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Lecture 18

Lecture 18. Case Royal Caribbean Cruises Ltd. Final Exam Outline. 12 – 3pm, Wednesday June 14 Half short and long answers on theory and principles from course Half case-study Closed book Sample questions next week. Royal Caribbean Profile. No. 2 in industry Distant 2 nd

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Lecture 18

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  1. Lecture 18 Case Royal Caribbean Cruises Ltd

  2. Final Exam Outline • 12 – 3pm, Wednesday June 14 • Half short and long answers on theory and principles from course • Half case-study • Closed book • Sample questions next week

  3. Royal Caribbean Profile • No. 2 in industry • Distant 2nd • Profitable (even after 9/11) • Strong balance sheet • Compete on innovation and brand • Built by acquisition and construction of new ships • Very aggressive construction schedule • Wrong side of economic scale • Recently lost large acquisition – morale problems • 9/11 massively disruptive • Recently recovered booking-wise • Two brands with different images • Challenge to squeeze back-office costs • Commoditize standards in operations • Maintain key elements of brand differentiation

  4. IT Activities • Pre-1996 • New IT leadership • Cost frozen, reported to CFO • Budget of $40million • No innovation (even email) • Home-grown legacy systems with code and data mixed together • Low-level support environment • Chosen not to compete in IT • 1996 – Sep 10,2001 • Caught up on IT • COO Jack Williams from American Airlines background • Doubled budget 40m to 80m • New staff • Tom Murphy, CEO • Typical user background CEO • Limited technical training • Effective change agent • Needs good tech people around • Mike Sutton joined, now CIO • Project Leap Frog conceived and funded • Supply chain • Employee support • Customer interface • 200m cost budget • Strategic IT

  5. 9/11 • Middle of repositioning • Three options • Modest cutback in development • Significant reduction in development • Complete stop of development • Chose option 3 due to uncertainty • Headcount 50% cut • Budget slashed 83m to 42m • Survial mode • Move from strategic to factory quadrant • Four weeks to cut 50% spending

  6. Recovery • How to allocate scarce resources • How to move from defensive to offensive • IT priorities managed by committee led by Jack Williams • Meets 4 times per year • Research lab on new IT applications for use on ships is maintained • Innovation remains important • Aggressive development of external interfaces • Sophisticated website • Still travel agent dominated • IT enhances sales channel rather than replaces it • Phasing out legacy systems • Moving to packages with flexible architecture • Operations dependence becoming more critical onshore • Moving supply chain management problem • Compare outsourcing this to Cathay Pacific

  7. Portfolio of projects • Exhibit 6 • What should be priority?

  8. Royal Caribbean Cruises Ltd.

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