Critical Success Factors

Royal Caribbean Cruises Ltd enjoys a number of favorable factors. There are disadvantages as well. The long term success of the company entails consolidation of those favorable factors while focusing upon and overcoming the weaknesses. The company must continue with the following that ensured its success in the past.

  • Strong market position.
  • Robust financial performance.
  • Product development.
  • Strong focus on innovation.
  • Mergers and acquisitions wherever relevant.

However, it is critical to success that the company addresses some of the weaknesses that can be fixed with a focused approach. As of now these weaknesses have surfaced in the following forms:

  • Geographic concentration.
  • Low operational efficiency.

Apart from these weaknesses the company also needs to handle the threats that can cause considerable problem for the company. These are:

  • Industry consolidation: The industry has undergone dramatic consolidation in the last few years. Larger players have attempted to increase market share and product portfolios through mergers and acquisitions. This could lead to a price war, thereby reducing the operational cost of the company. It could also reduce the company’s share in the global market.

Conclusion

Royal Caribbean Cruises Ltd. has devised some effective and pragmatic policies for its each operation and that is why, the company has maintained its status among the elite of the industry. However, some of its corporate strategies could not produce the forecasted results and produced heavy burden on the financial assets of the company. The company’s strategy of enhancing its number of ships and berths should be appreciated but it was also mismanaged by the corporate management because of heavy investments on such new mega projects. Similarly, the enhancement of the services also accelerated the growth of the company, because most of these services were the new in the whole cruise industry and these types of services attracted many customers from all over the world. Its operational strategies also devised some new plans for the company which also became the major cause for the healthy revenue collections. The leasing policies of the company also provided the company with new platforms of the business. Similarly, the expansion of its cruise ships also increased the outcome values and the net profit ratios. The booking system of the company attracted the customers from every corner of the world due to easy access of the customers to its services. In addition to this, the major strength of the company was its brands, which was proved from its demands even after some environmental and socio-economic disasters at the world level. The company’s strategy of promoting its brands even after winning awards for that specific product told the story of the company’s sustainability. The deployment system of the company remained as the weak area of the company because the company had to change its deployment system many times. In short, the company’s competitive advantages retained its status in the cruise vacation industry.

Bibliography

Dittman, M. R. (2005), Royal Caribbean Cruises Ltd. 2005. Case 24. 246-47.

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Royal Caribbean Cruises Ltd., 2005 Annual Report.

Royal Caribbean Cruises Ltd., 2005 Annual Report. 2-7.

Royal Caribbean Cruises Ltd., 2002 Annual Report. 1-11.

Royal Caribbean Cruises Ltd., 2003 Annual Report. 1-5.

www.quickmba.com

www.csuchico.edu

www.royalcaribbean.com

www.cruising.org.

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www.iccl.org.

www.moneycentral.msn.com.

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StudyCorgi. (2021, October 25). Royal Caribbean Cruises Company’s Strategic Policy. Retrieved from https://studycorgi.com/royal-caribbean-cruises-companys-strategic-policy/

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"Royal Caribbean Cruises Company’s Strategic Policy." StudyCorgi, 25 Oct. 2021, studycorgi.com/royal-caribbean-cruises-companys-strategic-policy/.

1. StudyCorgi. "Royal Caribbean Cruises Company’s Strategic Policy." October 25, 2021. https://studycorgi.com/royal-caribbean-cruises-companys-strategic-policy/.


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StudyCorgi. "Royal Caribbean Cruises Company’s Strategic Policy." October 25, 2021. https://studycorgi.com/royal-caribbean-cruises-companys-strategic-policy/.

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StudyCorgi. 2021. "Royal Caribbean Cruises Company’s Strategic Policy." October 25, 2021. https://studycorgi.com/royal-caribbean-cruises-companys-strategic-policy/.

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StudyCorgi. (2021) 'Royal Caribbean Cruises Company’s Strategic Policy'. 25 October.

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