Case Study Description of Royal Caribbean Cruises Ltd.
Focuses on the current IT applications portfolio and plans for the world's second largest cruise line. An IT-intensive organization, it forces students to think through how IT resources should be allocated in this dynamic environment and what kind of management system is most appropriate.
Swot Analysis of "Royal Caribbean Cruises Ltd." written by F. Warren McFarlan, Valerie Massoni includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cruises Cruise facing as an external strategic factors. Some of the topics covered in Royal Caribbean Cruises Ltd. case study are - Strategic Management Strategies, Operations management, Strategic planning and Technology & Operations.
Some of the macro environment factors that can be used to understand the Royal Caribbean Cruises Ltd. casestudy better are - – cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
there is increasing trade war between United States & China, wage bills are increasing, etc
Introduction to SWOT Analysis of Royal Caribbean Cruises Ltd.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Royal Caribbean Cruises Ltd. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cruises Cruise, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cruises Cruise operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Royal Caribbean Cruises Ltd. can be done for the following purposes –
1. Strategic planning using facts provided in Royal Caribbean Cruises Ltd. case study
2. Improving business portfolio management of Cruises Cruise
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cruises Cruise
Strengths Royal Caribbean Cruises Ltd. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cruises Cruise in Royal Caribbean Cruises Ltd. Harvard Business Review case study are -
Learning organization
- Cruises Cruise is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Cruises Cruise is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Royal Caribbean Cruises Ltd. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Cruises Cruise is one of the leading recruiters in the industry. Managers in the Royal Caribbean Cruises Ltd. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Cruises Cruise digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cruises Cruise has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Analytics focus
– Cruises Cruise is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by F. Warren McFarlan, Valerie Massoni can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Cruises Cruise in the sector have low bargaining power. Royal Caribbean Cruises Ltd. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cruises Cruise to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Technology & Operations industry
– Royal Caribbean Cruises Ltd. firm has clearly differentiated products in the market place. This has enabled Cruises Cruise to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Cruises Cruise to invest into research and development (R&D) and innovation.
Organizational Resilience of Cruises Cruise
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cruises Cruise does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Cruises Cruise has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cruises Cruise has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Highly skilled collaborators
– Cruises Cruise has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Royal Caribbean Cruises Ltd. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Cruises Cruise is one of the most innovative firm in sector. Manager in Royal Caribbean Cruises Ltd. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Technology & Operations field
– Cruises Cruise is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Cruises Cruise in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Cruises Cruise has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Royal Caribbean Cruises Ltd. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Royal Caribbean Cruises Ltd. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Royal Caribbean Cruises Ltd. are -
Aligning sales with marketing
– It come across in the case study Royal Caribbean Cruises Ltd. that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Royal Caribbean Cruises Ltd. can leverage the sales team experience to cultivate customer relationships as Cruises Cruise is planning to shift buying processes online.
Interest costs
– Compare to the competition, Cruises Cruise has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Royal Caribbean Cruises Ltd. HBR case study mentions - Cruises Cruise takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the segment, Cruises Cruise needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Cruises Cruise supply chain. Even after few cautionary changes mentioned in the HBR case study - Royal Caribbean Cruises Ltd., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cruises Cruise vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Cruises Cruise has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Cruises Cruise, firm in the HBR case study Royal Caribbean Cruises Ltd. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Royal Caribbean Cruises Ltd., in the dynamic environment Cruises Cruise has struggled to respond to the nimble upstart competition. Cruises Cruise has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Royal Caribbean Cruises Ltd., it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cruises Cruise is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Royal Caribbean Cruises Ltd. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Royal Caribbean Cruises Ltd. HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Cruises Cruise has relatively successful track record of launching new products.
Opportunities Royal Caribbean Cruises Ltd. | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Royal Caribbean Cruises Ltd. are -
Developing new processes and practices
– Cruises Cruise can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Cruises Cruise can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Royal Caribbean Cruises Ltd. suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cruises Cruise can use these opportunities to build new business models that can help the communities that Cruises Cruise operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Using analytics as competitive advantage
– Cruises Cruise has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Royal Caribbean Cruises Ltd. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cruises Cruise to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cruises Cruise in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Cruises Cruise in the consumer business. Now Cruises Cruise can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cruises Cruise can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Royal Caribbean Cruises Ltd., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Cruises Cruise can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cruises Cruise can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Cruises Cruise can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Learning at scale
– Online learning technologies has now opened space for Cruises Cruise to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cruises Cruise can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Loyalty marketing
– Cruises Cruise has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Cruises Cruise to increase its market reach. Cruises Cruise will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Royal Caribbean Cruises Ltd. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Royal Caribbean Cruises Ltd. are -
Stagnating economy with rate increase
– Cruises Cruise can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Cruises Cruise will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Cruises Cruise needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Cruises Cruise can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Cruises Cruise is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Cruises Cruise business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Cruises Cruise high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Cruises Cruise has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Cruises Cruise needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Royal Caribbean Cruises Ltd., Cruises Cruise may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Cruises Cruise.
Consumer confidence and its impact on Cruises Cruise demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cruises Cruise can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Royal Caribbean Cruises Ltd. .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Cruises Cruise needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Royal Caribbean Cruises Ltd. Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Royal Caribbean Cruises Ltd. needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Royal Caribbean Cruises Ltd. is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Royal Caribbean Cruises Ltd. is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Royal Caribbean Cruises Ltd. is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Cruises Cruise needs to make to build a sustainable competitive advantage.
