Carnival Case Study

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Case Study (Carnival)Barry J. Ellis20 Feb 2013

The Carnival Corporation and plc is the largest global cruise line operator and one of the largest vacation companies in the world. Carnival is headquartered in Miami Florida and London England. It operates a fleet of over 80 ships and typically has over $150,000 guests and 65, 000 shipboard employees sailing at any given time.

Carnival is part of the North American market which is dominated by 3 organizations; Carnival, Royal Caribbean, and Norwegian Cruise Line. The ships director of food operations, Luigi Giordano, has received a memo from his new boss, the senior vice president of operations that in order to meet the needs of its shareholders and customers, a strategic plan will be implemented.

Even though the North American cruise industry is expected to continue growing for several decades to come, part of the strategic plan will involve and overall corporate objective of a 20% reduction in food costs per passenger. Mr. Giordano has been tasked to make that happen.

1. Given food costs are virtually identical (see Figure 9), is a 20% reduction in food costs a reasonable target for cost reductions? Is there a better way to measure performance other than food cost as a percentage of revenue?

* A 20% reduction may be achievable; however, the director of food operations should definitely make sure that quality of food selection and service is not compromised. * Taking advantage of the customer preference database Giordano can increase customer satisfaction by having exactly what the customer wants and thereby reduce waste * Giordano should take advantage of the distributor web site of “Carnival Hot Deals.” These are typically promotional deals of limited time availability. Ship personnel, like Giordano, are allowed and encouraged to order food and beverages that best meet the needs of their passengers for the coming voyage.

2. What changes should be made to the food...
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