In 1968, Royal Caribbean Cruise Line was founded with one ship. Over the next twenty-five years RCCL has expanded its fleet to 29 ships, with 2 more ships being built. RCCL has made its way in the cruise industry as one of the top three cruise lines. Over the past 5-7 years RCCL has experienced some problems with the external environment. These and other factors have placed RCCL in a situation of future organizational uncertainty. The time of this case is 2004.
Current Mission, Goals, & Strategy:
RCCL markets 3-17 day cruise vacations to over 160 destinations. Their current #1 goal is to provide the highest level of service and the best vacation experience on land and sea. RCCL is currently engaged in a capital expansion program, by drawing revenue growth through the purchase of new and larger ships. These new and larger ships will be the largest cruise ships in service. Each ship will have a new variety of innovative design features. RCCL's international marketing team is focused on active adults and families interested in exploring new destinations. "Get Out There" campaign was launched in 2000. This campaign was designed to reposition the brand dispel consumer misperceptions of cruising and generate increased demand for Royal Caribbean.
Internal Analysis: See Attached IFEM
RCCL is a STRONG company internally with an IFEM score of 2.94.
RCCL is weak financially. This is due to the experience in weaker margins due to the pricing pressures caused by a weak U.S. economy, traveler safety concerns, and increasing capacity. RCCL has a LT debt-to-equity ratio of 1.31, which is much higher than the industry average of 0.69. Assuming no significant changes in interest rates RCCL net interest expense is expected to fall in the range of $290-$310 million.
While the overall financial situation of RCCL is weak, factors that boost their overall appearance are the strategic decisions that have...