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Business Case Holland America Line by Anderson Hexsel Denis Nascimento Felipe Raffani Ingrid Almança 1.

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Presentation on theme: "Business Case Holland America Line by Anderson Hexsel Denis Nascimento Felipe Raffani Ingrid Almança 1."— Presentation transcript:

1 Business Case Holland America Line by Anderson Hexsel Denis Nascimento Felipe Raffani Ingrid Almança 1

2 Agenda HAL Situation Economic Situation Short-term strategy Long-term strategy Financial Analysis Conclusion 2

3 HAL SITUATION 3

4 HAL Situation What is the company? – Premium Cruise Company – Founded in 1873 – Subsidiary of Carnival Inc. – 14 Ships – Cruises to all of America, Europe, Asia and Oceania 4 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financials Analysis Conclusion

5 HAL Situation Good aspects: – Company is still filling their ships – Operations are stable amidst crisis – Board of Directors is confident and optimistic – Mother companys shares are increasing – Already present in new medias 5 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financials Analysis Conclusion

6 HAL Situation Bad aspects: – Discount rate is too high – Mother Company has stopped paying dividends – Market is threatened as a whole 6 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financials Analysis Conclusion

7 HAL Situation 7 BrazilMexicoUSACanadaAustraliaItalyUKPeru Some International Cruises: HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financials Analysis Conclusion

8 ECONOMIC SITUATION 8

9 Economic Situation World engulfed in crisis – Unemployment is staggering – World purchasing power is falling rapidly – No country is immune to the Crisis -Dominique Strauss-Kahn, Managing director of the International Monetary Fund – USA and Europe facing a huge recession 9 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

10 Economic Situation 10 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion USA Unemployment Chart Source: Bureau of Labor Statistics, April 2009

11 Economic Situation When will it end? – [...] nothing before 2010, when you will be technically out of a recession – […] but the effects […] such as unemployment will last for at least two more years. 11 - Nouriel Roubini, New York Times economist HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

12 Economic Situation How will the recovery be? – [...]it takes nearly three and a half years for an economy to return to the peak level of growth before a global financial crisis. –Recoveries from such events take twice as long on average 12 - Marco Terrone, economic author HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

13 Economic Situation Based on those views, we have: – End of Crisis: 2010 ± 1 year – End or Recovery: 2015 ± 2 years 13 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

14 Economic Situation Based on those views, we have: 14 2007: Beginning of crisis 2008: Beginning of recession 2010: End of formal recession 2015: End of recovery HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

15 Economic Situation After the crisis: – Customer buying habits will change Frugal way of life – A sharp inflation may happen in many countries 15 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

16 Economic Situation Results: – HAL prices will have to be kept below pre- recession levels 16 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion Unless a new value is created

17 SHORT-TERM STRATEGY 17

18 Short-term Strategy Clients: – 25% : first time travelers – 45% : repeaters – Average 46 years of age – Annual household income ($93,000) – Clients want to feel special – Minimize risky investments 18 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

19 Short-term Strategy Premises: – Clients want to feel special – Minimize risky investments – Maintain beds filled – Increase on-board spending On-board specials (credits, rewards) CRM implementation 19 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

20 Short-term Strategy Premises: – Maintain beds filled – Increase on-board spending On-board specials (credits, rewards) CRM implementation 20 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

21 Short-term Strategy Value aggregation based on CRM: POST CRUISE ACTIVITIES TIME SHARING – Preferred customers invited to participate – Creates sense of uniqueness/elite – Cruise Owner idea – Increase customer – HAL loyalty and relationship 21 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

22 HAL Ownership How does it work? – HAL invites customers to be a part of their program – Customers pay a program entrance fee (diluted in the first year) and a monthly upkeep cost – Customers can use up to two weeks of cruise time, paying only for onboard purchases and get special credits and bonuses 22 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

23 Why Own a Cabin? – Customers get the opportunity to get custom- fitted cabins (enabled by CRM) – Amenities rivaled only by in-shore resorts – Amenities include tennis courts, swimming pools, Jacuzzi, minigolf and spa – Every accessory needed to enjoy amenities are included and customized 23 HAL Ownership HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

24 How does Purchasing Work? – Buyers pay for the use rights – Buyers may pay cash, credit card or finance company – Price depends on ship, size of unit and season – Average HAL Ownership will sell for approximately US$ 2,760.00 per person. 24 HAL Ownership HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

25 ProductPricePlacePromotion Physical Layou Provision of Customer Service Processes 7-Ps 25 Experience of Personalized Cabin Shows Theme Cruises Product HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

26 ProductPricePlacePromotion Physical Layout Provision of Customer Service Processes 7-Ps 26 Practice same price before crisis 14 days for the price of 12 Price HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

27 ProductPricePlacePromotion Physical Layout Provision of Customer Service Processes 7-Ps 27 RCI partnership Retailers Exchangeable Timeshare Place HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

28 ProductPricePlacePromotion Physical Layout Provision of Customer Service Processes 7-Ps 28 World Class Events Association Theme cruises Own social network and Web 2.0 Referencing Promotion HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

29 ProductPricePlacePromotion Physical Layout Provision of Customer Service Processes 7-Ps 29 Custom decoration Perfect hygiene Favorite brands My own cruise ideal Physical Layout HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

30 ProductPricePlacePromotion Physical Layout Customer Service Processes 7-Ps 30 Serve well the client: Website Call center Ships CRM Customer Service HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

31 ProductPricePlacePromotion Physical Layout Customer Service Processes 7-Ps 31 Salespeople Partnership with companies for incentive programes Trainning CRM WEB 2.0 Processes HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

32 LONG-TERM STRATEGY 32

33 Long-term Strategy Expanding the business on a global scale is the best way to grow after the crisis Premises: – Focus on countries that will have a stable economy after crisis – Minimize risky investments – Work on pre-existing ports and distribution channels 33 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

34 S. America Long-term Strategy EuropeAsiaEuropeAsiaS. America HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

35 Long-term Strategy South America – Brazil [...] has stable banks, high levels of reserves and sturdy domestic demand for products that keeps many businesses humming along. 35 Joshua Partlow, the Washington Post HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

36 Long-term Strategy Why Brazil? Strong banking system Growing wealthy population Classical touristic destination Pre-existing distribution channels Starting point to other ports in South America What are the Risks? Luxury market is still small Buying offshore is part of culture 36 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

37 Long-term Strategy The known destination Europe Many classic tourism destination Rich, surviving countries The risk Countries with problems due to recession Lack of distribution channels 37 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

38 Long-term Strategy Our plan: – Create supply chains in Europe to enable port utilization – Grow bases in Brazils northeast and South America 38 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

39 Long-term Strategy The timeline: 39 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

40 Long-term Strategy The Brazil Strategy – Ports may be used as entrance for South American Luxury places – Competition is almost non-existent in the luxury market – Build strong distribution channels to enable port utilization in northeast (CRM helps) 40 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

41 Long-term Strategy The Brazil Strategy – Marketing Strategy: Orkut Big University parties Company rewarding programs Association with world-class events 41 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

42 Long-term Strategy The European Reclamation – Distribution channels have to be reinforced – Will allow for new lines 42 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

43 FINANCIAL ANALYSIS 43 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

44 Current Cash Flow 44

45 Improvement Signs 45 Table 1.0Summary of Projections - Real GDP Growth 200820092010 Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 United States-0.5%-6.2%-7.2%-4.3%-1.8%-0.4%0.5%0.9%1.2%1.8% Euro Area-1.1%-5.9%-6.8%-4.2%-2.2%-0.8%0.2%0.7%1.1%1.4% SOURCE:OECD HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

46 Financial Analysis Why change the strategy? – Sharp fall in fuel prices will change flow of variable costs – The economy already shows signs of improvement – which may heat markets 46 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

47 Financial Viability 47 New strategy could change market scenario and allow for quick capitalization NPV = $1,673,662.04 IRR = 27.57 % per quarter HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

48 CONCLUSIONS 48

49 Conclusions The financial crisis is not a short-term problem There must be a plan to keep income up during the recovery Loyalty of customers cannot be underestimated Plans must be put into practice as soon as possible to minimize risks and maximize gains 49 HAL Situation Economic Situation Short-term Strategy Long-term Strategy Financial Analysis Conclusion

50 Thank you! 50

51 Sources Interview with Dominique Strauss-Kahn: http://www.blinkx.com/video/no-country-immune-to- crisis/gdStJIm3-MFWospfoQzwQwhttp://www.blinkx.com/video/no-country-immune-to- crisis/gdStJIm3-MFWospfoQzwQw Nouriel Roubinis writings and interviews: http://www.rgemonitor.com/blog/roubini/http://www.rgemonitor.com/blog/roubini/ Marco Terrones interview: http://blogs.wsj.com/economics/2009/04/16/imf-sees-slow-weak- global-recovery-even-with-strong-responsehttp://blogs.wsj.com/economics/2009/04/16/imf-sees-slow-weak- global-recovery-even-with-strong-response Joshua Partlows Article: http://www.washingtonpost.com/wp- dyn/content/article/2009/04/16/AR2009041604010.html?hpid=top newshttp://www.washingtonpost.com/wp- dyn/content/article/2009/04/16/AR2009041604010.html?hpid=top news 51

52 Sources Crisis after crisis: http://www.ft.com/cms/s/0/538ce910-2779- 11de-9b77-00144feabdc0,s01=1.html http://www.ft.com/cms/s/0/538ce910-2779- 11de-9b77-00144feabdc0,s01=1.html 52


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