Construction industry world wide - Free Essay Example

Sample details Pages: 30 Words: 8989 Downloads: 4 Date added: 2017/06/26 Category Statistics Essay Did you like this example? INTRODUCTION Construction industry is regarded as one of the most hazardous industries in UK and world wide. People attached with this industry do get injured or they may die. According to the report of Health and safety Executive 2,800 workers have expired during last 25 years in UK and many more are suffering from long term illness. Construction has extreme injury statistics of UK and worldwide industries. In 2005 and 2006, there were 59 fatal injuries to construction workers and 41% deaths were due to falls. 28% of all worker deaths were in the construction industry in 2005-6. Nevertheless this rate fell from 3.5 to 3.0 getting the lowest record. The rate of fatal accidents has been decreased over the years in construction industry. 981 or 27% major injuries were noticed resulting from fall. In 2005-6 observed the highest major injuries, 16% were injured in lifting, handling or hitting by falling or moving objects. The rate of major injuries reduced from 326.9 to 310.2 (Strategic Forum for Construction, 2007). Don’t waste time! Our writers will create an original "Construction industry world wide" essay for you Create order The Construction (Design and Management) Regulations 1994 (CDM 1994) have been reviewed critically for indecision on schedules, ambiguity regarding the individual tasks of the duty holders as well as an inclination for agreement to be seen in terms of paperwork produced rather than effective health and safety management. The various requirements placed on the duty holders (Clients, designers, planning supervisors, principal contractors and contractors) were designed to institute health and safety management into the genetic material of the project from start to end and to form a team work approach to health and safety along with risk management. According to HSE, over 2,800 people have expired from injuries as an outcome of construction work during the last 25 years (Public Sector Review). Research has been conducted in shape of a questionnaire which includes queries concerning duty holders, recognition of key apparent issues with CDM and achievements and disappointments faced as a result of the modification of CDM along with suggestions and recommendations. The modified version of CDM regulations up to now have proved unsuccessful in creating the any constructive adjustment in health and safety functioning. In 2009, HSE decided to begin a complete assessment of regulations with a plan to testify in 2010. However, an initial review of the effect of CDM Regulations by Coniac recommended that they mostly are not up to the standards in relation to the enhanced and better performance. HSE inspectorate recommended that much should be accomplished regarding the duties and competence of duty holders (Contract Journal, 2009). DEFINITIONS OF TERMS Health The safety (body as well as mind) of an individual from infection which is an out come of practices and measures taken at workplace. Safety The security of workers from physical harm. Welfare The specifications of conveniences to retain health as well as comfort of people at workplace. These include heating, seating, eating, first aid facilities, sanitation planning, drinking water, accommodation and rest rooms. Accident According to HSE definition, accident is an unexpected occurrence that ends in physical damage or illness of group, or harm to property, workshop, resources, equipments or atmosphere or a failure in business prospects (Heghes, 2008, pg-3). Client Client is a person or an organization for which the building project is done. CDM Co-ordinator CDM Co-ordinator is a person to direct and support the client about CDM duties on notifiable projects. Construction phase plan It is a file organized by the principal contractor keeping the record of health and safety planning, site rules and other measures for construction task. Construction work It can be any building work like construction, renovation, site preparation, alteration, demolition, repair, conversion, investigation, exploration, installations of electrical, gas, telecommunications, computer and other similar services (OPSI, PG 2, 2007). Contractor A competent organization hired to carry out the entire or a piece of the works is contractor. Competency It is the revelation of adequate experience, knowledge and expertise by a person or an organization to perform duties suitably. Design It includes design particulars, drawings, specifications, calculations planned for design. Designer Any person who plans and alters design and give instructions to his subordinates. Health and safety file It is a file including a considerable health and safety information about project, desirable throughout succeeding construction work, repairs and decommissioning. Notifiable project A notifiable project is a project which continues more than 30 days comprising holidays and weekends or it engages more than 500 person days of construction work. Pre-construction information It is information given to duty holders about unknown hazards, proposed use of finished product, and amount of time assigned to contractor and about the health and safety file. Principal Contractor The principal contractor role is to prepare, supervise and manage health and safety during construction work. Hazard It is a potential of the substance, activity or process to cause harm. It acquires many forms like, chemical, electricity and working from ladder. Risk Risk is the probability of a substance, activity and process to cause harm. ACoP An Approved Code of Practice offers assistance on how to fulfill with definite regulations. Business A trade, business or other enterprise. Construction site Any location where construction work is done or to which the workers have approach. Demolition The planned destruction or taking away a structure from each other, or a sizeable part of a structure. Duty holder Duty holders are persons counting client, co-ordinator, designer, principal contractor, contractor, worker who perform their function according to CDM 2007 Regulations. ACRONYMS HSE Health and Safety Executive ACoP Approved Code of Practice CIAC Construction Industry Advisory Committee HSC Health Safety Commission CIOB Chartered Institute of Building LITERATURE REVIEW CDM Regulations came into force in March1995, executing the short-term Construction Sites Directive (1992/57/EEC). The objectives of these Regulations includes improvement in management, synchronization of health and safety during construction phase project, forcing latest responsibilities on employers, designers with contractors to assume health and safety starting from outset to safeguarding as well as renovation on destruction. The concept of CDM is to force all the duty holders to work in collaboration with each other and perform their duties to reduce accidents and promote safety. It is observed that prior to planning and design stage, accidents can be reduced if properly recognized (Report on MOM Mission on CDM Regulations Implementation in UK, 2008). The major facets of the recent duties enforced were It was the duty of client to assign a planning supervisor competent enough to organize health and safety features of initial design and the project preparation. The CDM Co-ordinator must guarantee a pre-tender health and safety plan The CDM Co-ordinator was responsible for the preparation and maintenance of health and safety file and for its delivery to client at the end of the project. It is factual to state that the regulations had a constructive impact on safety, after the regulations were initially adapted within the construction industry. But, a range of deficiencies and ambiguities were revealed which led to the preparation of improved and modified regulations (Health and Safety Consultants, 2010). The Regulations were improved in 2002, to offer better explanation to duty holders concerning their obligations as well as responsibilities and a new ACoP was released. Consequently, due to industry discontent, the Health and Safety Commission (HSC) went into an industry wide discussion practice and CDM 2007 is the result. CDM 2007, a new set of Regulations came into force on 6 April 2007 which includes a few noteworthy alterations from CDM 1994. CDM 2007 was associated with a new Approved Code of Practice which assists in enlightening CDM 2007. Key aims of CDM2007 These are described in the introduction to the ACOP and set out to integrate health and safety into project management by encouraging teamwork that will: enhance planning as well as project management from the beginning; recognize risks before time to remove or reduce them at the design stage of the project, in order that the remaining risks can be handled suitably; aggressively disapprove needless bureaucracy (Federation of Piling Specialists, 2009). The Major Changes in CDM The major alterations can be reviewed like this: The main changes can be summarised like this: CDM 2007 enforces new and heavy duties on clients, who are restricted now to hire a clients agent; the job of planning supervisor under CDM 1994 has been improved. This task will now be performed by the CDM co-ordinator all duty holders on a project (i.e., clients, designers, CDM co-ordinator and contractors) will be forced to comprehensive functions of competence, co-operation and co-ordination the health and safety plan formed under CDM 1994 will at present be recognized as the construction phase plan; and there is better scope for civil accountability (besides criminal accountability) for violation of CDM 2007 (PROJEN). Project Notifiable Specific projects are notified to the Health and Safety Executive under CDM 2007. The HSE is the government organization which implements health and safety regulations in the construction business. A project is notifiable to the HSE when it involves more than 30 days or 500 person-days of construction work. These projects need the selection of a CDM co-ordinator along with a principal contractor. Despite the fact that, under CDM 2007, even if a project is not notifiable, the further all-purpose obligations of CDM 2007 will nonetheless employ (McCormack Benson Health and Safety Consultants). Benefits Every Law in relation to Health and Safety has as its key advantage of the safety of citizens particularly involving the staff and affected workforce. Nevertheless, once coped properly the blend of law and care, health and safety provides additional solid advantages for business, for instance: efficiency amplifies, as consumed phase from calamities and occurrences is lessened repute is improved exclusive of the requirement to utilize pricey PR mentors self-esteem and reliability enhances as workforce observes that their safety make a difference crucial Skills are maintained as well as shielded fines threat from implementation organizations are done with. Insurance Rewards can be discussed on the source of excellent industrial accident reports (EDP, 2007). According to the HSE, the benefits of the new regulations are to recover health and safety in construction industry, assign competent people; risk management and effective planning. HSE INITIATIVES The most recent HSE campaigns about risk awareness and risk management embrace: Hidden Killer campaign increases understanding amid individuals working in the construction industry that they are at threat from disclosure to asbestos. Shattered Lives This campaign aims at those workers who are mostly at the risk of a fall, stumble or slip at work along with those best sited to hold an action. It targets to educate people concerning risk management and assist them to take measures to reduce slips and falls. The European Campaign for Safety and Health at Work for 2008-09 It is a two-year campaign. This campaign focuses on a variety of employers, workers and safety agents and is meant to encourage the advantages of the execution of risk evaluation. It hunts for exposing risk appraisal process to reveal that this process is not complex or bureaucratic. It has raised awareness and understanding about risk issue by providing information and sensible counseling. It enhances activities possessing constructive influence at workplace and spot out better practice (Safety 1st, 2009, Issue-6, pg. 6). This operation tries to expose the threat appraisal method to confirm that threat appraisal is unavoidably intricate, problematic, and bureaucratic or a duty just for professionals. It intends aw well to increase understanding and knowledge on the issue of risk management, offer information as well as sensible counselling, support and promote actions that have a constructive impression at place of work, moreover discover as well as be acquainted with high-quality application (Safety 1st, 2009, Issue-6, pg. 6). Need to Revise the CDM Regulations 1994 The new Regulations came into force in April 2007. The goal of the restructured Regulations is to spotlight the merits of successful planning as well as management of construction projects beginning from the design model to onwards. These Regulations better point out health and safety concerns with the intention of trimming down the threat of damage to individuals who erect, draw on and retain buildings, as well as to tackle the commonly acknowledged inclination that the construction industry resumes excessively dangerous and unsafe to individuals attached with it. The goal is to facilitate members of the construction industry to work collectively on the way to implement a new health safety awareness management agenda, by means of making regulation easier; planning and management improvement from concept to onwards; early risks detection; enhance co-operation and team work; reducing bureaucracy and increasing values along with standards (AGS, Newsletter Issue 55, 2007). Approved Code of Practice A sketch of Approved Code of Practice (ACoP) has been shaped providing realistic guidance on how to adhere to law. It entails some constructive information, not obvious from regulations themselves, regarding how CDM 2007 will link to the PPP perspective. There is no indication until now of an assured industry acknowledged regulation. The Health and Safety Commissions CIAC has formed a sub-group exclusively to organize construction of this regulation (Public Sector Review). Approved Code of Practice that comes with the Regulations affirms the viewpoint behind the new regulations. If hazards are reduced or curtailed, in addition to providing financial support and surplus concerning improved physical condition as well as protection, it too will end in decline in the total rate of possession since the design is planned for secure, simple and undemanding repairs with sanitary job in addition to the basic information that is accessible in the health and safety file. The gist of this philosophy is that; Form safety a central component of running construction projects recognize risks early at the design phase support mutual work amid all companies advance project planning Diminish bureaucracy (EDP, 2007). CDM Regulations 2007 The fresh Regulations are divided into 5 parts: Part 1 – Application as well as description of the Regulations; Part 2 – All-purpose duties in relation to all construction projects; Part 3 – Additional duties pertaining to notifiable projects; Part 4 – Practical requisites for all construction sites; Part 5 –Central Planning with revocations (Birmingham Health, Safety Environment Association, 2007) What type of project is notifiable? A notifiable project continues more than 30 days comprising holidays and weekends or it engages more than 500 person days of construction work. It is the duty of CDM co-ordinator to notify the project (AGS Newsletter Issue 55 December 2007). 2. Application of Regulations The Regulations apply to all new building construction, new services installations, alterations, maintenance, or renovations of a building or any of its services, site clearance and demolition (University of Oxford, 2008). Cost effectiveness The cost effectiveness of CDM has been assessed seriously, the accusing CDM as a source of a good deal bureaucratic paper work. The HSE reaction to this has been comprehensible that any paper work that does not exercise effect on health and safety should not be accomplished under CDM. It gives the impression that there is a need to clarity designers duties under CDM. The view is that they frequently receive the safe alternative and construct domains of risk assessments that face approximately any possibility. This may not enhance safety, since the risk assessments may be standard. Consequently, there is an awareness that CDM is ineffective due to time redundancy that does not assist in improving health and safety (HSE, 2007). Competence, Co-Operation and Co-Ordination A client should ensure under Regulation 4 that: The client is responsible to take sensible and logical measures to make certain that the individual to be selected or attached is experienced, proficient and skilled (RICS Journal, 2007). All duty holders under CDM 2007 must be competent to perform his duties. Appointer must ensure the competence of the appointee and similarly the appointee should not attach to a company if he is incompetent; co-operate with others on the similar project as well as ask for the co-operation of others; and co-ordinate with each other in a mode to make sure the health and safety of people involved in the construction process. These duties promote an indication of the mutual working approaches which are convinced all through the construction industry in Great Britain (Jones Day Law Firm, 2007). Competency Measurement under CDM New Regulations There are three phases to competency. Vital perceptive of risk and risk management Adequate comprehension of the tasks to be applied and the risks they entail; The basic understanding and capability to perform those duties. DUTY HOLDERS Duty holders under CDM 2007 Regulations are: Clients Designers CDM Co-ordinator Principal Contractors Contractors Clients A client is a person retaining construction work performed as a component of his industry. The client may be a person, a company or a partnership (Veritas Consulting Safety Services). A number of alterations have been carried out in the latest CDM Regulations however; the alterations made to the clients role had the maximum influence. The influence of Client is prevalent on the mode a project is proceeded. They are responsible for the effect of their health and safety approach of workers by project. Though, the Regulations also appreciate that a lot of Clients are very little familiar with construction health and safety, hence, they are not competent enough in project planning and management (Leicestershire County Council, 2007). Duties of Client Clients have to adhere to explicit duties for the construction work carried out on their behalf. But if the project is notifiable then the clients are responsible for additional tasks. To comprehend the role of a client, the duties assigned to him under CDM Regulations are listed below; Ensure the competency as well as resources of every appointee; Make sure about the proper management planning intended for the project involving safety and welfare services; Allocate adequate time along with funds for each and every phase of the project; Give designers and contractors pre-construction information; Hire a CDM co-ordinator; Assign a principal contractor; Ensure that construction phase should begin in the presence of welfare facilities; Supply information to CDM co-ordinator concerning health and safety file; Maintain the health and safety file (Salford City Council, 2007). Ensure that they are committed; Make sure that the designers, contractors and other duty holders are proficient and experienced; Agree to adequate recruitment time for contractors for planning and preparation for the works. Ensure the safety of project management; Improve communication and co-operation between designers and contractors; CDM co-ordinators A CDM co-ordinator is appointed for client counseling on projects that go on for more than 30 days or else entail 500 person days of construction work. His counseling is based on health and safety issues all through the design planning period of construction work (Veritas Consulting Safety Services). Duties of CDM Co-ordinator A new duty holder introduced by CDM is CDM co-ordinator, instead of the planning supervisor, who is a plan counselor with regard to risk management and safety. The CDM co-ordinator has very clear and comprehensible duties than planning supervisor. The CDM co-ordinator is a significant selection by the client and his key responsibilities are mentioned below; to inform HSE about the project; to inform and support the client of its duties i.e. selection of competent contractors and designers; and guarantee sufficient planning for project management. Make certain that proper planning is done and executed for the health and safety management all through the construction phase (from planning to preparation). Supply information to contractors and designers. Gather pre-construction information required by contractors and designers. Interaction with principal contractor concerning the gist of health and safety file. Communicate with principal contractor regarding information about the preparation and development of construction phase plan, which may influence construction planning and management (Build4Growth Ltd). Make sure that designers fulfill their responsibilities practically. Confirm co-operation between principal contractors and designers. Preparation of health and safety file. Health and safety file assessment and appraisal. Keep the health and safety file up to date. Deliver health and safety file to the client as the project comes to an end (Jones Day Law Firm, 2007). Make sure to deliver a project safely through an early induction of other duty holders and then authorize them to take on the requisite work. Ensure that the team members or workforce is competent and skilled. Ensure the supply of welfare facilities on construction site by the contractor. The role of CDM co-ordinator for notifiable projects is to supply a basic project advisor to client in relation to health and safety management and risk management; support client in the selection of skilled contractors; assist client in preparing competent management; safe management of design process; make communication and interaction possible among team members; ensure co-operation between workforce; reduce risks to workers due to an early input with designers and clients; help client in preparing decisions as regards to the time required for preparation by the contractor; and counsel client about ample time for staffing, starting from the selection of a contractor to the time when construction work begins (Imperial College, 2007). Designers Designers involve architects, quality surveyors and engineers who prepare designs, specifications, proposal of quantities and the arrangement of articles and issues (Veritas Consulting Safety Services). Designers are all persons who encompass a little contribution into issues related to designs of project. It comprises architects as well as engineers who by and large have liability for design; surveyors who sketch out requirements; contractors who perform design composition as suggested by a design-and-build contract; moreover a person with authorization to indicate or change the requirements and patterns of designs to be used (Jones Day Law Firm, 2007). Designers have a significant part to perform in CDM 2007. They are in a distinctive status of reducing the risks that occur all through the construction process. Designs enhance from key conception to a comprehensive arrangement. It entails diverse groups and individuals at unusual stages. At all stages, designers associated with all fields can perform significantly through identification and eradication of hazards. Designers initial judgment basically involves the health and safety of building composition. This judgment inspires the subsequent design alternatives. It is as a result imperative to deal with health and safety issue from the start. Firstly, designers require abolishing hazards. Eradication of hazards eliminates the linked risk, decreasing it risk to a satisfactory point. Presenting nonspecific risk information is undesirable. Designers officially are not involved in keeping the process record, however, it is constructive. Noteworthy and considerable risks are those that are rare and outlined. These are not expected to be noticeable by contractor and complicated in handling. A designer requires making sure the availability cleaning and safe maintenance of regular construction parts (Grove Services (UK) Limited, 2009). Duties of Designers The duties of designers include following; Designers should ensure sufficient resources to tackle the health and safety issues. They should supply satisfactory information concerning risks linked with design. They should co-ordinate with others for risk management. Designers must be sure about their competency for the task he has been assumed. Identify risks, make an out line of it and try to reduce them (RRC Training). Guarantee that his design check risks to construction workers. They must embrace workplace regulations 1992. Supply information necessary for other designers, clients or contractors to adhere to their responsibilities under CDM. Designers should report about the design and resources employed in the structure. One duty is the building maintenance after finishing the construction (Estates and Facilities Division Quarterly Briefing V.16, N.1). Additional Duties The additional duties of designers include To make sure that a CDM co-ordinator has been assigned by client Before the induction of CDM co-ordinator, design work should not begin. Co-operate with CDM co-ordinator. Initial selection of the CDM co-ordinator is vital for successful planning as well as for creating efficient management planning from the beginning. Initial selection of the CDM co-ordinator is vital for successful planning as well as for creating efficient management planning from the beginning (Imperial College, 2007). Principal contractors A principal contractor is appointed for projects goes on more than 30 days or engage 500 person days of construction work. His role is to prepare, supervise and organize health and safety during construction work. The principal contractor is generally a key managing contractor for the work (Veritas Consulting Safety Services). The Principal Contractors duties According to CDM 1994, preparation of health and safety plan was the duty of the planning supervisor and development of that plan was the responsibility of the principal contractor. But under CDM 2007, for both preparation and development of construction plan, only the principal contractor is responsible. The CDM co-ordinator must communicate with him concerning the preparation and aptness of the original plan but principal contractor holds the responsibility of construction phase plan. The thing that remained untouched in CDM 2007 is the presence of a proper plan before the start of construction work (Jones Day Law Firm, 2007). Duties of Principal Contractors Principal contractors are appointed by Estates Director for notifiable projects. They perform numerous duties comprising Management of construction phase. Co-ordination during construction phase. Provide proper safety and welfare facilities. Check unofficial approach to site. Enforcement of site set of laws. Workers secure appointment, education and training. Perfection in co-operation as well as co-ordination between contractors. Improve communication among workforce to prevent risks. Preparation of construction plan. Provide health and safety information to the desirable individuals (Grove Services (UK) Limited, 2009). For Notifiable projects the principal contractor should perform following responsibilities; They must make sure that the contractors perform their duties safely and risk free. They must be sure about the appointment of CDM co-ordinator and HSE notification before the start of project. They must show their competency and skill in the management of the health and safety issues during project. Contractors requirements for information should be gone through without delay. Make sure the contractors are working in collaboration of each other and ensure team work. Supply quick information to the CDM co-ordinator pertinent to the health and safety file (Imperial College, 2007). Contractors A contractor is a company engaged in building, variation, repairs or flattening work. These companies entail construction mechanical, civil engineering, demolition and maintenance companies (Veritas Consulting Safety Services). Contractors duties The principal Contractor appoint contractor in case of notifiable projects and it is client who appoint him when the project is not notifiable. Duties of Contractors The duties of contractors are following; The contractors must be proficient and skilled in their job performance. They should plan and manage their task accurately. The contractors must scrutinize their work for health and safety assurance. They should co-operate with principal contractors as well as the contractors and improve co-ordination. In the absence of principal contractor or in case of non-notifiable work, the duties of contractors includes following; The contractors must make the client aware of his job or responsibilities. They must examine their work to guarantee a risk free environment and to handle health and safety issues. They should supply sufficient information to their workers. The contractors should provide training and awareness to their workforce. They make the security of site certain against unofficial access. The duties of contractors include the assurance of welfare facilities for workforce on the site (IET, 2008). Additional Duties In case of notifiable projects, the duties of contractors are as under; The contractors must verify the appointment of CDM co-ordinator and HSE notification before the work begins. They must inform the principal contractor about the risks created by their works. They must inform the principal contractor about the other contractors attached with their work. The contractors must adhere to the practical guidance and rules suggested by the principal contractor about health and safety. They must notify the principal contractor about the key problems they face on site. The contractors should inform the principal contractor about injuries and unsafe incidents on site. They must supply awareness about health and safety file (Imperial College, 2007). METHODOLOGY METHOD Primary and secondary methods have been used to identify the impact of CDM Regulations. PRIMARY METHOD Primary method is used for direct communication or personal interviews with respondents. A qualitative data is collected through interviews. Data obtained through this method is based on oral-verbal responses. This method, though, is time consuming and costly, yet it produces high response and less negative response rate. In the current research paper based questionnaires were used to interview the duty holders. These questionnaires demonstrated the attitudes and beliefs of their specific job positions. The respondents openly described about their responsibilities and experiences under CDM 2007 regulations. DATA COLLECTION Data was collected from nose to nose dialogue and interviews with duty holders i.e.-e clients, designers, planning supervisor, principal contractor and contractors or subcontractors. The well thought-out interviews with 12 duty holders were organized so as to survey the CDM function to a variety of diverse task circumstances. Three interviewees were selected from every duty holder. These contestants were picked to signify distinctive executive formation, welfare, safety as well as environmental settings. A wide ranging problems were conferred with respect to CDM as numerous among interviewees turned up from huge and reputable corporations. QUESTIONNAIRE DESIGN Primarily the survey aimed at a questionnaire. A substantial comprehension was assumed to create the plan and design of the feedback form. It has been composed with care. It was short, concise and simple so as to interest the respondents. Respondents were serious and we find no ambiguities in responses. Words and sentences used in questionnaire are very familiar and intelligible. Throughout these interviews were based on a chain of concerns in shape of a questionnaire which includes queries concerning other duty holders, recognition of key apparent issues with CDM and achievements and disappointments faced as a result of the modification of CDM along with suggestions and recommendations. These questions were the personal observations of every duty holder. Questionnaire What is your service rank? Which of the known divisions are you attached with? Number of employed individuals in your organization? By and large how can you appraise CDM Regulations? In the past two years, how did you find CDM? Could you explain your experience? How would you tell the attitudes of other people you worked with, towards CDM Regulations? Which duty holder do you consider as strategic to the effectiveness of CDM Regulations? Tell us about your big challenge while working under CDM? Do you think existing CDM supports bureaucracy? What are the achievements of CDM? What are the accomplished spheres of CDM? And why? What are the failures of CDM? Mention the core fields of failure? And why? As a duty holder how effortless it is to discover problems regarding you? How long does CDM tackle professional health problems? How the issue of health and safety is linked with the function of CDM? As a duty holder what is the degree of requirement expected by you? Can you identify vital issues relevant to safety planning? To what extent do you assume that collaboration and harmony can be enhanced among duty holders? How can HSE and construction industry sort out to talk about the requirements? As a duty holder how patent and comprehensible are CDM regulations for you? How health and safety planning can be enhanced? How can duty holders perform successfully and efficiently to handle health and safety? How, as a duty holder, CDM Regulations manipulate you? How new CDM can deal with communication, co-ordination and co-operation among duty holders, principally, between contractors and designers? Are the people involved in evaluation process themselves are capable or not? Is it bureaucratic? How CDM Regulations are appropriate and pertinent to planning commitments? Do CDM regulations certify the preference of capable duty holders? Your perception of competence and proficiency and suggestions for improvements! To what extent does CDM assist in attending towards workers commitments and appointments? Does it need enhancement? How? Do you consider review of CDM as effective and productive? Do you call CDM review as failed and hopeless? Illustrate cost proposition of CDM to construction industry as well as your corporation? Evaluate the constructive advantages of CDM? What sort of crucial steps can be taken in to enhance the efficiency and value of CDM? SAMPLE The competently planned interviews were conducted with 12 duty holders to study the CDM role to a range of assorted job conditions. Three interviewees were opted from each duty holder. CLIENTS Three recurring clients for this research were interrogated. One from private sector, working for about 8 years with 100 to 200 employees and other two operating for 20 years with 1500 employees. Since last year, two clients have been attached with 98 and one with 50 to 100 CDM projects of construction. DESIGNERS Three designers for this research were interrogated. Two design organizations performed both as a contractor and client along with the role of supervisor. One was a civil engineer with 50-125 personnel and other two were architects with 1,100 workers attached with CDM projects. One organization was operating for 4 years and other two were in business for 19 years. The cost assumed by designers was up to 95 M. CDM Co-ordinators Three CDM Co-ordinators were interrogated for this investigation. One was joined with project management tasks and other two belonged to design companies. These supervisors had been operational through out previous year under CDM projects with above 1,300 staff workers. One planning supervisor, from private sector, had been concerned with 20-40 CDM projects for 20 years with 150-300 workers and the two others were functional for 10-18 years with 1,300 staff. The cost of construction during last year was assumed between 300M to 800M PRINCIPAL CONTRACTORS Similarly three principal contractors were interviewed for this research. All of them were engaged in construction and design projects. One was a civil engineer, one house builder and one was commercial builder organizations. They all have been connected with construction industry for 20 years. The civil engineer contractor had been attached with 20-50, the house builder with 50-100 and commercial builder was attached with above 100 CDM projects during the previous year with 100-300, 1,500 and 300-600 employees respectively. The principal contractors cost was estimated between 70M and 700M. Two of them also contributed in maintenance and refurbish projects. CONTRACTORS/ SUBCONTRACTORS All the three contractors / subcontractors interrogated for this research were assumed the position of designer. Two of them performed as planning supervisor as well and have been in industry for 20 years. One contractor has been working for 12-20 years. These contractors employed 30-60, 60-80 and 100-300 workers respectively. The fields of small contractors include painting, glazing, roofing, plumbing, highway building and electrical fixing with 30-60 workers whereas the large subcontractor was associated with diverse spheres with 1,100 staff workers. One contractor assumed 10-20, the other 21-50 and the third one above 95 CDM projects. The cost of construction specified by these contractors or subcontractors was between 5M and 199M through out previous year. SECONDARY METHOD Secondary data has also been collected indirectly for the research through government reports. This method is inexpensive, easily accessible and saves time and effort as compared to primary data collection. In this method, data is easily available. For this research, data has been obtained through quantitative sources. CDM 2007 Impact Survey shows that the implementation of CDM regulations is ineffective and unsuccessful for a few organizations working in concerning areas of construction in UK. This survey was conducted online by the CDM 2007. The sample was large with 228 CDM 2007 duty holders in this survey. The participants included in the survey came from diverse disciplines like site and design duties, architecture, training, planning and health and safety professional. Construction industry is regarded as one of the most hazardous industries in UK and world wide. People attached with this industry do get injured or they may die. According to the report of Health and safety Executive 2,800 workers have expired during last 25 years in UK and many more are suffering from long term illness. With a view to improve health and safety system in construction industry CIOB conducted a research to approach those who are the victims of health and safety risks. This research appraises key issues associated with health and safety in a construction industry like health and safety in industry; effect of CDM; occupational strain and its influence; crane safety along with workers safety. RESULTS AND DISCUSSION The respondents were asked about the impact of CDM Regulations by using questions regarding Co-operation among staff members, integration of designer/client/contractor teams, attraction for workers, CDM management Practices, better quality, workers care, fall in workers absence caused by injury, prompt achievement, health Risks reduction, safety risks reduction, site safety improvements, onsite staff training and communication among project affiliates. The following table shows the effects of CDM on duty holders. A D indicated agreed or disagreed. 1- Transparency of new CDM Regulations By and large, the CDM Regulations were found clear in relation to what is predictable about every duty holder. Clients One of the three clients disagreed with the clarity of CDM Regulations and opposed it by stating that there is a deficiency of possession from contractors and designers. They were uncertain about the closing stages of contribution by principal contractors. One was required explanation on proficiency evaluation along with planned agenda for planning supervisor. The third one needed a patent testimonial of the clients individuality as well as the designers accountability. There was an opinion that comprehension of CDM is inconsistent in the civic sector, a reality not facilitated by the inclination for public sector staff to recurrently alter the job placements regularly. Designers Two of three designers approved the accuracy of new Regulations but one convincingly opposed it. One respondent stated that CDM should intimately be associated with the duties of individuals who take part in construction practice. This view was confirmed by other designers, who revealed the uncertainty in specified circumstances like change in project from one planning supervisor to the other one, substitution in devising and constructing projects and the situation when clients make a decision about designs. The respondents wanted investigation to be precisely considerable with a reliable supervision from the supervisory body. In their opinion ACOP should not merely include cross-references but the reviews of further pertinent legislation, forming it as a sole orientation for the industry. The opposed respondents demanded transparency on a number of issues like what are the duties of contractors, risk assessment, assistance in composing secure and insecure design and problems concern ing short term works design. CDM Co-ordinators One of three CDM co-ordinators agreed on the lucidity of CDM Regulations but two opposed. All respondents stated that the design task of contractor is not focused in existing CDM. They were of the view that the designers competence is not suitably tackled. They opined that the role of client should be clarified. The respondent who favoured CDM said that planning supervisors should be inducted early in the project. Designers are uncertain about the concepts of threats and risks and require practical advice to attain safety in design. All three agreed on a new ACOP and said that a direction and supervision is required for planning supervisors. They should be trained about how to guarantee co-operation among designers. Principal Contractors One of three respondents agreed on clarity but the other two opined that much is required concerning the role of planning supervisor and an appropriate direction is required for competence assessment. The role of planning supervisor needs supervision. Contractors / Sub Contractors The one respondent found CDM Regulations vague. In his view the CDM Regulations should be simple, combined and intelligible with a transparent explanation of the roles and duties of the duty holders particularly designers. HSE should expose the performance concealed by CDM and stress on the broad capacity of execution. One contractor responded about the clarity of his role that he needs more explanation on the approach of client and principal contractor towards the application of their records. 2- Competency Assessment Clients CDM guarantees that competent duty holders are chosen. On this question two respondents agreed. However, they mentioned that proficiency evaluation or assessment is a complex procedure for rare and small clients and face to face interrogation is an excellent tactic to assess someone. In their opinion, planning supervisor should also perform in this process of competency assessment. The respondents who disagreed were of the view that competency is determined by the assessors and they thought that the assessors themselves are satisfactorily capable. They suggested that proper training and guidance for competency assessment should be provided in the induction of assessor. Designers All designers disagreed about the selection of competent duty holders. They suggested questionnaires as non-reliable source of getting basic information and recommended face to face dialogues as a successful source. CDM Co-ordinators One CDM Co-ordinators agreed about competency assessment with a notion that better supervision can assist. Those who disapproved responded that mostly the competency assessment is avoided due to the demands of the project and appointments rely on reputation of the organizations. Evaluation is not a project feature and CDM can not ensure that only competent people are chosen. They viewed it as more bureaucratic. Principal Contractor One principal contractor disapproved the declaration saying that instead of competency assessments by clients; even now they were being inquired to perform acts that are beyond their proficiency. They opined that duty holders are not properly aware of their duties and health and safety proficiency is a secondary issue in competency assessment. The principal contractors who agreed were of the opinion that though it was unattainable to check competence but CDM did stick to this objective. They mentioned that people were not aware about assessment process and needed training. It was suggested that assessment should be based on site visits rather than only paper work and that a scheme should be devised to point out the standard requisite to competence. Contractors Two of three contractors disagreed concerning the selection of competent duty holders. One contractor gave his comments that competency paper work is not verified and the other said that the clients should visit them personally. One of them commented that competency assessment takes place in haste, usually when a problem occurs. The contractors viewed that some SMEs were entirely ignorant of how to devise an assessment method. 3- Communication, Coordination and cooperation Clients When the clients were interviewed about the improvement in communication, co-ordination and co-operation encouraged by CDM, two clients agreed and one disagreed. They recommended that co-operation can be enhanced by removing ambiguity in the responsibilities of duty holders, assisting designers in designing projects, encouraging mutual work performance and declaration of assurance to co-operate should be signed by all duty holders. Designers Two designers agreed whereas one disapproved it commenting on CDM to create broad plans concerning the respect for people. They opined that at the concluding stage of a project feedback is required. The contractor should be assigned early so that the workforce gets connected. CDM Co-ordinators One CDM co-ordinator agreed while two strongly disagreed. They stated that co-operation, co-ordination and communication was weak when principal contractors include sub contractors who are responsible of design. They recommended the on site presence of designer, early involvement of contractor in design and enhancement of team work. Principal Contractors All contractors disagreed and responded that contractors should keep every body connected through out construction process. They suggested frequent meetings and pre-start meetings between principal contractors and the contractors. There should be a boundary between permanent and temporary designers and risks should be recorded in a regular risk record. Contractors One sub contractor agreed and two disagreed. They recommended that during construction process, designers should be actively involved realizing their duties and responsibilities. Besides, early dialogue is useful in shape of pre-start meetings, feasibility meetings and post contract appraisals. 4- Obligations and contribution of CDM to health and safety improvement As a duty holder, the respondents stated a number of obligations of CDM Regulations. A collective list of these obligations and CDM s contribution regarding health and safety plans was provided by clients, designers, planning supervisors, principal contractors and contractors. This contribution includes training, Health and Safety File, risk management design, co-operation assurance, threat reduction design, aptitude appraisal, stable co-ordination and construction planning. 5- Achievements of CDM The respondents were asked about the achievements of CDM. They indicated that sites are safe and healthy; client is the integral part of project team; health and safety are taken thoughtfully; value of design has been appreciated; performance of contractors is improved in providing on site facilities; onsite communication and team work have been enhanced; designers are aware of their duties more than before; designers are taking maintenance issues into account; project management has been enhanced; fatalities have been reduced; co-ordination between contractors has been improved; Onsite injuries have been reduced; Onsite inspections by principal contractors have been enhanced; papers containing basic health and safety information are broadly available; risk management; level of health and safety files is refining; services management; planning improvement; client is more involved; improvement in welfare provision and co-operation; ill-health incidents have been reduced; stress on competence and training; reduction in bureaucracy; enhanced on-site co-ordination; reduction in paperwork. Problems with CDM The respondents felt numerous problems as well with CDM. They stated that Clients are uninformed about their duties; No improvement in design and build ability; No improvement in bureaucracy; Misapprehension about the role of planning supervisor; Increased paper work; No reduction in accidents; health and safety issues are not taken into account timely; late induction of planning supervisor; designers offer poor quality work; co-ordinators are not competent people; no cost benefits; clients offer inappropriate information; futile competence assessments; no improvement in occupational ill health challenges; disinterest of clients; conflict between duty holders; lack of awareness and training; Recommendations to improve CDM A number of recommendations were suggested by duty holders to improve CDM. Clients Knowledge and training for clients. Regulate and restructure the proficiency evaluation system. Promotion of early selection of CDM Co-ordinators HSE should play its part to make organizations responsive to their duties. Communication enhancement. Assistance and sustenance for SMEs. Designers Shelter industry possession in the composition phase and make leadership simple. Training of supervisor so as to better appreciate design process. Create a composed safety. Tackle the resources deficiency in HSE. Offer assistance precisely to diverse categories of the project. Principal contractor should be kept as core on site. Explain information concerning health and safety in the form of a leaflet or brochure. Make the role of designer and his proficiency level clear. Feedback and improved communication. CDM Co-ordinator Recruitment period must be mentioned in the F10. Principal designer and clients should put signature on the F10 to make them aware of their duties. Education and training should be made compulsory for duty holders. Avoid design work before the induction of CDM Co-ordinator. HSE should offer practical guidance. Health and safety course must be introduced in higher education. CDM Co-ordinator should be assigned the duty to scrutinize site performance. Principal Contractor Make the Regulations simple. Create an assessment scheme to evaluate competence. Feedback is mandatory to observe the benefits of CDM implementation. It should be imposed on clients to maintain their Health and Safety File. Sub contractors should be accountable for the health and safety of their workers. Train designers in Health and Safety and risk management. Project group must work jointly to create and handle a collective risk record. Contractor CDM should enhance its website to find out information on best performances. CDM must be revealed publicly and encouraged to put up an understanding of commitments. Through out project health and safety should be stressed. Competence assessment system for designers should be set up. Designers must improve their communication with clients and site. Clients and designers should be more accountable. Pre-start meetings system should be introduced. Secondary Research CDM Impact Survey indicates that 54% respondents were uncertain about their colleagues awareness of CDM 2007 duties in their organizations and about 47% were doubtful about their competency. Majority of the participants called CDM 2007 a success but there was a minority of them who opined that still it needs enhancement. 59% respondents agreed with constructive appreciation, offered to CDM 2007 by their executives. 19% disagreed and 22% did not respond (CDM 2007, 2009). The study by CIOB shows very constructive findings. 69% respondents opined that health and safety measures are taken very gravely in their organizations. Over a quarter of respondents agreed that it is a serious matter but is not of a main concern in their companies. About the healthy environment and safety provided by construction industry, 73% consider that both health and safety are vital but 26% judge safety as important. 60.9% respondents deem that on account of changes in CDM Regulations, health and safety has been enhanced during the previous years. 84.7% responded that depression and downfall has not changed the need of health and safety observance. 31.4% experience stress at work and 42.4% carry on their work with stress diagnosis. The reasons for stress given by respondents were loss of job, work pressure and management stress (CIOB, 2009). 36% respondents in a few organizations viewed that executives keenly support CDM 2007. Some organizations consider guidance and communication as important fields and 75% demanded the clarification of CDM 2007 policies and its implementation but again 72% observe an awareness and knowledge of CDM in their organizations. On the other hand, 25% disagreed about the clarity of CDM policies, 26% are not aware of their duties and 28% voted for no CDM culture. 62% respondents reported about being assisted to deliver CDM responsibilities. 67% reported that they are certain about the competence of their duty holder colleagues because they provide assistance. The survey advocates that majority of the organizations are performing better under CDM 2007 but a few one who are not confident are taking steps to effectively practise it (Demolition News, 2007). Recommendations and Conclusion The significant matter is that only competent people are safer people and regarding this organization must consider their limitations. It is ACoP that offers helpful guidelines about the question of competence. Clarification and education are required. Designers must be lucid and certain about their duties that are handed over to them under CDM. It is recommended that if designers appreciated their duties evidently, they could concentrate on designing out risks sooner than directing towards the formation of risk assessments. To improve the effective of CDM Regulations some steps should be taken like the training of clients, plan a competency assessment scale other than paperwork, promote early appointment of CDM Co-ordinators, improved communication among people involved in a project, ensure safety and health, handle lack of resources in HSE, provide information regarding health and safety file, clarify the role and competency of designer, mention appointment period in F10, compulsory education for duty holders, introduction to health and safety courses, keep the CDM Regulations simple and easy to comprehend, training in risk management, maintenance of health and safety file, stress on health and safety through out the project, publicize CDM Regulations, accountability and pre-meeting system should be introduced. The purpose behind the CDM Regulations is laudable however they have undeniably produced professional complications, enlarged planning as well as building expenditure. Moreover, these are hard to pertain logically in a lot of actual state of affairs. REFERENCES AGS Newsletter. 2007. Construction (Design and Management) Regulations 2007 (CDM) – Questions and Answers. Issue 55. Peter Keeton, Environmental Services Group Ltd. Retrieved from https://www.ags.org.uk/site/newsletters/nldec07.cfm Birmingham Health, Safety Environment Association. 2007. Newsletter. Report on Midlands Construction Design and Management Forum. Registered Charity No.: 255523 Retrieved from https://www.bhsea.org.uk/2007maynewsletter.pdf. Build4Growth Ltd. CDM-C Methodology. Retrieved fromhttps://www.build4growth.co.uk/docs/MethodologyCDMcoordinator.pdf CDM 2007. 2009. CDM2007 Impact Survey results. Hannover Consultancy.Retrieved from https://www.cdm2007.org/News/FullInfo.aspx?NewsID=132 CIOB. 2009. Health and Safety in the Construction Industry 2009. Retrieved from www.ciob.org.uk//OCT09-011_REPORT_Health-and-safety_sample_WEBok27.pdf? Contract Journal. 2009. CDM Regulations not improving industry safety. John DArcy. Retrieved from https://www.contractjournal.com/Articles/2009/01/13/63612/cdm-regulations-not-improving-industry-safety.html Demolition News. 2007. Survey reveals CDM implementation deficiencies. Retrieved from https://www.demolitionnews.com/2009/08/21/survey-reveals-cdm-implementation-defficiencies/ EDP. 2007. New Construction Regulations and You. EDP HSE Consultants Ltd. Retrieved from https://www.edp-uk.com/newsletters/cdmregulations2007.htm Estates and Facilities Division Quarterly Brief. Explained Know your CDM 2007 role? V16.NO.1. Retrieved from https://www.nhs-procure21.gov.uk/news/downloads/20/cdm_1_.pdf Grove Services (UK) Limited. 2009. Construction (Design and Management) Regulations (CDM). Retrieved from https://www.groveservices.co.uk/?p=49 Heghes, Phil. 2008. Introduction to Health and Safety in Construction. Page-2-3. Elsevier LTD, UK. HSE. 2007. Improving the effectiveness of the Construction (Design and Management) Regulations 1994. BOMEL Limited. Retrieved fromhttps://www.hse.gov.uk/research/rrpdf/rr538.pdf IET. 2008. Construction Design and Management Regulations (CDM 2007). Health and Safety Briefing No, 6. Retrieved from www.theiet.org/factfiles/health/hsb06.cfm?type=pdf Imperial College London. 2007. Construction (Design and Management) Regulations 2007. Denis Murphy Grad IOSH MIIRSM MAPS. Retrieved from https://www3.imperial.ac.uk/pls/portallive/docs/1/11549696.PDF Jones Day Law Firm. 2007. The Construction (Design and Management) Regulations 2007 Some Key Changes to Health and Safety Legislation Affecting Construction Projects in Great Britain. Retrieved from https://www.jonesday.com/newsknowledge/publicationdetail.aspx?publication=4225 Leicestershire County Council. 2007. Construction (Design And Management) Regulations 2007. Retrieved from https://www.leics.gov.uk/index/business/commercial_industrial_property/construction_regulations_guidelines.htm McCormack Benson Health and Safety Consultants. CDM Regulations in Detail. McCormack Benson Health and Safety Ltd. Retrieved from https://www.mb-hs.com/cdm-regulations.htm OPSI. 2007. Health and Safety. NO, 320. Page, 2. Retrieved from https://www.opsi.gov.uk/si/si2007/pdf/uksi_20070320_en.pdf PROJEN. What is CDM? PROjEN PLC. PROjEN House. Retrieved from: https://www.cdm-regulations-uk.co.uk/. Public Sector Review. Changing the rules: CDM regulations. Retrieved fromhttps://www.publicsectorreview.com/constructionhealthandsafety/?pid=4303lsid=4558edname=23925.htmped=23925 RRC Training. CDM 2007 Are you Ready? Retrieved from https://www.healthandsafetybusiness.com/Spring07/Articles/RRC_CDM_Lft_low.pdf Report on MOM Mission on CDM Regulations Implementation in UK. 2008. Page, 2. Retrieved from https://www.ies.org.sg/e-newsletter/UKTRIP.pdf RICS Journal. 2007. Building Survey. Page, 9. Retrieved from https://www.rics.org/site/download_feed.aspx?fileID=3532fileExtension=PDF Safety 1st. 2009. HSE Initiatives. Page, 6. Retrieved from https://www.hvserviceplan.co.uk/Newsletter%20February%202009.pdf Salford City Council. 2007. POLICY GUIDE (30) CDM 2007 AND RELATED PROCEDURES. IN Salford. Retrieved from https://services.salford.gov.uk/solar_documents/CSSLMR140108B.DOC Strategic Forum for Construction. 2007. Health and Safety Performance in the Construction Industry. Fifth Report for the period February 2006 to January 2007. Retrieved from https://www.strategicforum.org.uk/MSWord/SFReporttoMinisters280607%20Final.doc University of Oxford. 2008. University Policy Statement S7/08. Retrieved from https://www.admin.ox.ac.uk/safety/ups0708.shtml Veritas Consulting Safety Services. Construction (Design and Management) Regulations 2007 (CDM 2007). Retrieved from https://www.veritas-consulting.co.uk/Documents/CDM%202007%20Regulations%20Summary%20of%20Duties.pdf

The Expansion Of Internet During The United States

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Carnival Case Issues Free Essays

string(53) " Since defueling on Costa Concordia began until 7 a\." SPRING 2013 – GLOBAL STRATEGY AND POLICY MAN4720009_2013S_11202: , Schwartz: Tuesday and Thursday 9:30 to 10:50 AM – LA 331 GLOBAL STRATEGY AND POLICY MAN4720009_2013S_11202 Spring, 2013 Prepared for Professor Harry Schwartz, March 14, 2013 by the following students: Robert OndercikZ8384Finance Ron AbrahamZ4458Accounting Jenna FranzoneZ3483Business Management Tabitha Palmisano Z0857Marketing Jeffrey VonZ7035Accounting Aaron SchneiderZ0653Business Management Sabine BorgesZ7510Accounting 1. Current Situation: CRITICAL CASE ISSUES Human Relations (CI #1) Employee and Labor Lawsuits Employees of Carnival are claiming unfair working conditions with poor compensation. (CI #2) Succession Mr. We will write a custom essay sample on Carnival Case Issues or any similar topic only for you Order Now Arison stepping down in the future, who will run company, third generation Arison or someone else. Operation/Logistics (CI #3) The Costa Concordia Cruise Ship lawsuit Cruise ship laying on side, environmental risk, and lawsuits from crash. (CI #4) The Carnival Triumph dead at Gulf of Mexico Pending lawsuits from this event, leading to more negative publicity (CI #5) US Corporate Tax Congress continues to try to charge Corporate taxes on Carnival, but has failed recently. This could change soon. Marketing CI #6) Serving on 20 % of Americans It becomes expensive for customers to get to ports to cruise, discouraging some customers from cruising. Carnival Corporation plc is currently the largest cruise company in the world and is among the most profitable and financially strong leisure travel companies in the world. Carnival Corporation PLC’s portfolio of cruise brands in North America, Europe, Australia and Asia are comprised of Carnival Cruise Lines, Holland America Line, Pri ncess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, PO Cruises (Australia) and PO Cruises (UK). Collected, these brands operate 100 ships totaling 203,000 lower berths with nine new ships scheduled to be delivered between March 2013 and March 2016. Carnival Corporation PLC is the only group in the world to be included in both the SP 500 and the FTSE 100 indices. A. CURRENT PERFORMANCE Carnival reported net income for the year 2012 decreased to $1. 3 billion compared to $1. 9 billion for the prior year due primarily to a combination of lower revenues and higher fuel prices. Revenues declined $410 million primarily as a result of the Costa Concordia incident. Net revenue yields declined 2. 5 percent due primarily to lower cruise ticket prices and occupancies for the Costa brand. Excluding Costa, Carnival was able to maintain year 2012 net revenue yields in line with the prior year. Even with the many challenges faced in 2012, Carnival generated $3 billion of cash from operations, more than enough to fund our net capital investments of $1. 8 billion. All of the subsequent free cash flow was then returned to shareholders. Carnivals regular quarterly dividend of $0. 25 per share, combined with a special year-end dividend of $0. 50 per share, resulted in $1. 2 billion of distributions to their shareholders. Carnival also purchased 2. 6 million of the company’s shares in the open market at a cost of $90 million during 2012. B. STRATEGIC POSTURE * Carnival remains dedicated to profitably growing our cruise business and driving returns on capital higher. Carnival will continue to increase their fleet through a measured pace of two to three new ship introductions each year. Some of these vessels are expected to replace existing capacity from the possible sales of older, less-efficient ships * Currently, Carnival has nine cruise ships scheduled for delivery through March 2016. * In addition, Carnival is focused on the growth of developing cruise regions. During the previous five years, Carnival has doubled their guest sourcing fro m up-and-coming markets, a trend Carnival expects will continue in the future. CI #6) * Carnival and its Operating Lines place the uppermost importance on guest health, safety and security. Carnivals objective is to maintain an exceptional health, safety and security record. As well as constantly strive to better our health, safety and security standards and procedures. (CI #3 and 4) 1. Mission â€Å"Carnival Corporation plc mission is to take the world on vacation and deliver exceptional experiences that appeal to a large variety of consumers, all at an outstanding value. † 2. Objectives To our stakeholders, this mean: Consumers | Take the world on vacation and deliver exceptional experiences that appeal to a large variety of consumers, all at an outstanding value| Employees | Recruiting and Retaining Qualified Employees. Carnival considers their employee and union relations generally to be good| Business Partners | Carnival shall communicate with our business partners frequently to ensure that we receive high-quality products and services and that our ships receive the goods and services that they need to operate sustainably. Shareholders| The strength of their people, values, culture and mission has driven superior returns for their shareholders. A dollar invested in Carnival stock 25 years ago would be worth 19 times that today, representing a total return almost twice that of the SP 500 over the same period. | Communities | Carnival strives each and every year to make a difference in their homeports and various regions around the world in need. During the past year Carnival Corporation plc gave nearly $10 million to charitable organizations, including a $2 million donation to support Hurricane Sandy relief efforts. | 3. Strategies * Carnival now has its ships in ports that are within reasonable driving range for a good portion of the country. Galveston, San Diego, Mobile, New Orleans, Charleston, Baltimore and New York all have Carnival ships sailing from their ports, making it cheaper and easier for more Americans to cruise. CI #6) * Identify those managers responsible for implementing health, environmental, safety and security performance and ensure that there are clear lines of accountability. (CI #3 and 4) * Promptly report and properly investigate all incident and take appropriate action to prevent recurrence (CI #3 and 4) * Establish and act upon goals and objectives to continually improve our performance * Continue to publicly report to and maintain open dialogue and cooperation with key stakeholders (CI #3 and 4) * Carnival operates Under Section 883 of the Internal Revenue Code; certain non-U. S. corporations (such as our North American cruise ship businesses) are not subject to U. S. federal income tax or branch profits tax on U. S. source income derived from, or incidental to, the international operation of a ship or ships. (CI #5) * Since defueling on Costa Concordia began until 7 a. You read "Carnival Case Issues" in category "Essay examples" m. Feb. 17, a total of 251,492 gallons of fuel have been pumped out of 4 tanks located on the ship. (CI #3) * According to Costa Cruise, a total of 377,237 gallons of fuel is still onboard in 13 tanks. Following the schedule drawn up by the Neri/Smit Salvage experts, if sea and weather conditions remain favorable, all of the fuel still on board the vessel should be removed within three weeks. (CI #3) * Carnival has several defined contribution plans available to most of their employees. Carnival also has single-employer defined benefit pension plans, which cover some of their shipboard and shore side employees. (CI #1) 4. Policies Protecting the health, safety and security of Carnivals passengers, guests, employees and all others working on behalf of the Company * Protecting the environment, including the marine environment in which Carnivals vessels sail and the communities in which we operate * Continue to follow Carnivals Corporate Standards which go considerably beyond the requirements of current environmental law and regulations. * Carnival is primarily a foreign corporations engaged in the business of operating cruise ships in international transportation. (CI #5) Key Executi ves: Mickey Arison: Chairman and CEO of Carnival Corporations David Bernstein: CFO and senior Vice President of Carnival Corporations Howard S. Frank: Vice Chairman and Chief operating officer Alan B. Buckelew: CEO and President of Princess cruises Gerald R. Cahill: CEO and President of Carnival Cruise lines Larry Freedman: Chief Accounting Officer and Vice President-Controller Michael Thamm: CEO of Costa Crociere, S. p. A. Arnaldo Perez: Senior Vice President, General Counsel and Secretary Stein Kruse: President and CEO of Holland America Line David Dingle: CEO of Carnival UK Michael Ungerer: President of AIDA Cruises Board Members: Mickey Arison: (Internal) President since 1979 and CEO since 1990 Howard Frank: (Internal) Vice Chairman of the board of directors of Carnival Corporations since 1993, and Chief Operating Officer since 2003. Pier Foschi: (Internal) on the board of directors for Carnival Corporation since 2003. Chairman and CEO of costa crociene SpA. A vice chairman of confitama, the federation of Italian ship owners. Robert Dickinson: (Internal) Director of Carnival Corporation since 1987 and of carnival plc. since 2003. He served as president from 1993-2007 and CEO of Carnival cruise lines from 2003-2007. Jonathon Band: (External) Director of Carnival Corporation and Carnival plc. Since 2010. Stuart Subotnick: (External) Director of Carnival Corporation since 1987 and of carnival plc. Since 2003. Richard Glasier: (External) Director at carnival corporation and carnival plc. since 2004. From 1995-2002 he was executive vice president and CFO of royal Caribbean cruises. Arnold Donald: (External) Director of carnival corporation since 2001 and a director of carnival plc. ince 2003. Modesto Maidique Ph. D: (External) Director of Carnival Corporation since 1994 and of carnival plc. since 2003. He also served as FIUs president from 1986-2009. John Parker: (External) Director of Carnival Corporation since 2003 and of Carnival plc. since 2000. He served as Deputy Chairman of Carnival plc. from 2002-2003 Laura Weil: (External) Director of Carnival Corporation and carnival plc. since 2007 Peter Ratcliffe: (Ext ernal) Director of Carnival Corporation since 2003 and director of Carnival plc. since 2000. 003 to 2007 he served as the CEO of PO Princess cruises. Randall Weisenburger: (External) Director of Carnival Corporation and Carnival plc. since 2007 Debra Kelly- Ennis: (External) Elected to the committee of the carnival Corporation and carnival plc. in January 2012. Conflicts of Interest: Richard Glasier was once the CEO of Argosy gaming and although no longer the CEO he still is a chairman and major shareholder of the company. Argosy gaming mostly deals with casinos but also operates riverboat gambling cruises. There is a definite conflict of interest because he is not only concerned with the success of Carnival Corporation but also Argosy gaming success as well. Even though he is not the CEO anymore he still converses with the top management of Argosy and is up to date about what’s going on within the company as well as knowing about what’s going on in Carnival too. This means he might have information on the companies such as release dates for new ships or new specials that he cannot share with the board members of the other company and if he did it would be ethically wrong. Therein lies the conflict of interest, if he was not on both board then there would be no conflict. Being on both boards is a conflict of interest because he is not only concerned with the success of Carnival but also Argosy gaming as well. Since 2010, Start Subotnick has been the president and CEO of Metromedia. Metromedia is a holding company that has many subsidiaries that operate in various activities such as restaurants, internet, software technology, and more. The main conflict of interest for Subotnick is that Metromedia develops software for the hospitality industry. Since Carnival uses hospitality software to perform most tasks such as when you get checked at the port to the server on the cruise ship placing your dinner order, it would be in Subotnicks best interest to try to get Carnival to use Metromedia’s software. This is a conflict of interest because it might not be what’s best for the Carnival but it what’s best for Metromedia. Mickey Arison: Mickey Arison, CEO and chairman of Carnival Corporation is #64 on Forbes billionaire list in the United States. His father ted Arison founded carnival cruises in 1972. Mickey started working for the company in sales. He quickly moved up the ranks not just because of who his father was but because he was hard working and had great ideas. In 1979 he became president and finally in 1990 he became the CEO and he currently still holds that position. He turned carnival into what it is today, which is the world’s largest and most successful cruise ship company. Mickey said the best lessoned he learned from his father was to â€Å"hire good people to run your businesses, give them the support they need to be successful, and let them do the job you hired them to do. He is known for his â€Å"hands-on† or â€Å"open door management style. He lets his employees’ do their own thing because he knows that they will do it right and he doesn’t have to be watching over them in order for things to get done because he hired the right people. Micky Arison goes above and beyond what a manager does. He is to say the least a competent manager. His company has been the most successful and r ecognizable cruise line in the world for over two decades. Arison learned the basics of the company from the bottom so he could really understand the company and make better decision for the company as a whole down the road. He directed his company to make many acquisitions, including their most important, the acquisition of the PO princess cruises. Royal Caribbean also wanted to acquire the line so it was not an easy fight. Luckily for Arison they got it and with the acquisition it made them a clear industry leader. David Bernstein: David Bernstein Started with carnival in 2003 as vice president and treasurer. He was then promoted in 2007 to senior vice president and CFO. AS CFO and VP of carnival he overlooks all finance, treasury, insurance, accounting, tax, and investor relations. Howard Frank: Howard frank has been Vice Chairman of the board of directors of Carnival Corporations since 1993, and Chief Operating Officer since 2003. He is responsible for the corporate-wide business strategies. He works closely with all carnival corporation management, especially with Mickey Arison. He provides oversight to Mr. Arison of the companies many worldwide ventures. He also serves as a chairman of the executive committee of the cruise line international association. (CLIA) Partnership Management: Based on the information gathered the Carnival Corporation shows a partnership management model. They have many characteristics of this model. There is a high degree of involvement by top management and an equally high degree of involvement from its board members especially since their CEO is also their chairman and they also have a few other top guys on the board. * This enables the top management and board members’ to work more closely with each other to develop strategies and to co nverse on a daily basis about the many things going on in the company. * Howard frank who is the vice chairman of the board is known for working closely with all management of Carnival Corporation plc, As well as with Micky Arison himself, the CEO and chairman of carnival. When disaster strikes the company’s senior management team and board members take on the responsibility for what’s going on and work together to come up with the best strategy to fix the problem. * Also the board creates committees by matching certain members’ functions to their expertise. For instance, David Bernstein was promoted to senior vice president and Chief financial officer in 2007 because of his expertise in finances. He was the CFO of Cunard line and Seabourn cruise line for five years and before that he held various financial positions at royal Caribbean for seven years. Carnivals board consists of 15 members. 3-A. External Environment: Opportunities and Threats A. Natural Physical Environment: Sustainability Issues 1A. Opportunities a. The climate could be a benefactor since nice weather usually attracts tourism and cruising. 1B. Threats a. When the weather is not pleasant on the coasts of the United States, there may be a negative impact on the num ber of cruise ships sailing since the shipping ports are located in these areas. For example, during the hurricane season, cruises along the Atlantic and Gulf coast do not set sail due to danger the storm may bring. . The weather in places like Europe, is not as threatening when it comes down to storms compared to the United States. This lessens the degree of one threat in the European market for Carnival cruise lines. B. SOCIAL ENVIRONMENT 1. Opportunities Economic: * | Potentially expand their luxury liners which can cause an increase in revenue. (CI#2)| * | Increase their capacity of their cruises by 30-40%. (CI#2) | * | Offer more travel destinations that they currently do not offer, such as China, India, and various countries in South America (CI#2) | Technological: | Improvement of the technology on the cruise. | * | Working on their home web page since millions of people visit this site daily. They can improve their format so that it would be better understood and easier to n avigate by people in foreign countries. | * | Using more technological machines for the cleaning staff; for example, to check off each room that was cleaned or is in need for something, such as towels, toiletries, blankets, etc. (C#1)| Political-legal: * | Avoiding paying some of the taxes that other companies in the same industry pay for. CI#5)Ship waste disposal is highly unregulated; waste is dumped off shore without any consequences from a legal point of view. (CI#5)| Sociocultural: * | The diversity of customers that are traveling with Carnival Cruise Lines for their vacation get-away is very large. (#CI2)| * | Brand name is well known among the society. | * | Reached an agreement with Italy’s Fincantieri shipyard to build a 2,660-passenger vessel for Holland America and a 4,000-passenger vessel for Carnival. Ships should be delivered by 2015. This will generate more revenue in the future. CI#2)Some people take a cruise with carnival just to gamble in the casino because some states do not have any casinos at all. | 2. Threats Economic: * | Prices of fuel constantly increase. (CI#6)| * | One of the biggest weaknesses that the company and the industry itself are facing is hurricanes and bad weather during specific seasons. Revenues go down, refunds go up. | Technological: * | Technological problems on-board which can be a big threat for Carnival. For example, the latest incidence was last month. Carnival ship was stuck at sea for almost a week because of technological mishaps. This caused many lawsuits, refunds, and a bad reputation for the brand. (CI#1)| | | Political-legal: * | Progressive accumulation in water waste caused the cruise line to pay millions in fines. | * | More regulators are trying to force Carnival and other cruise line companies to pay more taxes. (CI#5)Major law-suits of the sinking Costa Concordia. (CI#3)| | | Sociocultural: * | Seasick; some people can’t take a cruise because they get seasick after a while. People that suffer from this generally do not board lengthy cruises. | * | Most people do not eat at the higher class restaurants because the dining room is complementary. Most passengers are generally not looking to spend more money on a cruise that was already paid for and clearly states that it is â€Å"all inclusive†. (CI#6)| * | For some people cruises can be very pricy. (CI#6)| | | 2. Some of these opportunities and threats are different in other parts of the world because of different climate, economical issues, and different regulations. III. Internal Environment: Strengths and Weaknesses A. Corporate structure 1. Carnival Corporation and Carnival plc operate under a dual listed corporation structure with primary stock listings in the United States and the United Kingdom. Carnival corporate structure is based on the concept of â€Å"profit center. † a. The decision making authority is decentralized. b. The corporation is a fleet organization worldwide. For the most part, most of Carnival business runs in North America and Europe. 2. Carnival keeps telling its employees this phrase: â€Å"do one thing and do it better than anyone else†. Well that could sound very promising, but from a personal experience I enjoyed royal Caribbean a lot more than I did with carnival. Whatever the CEO preaches to the employees does not really justify the truth. To clarify, Micky Arison the CEO of the company quotes: â€Å"Carnival doesn’t view a cruise the way Procter Gamble would view toothpaste or Dial would view soap. Each of Carnival’s lines has its own personality and corporate focus. † (CI#2) 3. The current structure of the company is pretty much consistent with all of its objectives, strategies, policies and programs, as shown and seen in their financial report their profit keeps increasing. (CI#2) 4. The structure of Carnival cruise is very similar to the other cruise companies that strive to succeed and make money. B. Corporate culture 1. Carnival Corporation maintains a friendly, family-like atmosphere on all of its ships. I agree to this based on my previous experience on their ships. ( CI#1) 2. In my opinion, the corporate culture is consistent with current situations of objectives, strategies, policies and programs. They have an â€Å"open door† policy where each and every employee can communicate with upper division managers and let their voice to be heard, and the reason for that is to benefit the employee and potentially even benefit the company. CI#1) 3. â€Å"Unique to the cruising industry is its promotion to protect the environment. The core values include preserving the marine environment and, in particular, the pristine condition of the waters upon which our vessels sail. † This statement is posted on the Carnival website and is the biggest flaw that I have noticed with the company. They are constantly polluting the water, dumping trash into the water, and they contri bute a great deal to air pollution. Therefore the statement above is not accurate. (CI#4) 4. Carnival employs a variety of different kinds of people from various different cultural backgrounds. Many employees that work for Carnival have different ethnic backgrounds but are all being treated equally(CI#1) 5. The company does take into consideration the value of cultures of each nation the company operates in. This is shown in the diversity of Carnival employees and their cultural backgrounds from all around the world. (CI#1) 3-B. Corporate Resources – Finance IV. All numbers in millions except for ratios | 2012| | 2011| | 2010| | | Carnival| RC| Carnival| RC| Carnival| RC| Revenues| 15,382| 7,688| 15,793| 7,537| 14,469| 6,753| Operating Income| 1,642| 403| 2,255| 932| 2,347| 803| Net Income| 1,298| 18| 1,912| 607| 1,978| 515| Net Profit Margin| 8. 4%| 0. 2%| 12. 1%| 8. 1%| 13. 7%| 7. 6%| EPS| 1. 67| 0. 08| 2. 42| 2. 80| 2. 47 | 2. 4| OperatingCash Flows| 2,999| 1,382| 3,766| 1,456| 3,818| 1,663| Debt to AssetRatio| 39%| 58%| 38%| 58%| 39%| 60%| V. Financial Analysis The chart above displays a list of relevant figures and ratios for the Carnival Corporation. It is important to highlight that some of these numbers show increasingly negative results each year. If this negative trend continues it would represent a significant problem for the company, as it would become unprofitable. But how does Carnival compare to others in the industry? Two key players dominate the cruise industry. According to a report by Cruise Market Watch, Carnival Corporation controls 48% of the market share, Royal Caribbean controls 23%, while the rest is controlled in small portions by over 30 other companies (Cruise Market Watch). By generating double the revenues of Royal Caribbean, Carnival is clearly the leader in this industry. For the purpose of this section of the paper, we analyzed the financial statements of Carnival Corporation to measure the health of the company. We will also use financial ratios which best allow us to compare Carnival side by side to its smaller but closest competitor, Royal Caribbean. A notable decline can be seen in the operating income. This figure is considered by analysts to be one of the most important on financial statements because it reflects to a great extend the strength of the company and success of its core business operations (Kennon). Operating income is arrived at by subtracting operating costs and expenses from gross revenues. It is the profit that is left to invest, expand, pay debt, distribute to shareholders, and achieve other objectives that a company may have (Kennon). For Carnival Corporation, Operating income declined 27% from 2011 to 2012. Let’s see why. Carnival mainly generates its revenue from the sale of cruise tickets and onboard items and services (Carnival). Although revenue has remained stable in the past years, operating income has been declining which indicates that the company is making less and less profit of the revenue it generates. This could be due to several reasons, but in the case of Carnival Corporation, there are two major factors. One is the rising price of fuel. Cruise companies are heavily dependent on fuel and any change in its price has a significant impact on the company’s financials (Carnival). From 2011 to 2012, the carnival’s fuel expense increased 7% or $188 million. Another factor that has affected profits for the company is accidents. In its annual report for fiscal year ending 2011, Carnival Corporation included a note to its shareholders regarding the tragic event of the Costa Ship (Carnival). It states that the company takes careful measures to prevent accidents such as the Costa cruise incident (Carnival). In the 2012 Income Statement, Carnival Corporation reported $28 million for â€Å"ship incident-related expenses that were not covered by insurance, including a $10 million insurance deductible related to third party personal injury liabilities (Carnival) CI#3. It is safe to expect that in the 2013 financial statements, Carnival Corporation will again report incident expenses not covered by insurance and possibly higher ones due to the â€Å"Triumph† ship incident CI#4. Although Carnival’s decline in operating income is significant, Royal Caribbean’s 56% decline truly is worrying. Even though Royal Caribbean had nothing to do with the Costa ship incident, there were indirect consequences that affected the company. Royal Caribbean had to report a $413. 9 million impairment loss because â€Å"booking volumes and pricing are down substantially in Spain due to the impact of additional austerity measures there, the lingering impact of the Costa Concordia tragedy and other factors†(Royal Caribbean). Now let’s compare the two companies in terms of efficiency generating profit. The profit margin ratio shows how much after-tax profits are generated by each dollar of sales (Kennon). It is a good indicator of how efficiently a company manages its resources and how well it keeps costs under control. Carnival Corporation has an 8% profit margin. In other words, of every dollar that the company receives from sales, only eight cents represent profit. With expenses increasing more than revenues each year, a low profit margin represents another sign of potential unprofitability. However, taking into consideration Royal Caribbean’s 0. 2% profit margin, which means that they keep much less than a penny for every dollar they sell, Carnival Corporation is performing much better than Royal Caribbean. Off course, there are additional expenses that are not calculated in operating income like interest and tax expenses. It is worth mentioning that carnival corporation currently does not pay any U. S. federal income taxes because it qualifies for the benefits of section 883 of the Internal Revenue Code (Carnival). Section 883 basically states that some non-U. S. corporations that generate income from the operation of ships are not subject to federal income tax in the United States (Carnival). However, the closing of this tax loophole could become a potential threat for Carnival, as it would significantly affect their net income in subsequent years CI #5. Senator Jay Rockefeller of West Virginia confronted representatives of the cruise industry in a hearing last year (Walker). Senator Rockefeller questioned why Carnival, a company that sells to many American and extensively benefits from the resources of forty U. S. ederal agencies, gets to pay no federal income taxes (Walker). Let’s analyze the Debt to Asset ratio, measured with total assets and total liabilities. Carnival Corporation has a 38% Debt to Asset ratio which by itself represents an okay picture. More specifically this means that debt was used to finance 38% of the assets. On the other hand, Royal Caribbean has a 58% debt to asset ratio which indicates that the company m ay run into problems borrowing more money in the future. For its debt, Carnival paid $336 million in interest in 2012, a healthy amount compared to the $2. 3 billion operating income (Kennon). Operating income divided by interest expense gives us interest coverage ratio, which indicates problems when it is below 1. 5 (Kennon). But carnival has a 4. 8 interest coverage ratio which means that there is still room for earnings to decrease before the company would default on bonds and loans for not being able to keep up with interest (Kennon). But will Carnival be able to meet short-term liabilities? The current ratio is short-term indicator of the company’s ability to pay its short-term liabilities from short-term assets; how much of current assets are available to cover current liabilities (Kennon). A healthy current ratio is greater than 2, but for Carnival Corporation’s is only 0. 25 which indicates that meeting current obligation could be a problem for the company (Kennon). But again we see that Royal Caribbean may have a bigger of a problem since their current ratio is only 0. 08. Another important factor to point out from the financial statements is that operating cash flows show a declining trend. From 2011 to 2012, cooperating cash flows declined 20%. What this means is that unless the current trends change, the company may start running out of cash and become unable to fulfill its obligations, which could lead the company into filing for bankruptcy. Interestingly, Royal Caribbean’s cash flows also declined 20%. However, it is worth mentioning that cruise companies have the advantage of receiving money for unearned revenues because cruise tickets are generally paid in advance. It’s like getting loans at 0% interest. Another important figure to analyze is Earnings per Share (EPS), which is especially important to stockholders. Carnival’s $1. 67 EPS means that if net income was divided amongst all outstanding shares, investors would receive $1. 67 per each share owned. Although a good EPS does not necessarily represent company strength or weakness, its changes affect the price of a company’s stock and therefore it is one of the most looked at figures by investors (Kennon). Based on EPS only, Royal Caribbean may not be an attractive choice of stock since their EPS is only $0. 08. Corporate Resources – Marketing Product (Service) Carnival sells cruise tickets for vacations around the globe. Although Carnival markets the experience on the cruises as the vacation destination, their ships go to hundreds of destinations worldwide. Carnival sells numerous products and services onboard either directly or through independent concessionaries from which a commission is collected. Some of the onboard products and services offered that are not included in the ticket price include â€Å"liquor and some non-alcoholic beverage sales, shore excursions, casino gaming, gift shop sales, photo sales, full service spas, communication services, art sales, a wide variety of dining options and laundry services† (Carnival). Moreover, Carnival offers shore excursions and activities, and depending on the destinations, it owns or has stake in hotels where customers are offered a stay in a vacation package. In addition, carnival owns or leases private islands where it operates â€Å"among other things, beach bars and restaurants, water sports, sky lifts, cabana rentals and a surf rider attraction† (Carnival). Promotion: Carnival’s annual report states that each of its brands has â€Å"comprehensive† advertising programs designed to attract the local market. The principal mediums used for marketing and advertising are television, magazine, radio, outdoor billboards, direct mail, e-mail, online websites, online advertising and social media† (carnival). Social media’s utilized are facebook, Twitter, YouTube and Pinterest. In 2012, Carnival’s facebook pages reached over five million â€Å"likes†. In addition, Carnival has â€Å"past guest recognition programsâ₠¬  designed to give past guest’s incentives such as reduced prices and gifts in order to create customer loyalty. Price: Through its many brands, ships, and packages, Carnival claims to provide an option for every generation, taste, lifestyle, and off course, budget. The company categorizes their â€Å"cruise experiences† as contemporary, premium, and luxury. A contemporary experience is the cheapest and most casual alternative, lasting a week or less. A premium experience is designed for experienced consumers with an emphasis on quality, comfort and style and lasts from a week to two weeks. The most expensive alternative is the luxurious, which provides high standards of accommodation and service in a smaller cruise. All cruise tickets include dining and entertainment but other options are available at additional prices. Carnival’s brands all offer special promotions, early booking or past guest recognition programs that reduce the regular price of a vacation. But regardless of the type of experience and discounts taken, cruise ticket prices can vary due to many factors including demand and season. To have little bit of an idea of prices we went through the steps of booking a vacation on carnivals website. The first thing we noticed on the carnival-U. S. website was a sale of â€Å"up to $200 off + free upgrades for 3-5 day sailings† or â€Å"up to $400 off + free upgrades for 6+ day sailings. Using this sale, for travel in July and departing from Miami on a cruise to Bahamas, the cheapest alternative per person came out to be $330. On the other hand, high-end vacations can cost thousands of dollars. Place: Consumers can always book their cruise vacation directly on the company’s website. But according to Carnival Corporation, their cruise vacations are sold â€Å"mainly through travel agents, including wholesalers, general sales agents and tour operators that serve our guests in their local markets† (Carnival). Accordingly, the company puts a lot of emphasis on their relationship with travel agents. Carnival provides additional commission incentives to travel agents in order to motivate them to sell more of carnival’s vacations. Carnival also provides agents with educational tools such as training seminars, online courses, and videos for them to better understand and sell Carnival’s products and services (Carnival). . TASK ENVIRONMENT Threat of New Entrants: medium * Economies of scale: expansion of current companies is the greatest weapon against new entrants. The few leading companies, Carnival, Royal Caribbean, ; Disney, purchase or build larger ships or renovate older ships. Carnival, the leading giant of the industry, â€Å"As of January 20 11, the company operated 98 cruise ships with a passenger capacity of 191,464 berths. The company operates through four segments: North America cruise brands; Europe, Australia and Asia (EAA) cruise brands; cruise support; and tour and other. (â€Å"Global hotels†, 2012) * Government regulations: as a global industry, it is very difficult for government of any particular countries to impose regulations. Therefore lack of enforcement or adherence to regulations regarding employment, safety, and health requirements make it less bureaucratic for a new entrant. * Capital requirements: large capital is required to own and maintain a ship. * Product differentiation: many companies offer a variety of theme cruises to attract or cater to different needs or preferences. It is an opportunity for a new comer although quite difficult to grasp. Access to ports cannot be so easily obtained. There are very few ports embarkations in populated cities. Giant companies sometimes share ownership of ports when they financially contribute with state government to build them. Rivalry: medium high * Capacity growth: the cruise industry is driven by capacity maximization; every square inch of space must be utilized to accommodate and maximize the experience of the passenger. * Service characteristics: cruises and ships are designed to cater to the various ‘wants’ and preferences of different demographic around the world. Many cruise lines difference themselves by the amenities or destinations they provide or offer. This uniqueness in the service adds an edge to the competitive field. Creativity is key in designing cruise themes that respond to or attract unexploited market niches. * Rate of industry growth: based on various reports the industry is growing at a much slower pace in North America than Europe and Australia. The slow growth may be because of the economic downturn that we are facing or it may be the result of how difficult it is for the cruise industry to reach the wallets of more Americans. Number of competitors: the industry is somewhat fragmented and few competitors have a hand in multiple niches. Competition is very high in the industry because they are fighting for a bite of a pie that is already small. The companies try to maximize their revenues by offering attractive prices and exotic destinations to customers. (Lester, Thyne, ; Weeden, 2011) * Switching cost: can be high or low ba sed on the type of cruise that is analyzed. Threat of Substitute Products or Services: medium high * Existence of substitutes: land-based vacations are the biggest threat to the industry. The cost is half or one third less expensive, the vacationer has more control in land than over sea, greater sense of security towards land than sea. Although land transportation does not provide the sea experience that a cruise does, it is by far preferred to sea transportation. Also, a cruise is considered a luxury item and can be compared to the purchase or acquisition of luxurious items such as jewelry, high-class automobiles or whatever else discretionary money is used for. A cruise is not a necessity; it is a choice, a reward or a gift to oneself or loved ones. The rating of medium high is mostly due because of the fact that choosing a cruise over a road trip, a flight, a hotel is determined by preference and affordability. * Switching cost: the only cost is the loss of the experience of the cruise. Power of Buyers: medium low * As a luxury item, the cost of a cruise is not negotiable. The expectation of a high cost is lightly brushed with the hope that a cruise will not drain a savings account. The buyer does not have a significant influence on the price. Prices are more inelastic than elastic. Backward integration is quite impossible, the capital necessary to lease or purchase a ship is over tens of thousands dollars. Average passengers cannot afford it. * Alternative suppliers do exist but high product differentiation does not allow the buyer to compare oranges with oranges, more likely the buyer has a choice between grapes or oranges. Moreover, the same company under different names may offer different theme or budget cruise. Cruise com panies own more than one cruise lines, therefore choosing one cruise line over another may not represent a competitor’s advantage. Carnival and Royal Caribbean cater to different income brackets, Windstar offers exotic destinations for adventurers, Disney Cruise Lines are more family oriented. (Deep sea, 2012). * Due to the hefty price of a cruise, the buyer has a high expectation about the service. The demands and expectations of buyers greatly influence the marketing techniques and expansion projects that cruise companies undertake. Brand recognition is a magnet to create and retain customers and helps increase demands. Power of Suppliers: medium high * Supplier dominance: only a few companies build ships, provide staff and services to cruise companies. Forward integration for suppliers is less likely but backward integration for the cruise line industry is highly possible. Carnival uses backward integration to reduce costs and retain control of how its ships are built. * Product and services that the suppliers provide to cruise lines is very unique and specific to that industry; switching cost is high. What t hese suppliers make or produce can only be sold to the cruise industry. * Economies of scale: purchasing industry is very important to the supplier. All the major cruise companies own at least 5 to 10 cruise lines; which strengthen their purchasing power. However, there are not that many suppliers to choose from. Having limited purchasing options, increases the power of the suppliers. Relative Power of Other Stakeholders: very high * Special interest groups: environmental activists voice their concerns to the industry and directing their attention to fuel emissions, waste water dumping and few others. Thousands gallons of sewage and water bathroom water are discharged untreated in the ocean daily. Onboard observers are placed on ships that use ports in Alaska to ensure that wastewater is sanitized before being dumped in the ocean (Klein, 2011). In his article, Klein also indicated in his article that the daily fuel emission of one cruse ship could be equivalent of that of thousands of cars. * Loyal customers: their perception regarding the safety of the industry affects their decision about whether to use discretionary money on a cruise or elsewhere. It also taints their views of the brand recognition. They are less likely to refer that cruise line or to become repeat customers. * Travel agencies: most cruises are sold and advertised by travel agencies. Travel agencies are described by Cruise Lines International Association (CLIA, 2011) as ‘the distribution channel offering the best service† to the cruise industry. * Government regulations: even though some of the big companies have headquarters in the USA, they are incorporated in Antillean territories such as Panama, Bahamas, and Virgin Islands. Doting a ship with a flag registered in countries like Liberia and Panama, becomes a convenient avoidance tool that shields the cruise companies from adhering to labor and environmental laws, health and safety regulations, and most importantly avoid paying corporate taxes. Airlines industry: they provide means of transportation to different ports (from one state or one country to another), when airfares are high, it adds to the cost of transportation to a port. To overcome this dependence more ports are being built in areas that can be driven to. * Local communities: when a cruise ship arrives at a destination, the community of that foreign location receives the passengers. How passengers and the cruise line are received affect how the cruise experience is perceived. * Global workforce: many describe the work environment as ‘sweat ship’ and it does not project positively on the companies. In the cruise industry, employees are in contact with passengers 24 hours a day and for several days; an unhappy or miserable employee is contagious. It does affect indirectly the bottom line of the company. Lack of respect, living quarters, rigorous demands of the job, being underpaid, language and culture differences separate the cruise workforce from the visibles and the invisibles. The cruise industry is part of the service sector; an unhappy, mistreated, undervalued workforce does not contribute to a pleasant experience for the passenger (Agaard, Larsen, ; Marnburg, 2012). SWOT ANALYSIS Strengths:1- wide variety of theme cruises Case issue #6 2- largest ship capacity Case issue #63- backward integration4- heavily invest in marketing Case issue #65- experienced managenent Case issue #1, #3 ; #4| Weaknesses:1- Corporate culture regarding ship workforce Case issue #12- PR handling of current sea tragedies Case issue #3 ; #43- HR: employee training and recruitment Case issue #1| Opportunities:1- partnership with travel agencies Case issue #62- leader in environment protection ; safety Case issue #3 ; #43- Adopt a global standard of ethics ; conduct Case issue #14- develop a positive rapport with ship workers Case issue #15- treat labor force as valuable contributors Case issue #1| Threats:1- Extra costs (taxes, cleaner waste water) Case issue #52- slow growth of North American market3- workforce motivation Case issue #14- land-based transportation and hotel resorts Case issue #65- brand recognition mudded by sea tragedies Case issue #3 ; #4| MODIFIED TOWS SO Cross referencing * The capability of backward integration puts Carnival in a better position to build ships that are safer friendlier to the environment while controlling costs. S3, O2 Case issue #3 ; #4 * Experienced management can develop standards that could help improve the workforce environment on board. S5, O3, O4, O5 Case issue #1 * Sharing marketing techniques with travel agents may improve and strengthen their relationship. O4, S1| WO Cross referencing * The tone starts at the top. A workforce that feels valued and adequately paid strengthens the base of any company. W1, O3, O4, O5 Case issue #1 * Actions speak louder than words. W2, O2, Case issue #3 ; #4 * Treating employees as valuable contributors helps HR in their recruitment strategy. W3, O5 Case issue #1| ST Cross referencing * Experienced management can use their expertise to create a working environment that empowers and values the ship employees. S5, T3 Case issue #1 * Marketing techniques is the best weapon to weaken the threat of substitutes and ‘clean’ the brand. S4, T2, T4. T5 | WT Cross referencing * When morale is low, ‘the ship may sink’. Employees are the foundation of companies, the weaker the base, the less solid is the company. W1, W3, T3 Case issue #1 * A PR is the voice of the company. After a tragedy, responsibility, reassurance, and compensation is key in re-building confidence. The opposite drills the hole deeper. W2, T4, T5 Case issue #3 ; #4| 5. EVALUATE STRATEGIC ALTERNATIVES Alternative #1 Pause/Proceed with Caution Strategy: Proceed with caution until they are able to evaluate how the new tax and fuel regulations will affect the company and how to go about decreasing lawsuits due to employee exploitation and onboard guest safety. (CI #1, 3, 4, 5) Pros: * Customers will continue to do business with Carnival if they feel that they are working to improve the ship’s safety. * Employees put forth more effort if they do not feel as though the company is taking advantage of them and increased motivation from the staff can increase the company’s bottom line. Cons: * Only making small changes gives the competition a chance to catch up. * Nothing can be done to stop new regulations, so the company is bound to lose profits if there is an increase to fuel prices and taxes. Alternative #2 No-Change Strategy: Since Carnival Corporation ; PLC has the largest ship and passenger capacity in the cruise industry with many diverse brands they can continue to do what they have been doing and hope they remain ahead of the competition even with the replacement of Mr. Arison in the future (CI #2). Pros: * Carnival is already one of the most profitable cruising companies with a 47% market share in the UK, 68% in Italy, 51% in Germany and 45% in France, so they are dominating the global market competing mainly with Royal Caribbean. * Doing nothing new gives the company time to fix some of the current issues. Cons: * Competition could pass and take control of market if Carnival sits idly by especially with growing customer concerns about safety of the ships. Profits are already decreasing from previous years so doing nothing new could keep the company from enjoying profits that could be acquired with innovative ideas. Alternative #3 Horizontal Growth Concentration Strategy: Carniva l can increase operations in the current European market as well as reaching out to new regions (CI #6). Pros: * Carnival derives a majority of its revenue (nearly 52%) from US customers which is currently on the decline, so it would be beneficial to tap into other markets around the world. * Carnival already has market presence in Europe, so it would not be as difficult to increase capacity in that region as opposed to starting fresh somewhere else. Cons: The value of the dollar against Euro appreciated from 1. 60 in January 2010 to 1. 53 by April 2010 against the Pound. If the dollar strengthens it would record lower revenue than is actually earned. * The European economy is also faltered, so profits are not guaranteed and an increase in operations could instead cause a company lose. RECOMMENDATION I would recommend that Carnival begin with the pause and proceed with caution strategy for at least 1 to 2 years. This would give them time to get the company back in line with the aspi ration of earlier business days when the safety and satisfaction of customers and employees came before the profits of the corporation (CI #1,3). Once they are back on track I would then recommend for Carnival to go forward with the horizontal growth. It is in their best interest to reach out to untapped markets particularly since there is a decline in the current US regions and they are looking for ways to increase revenues since Carnival is only currently reaching 20% of the total US market (CI #6). Growing horizontally in any market has significant financial implications for a cruise company. Considering that the newest Carnival Dream-class ships cost $740 million each (Shipcruise. org), it is a very expensive strategy to implement. In addition, the company would have to engage in research, planning, training, and marketing activities which can be very costly. Because Carnival’s balance sheet shows $465 million in cash, it will most likely be necessary for the company to borrow money to finance their growth. But borrowing money would not cause any problems for Carnival Corporation because as we analyzed earlier, the company has a healthy interest coverage ratio which measures the ability to pay interest on outstanding debt (Kennon). Although it is costly and risky, investing the money to expand into new and existing markets now, Carnival would have the potential to increase its revenues in the future years to offset the increasing costs. Carnival is already in the process of building two new ships to be entered to service in 2013 and 2014 and estimates that these two new ships will increase their passenger capacity by 19% (Carnival). Also, a continuous growth by the largest company in the industry could drive some of its competitors out of business and capture a larger market segment. 6-A. Implementation After an extensive in-depth review of the Carnival Corporation ; PLC, it is apparent, as with any large corporation it has many strengths and weaknesses. Carnival and its subsidiaries have a dominating; nearly 50% market share and strong support base among its customers. With plenty of loyal customers, and many recognizable and respected brands it would  appear to have few  problems. However, despite all the good attributes, several recent negative events have arisen concerning both  safety and corporate concerns, which have shaken the company and its shareholders. 6-B. What must be done?  ·Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   1. Shareholder Confidence  ·Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2. Safety Concerns  ·Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   3. Improvements and New Ship Building Action Steps| Responsibility| Start-End  | Financial impacts| Questions? | Concern:| WHO? | WHEN? | HOW MUCH? | What Must be done? |   |   |   |   | | 1. Shareholder Confidence| Micky Arison (CEO), Upper Management| 4/1/13-Ongoing| Determine Future Earnings|   | 2. Safety Concerns| Upper Management,Howard S. Frank (COO)| 4/1/13- 12/31/13| Cost of Training and current safety assessment|   | 3. Improvements and New Ship Building| Upper Management, Design Team,David Bernstein (CFO)| 4/1/13- 4/1/16| Set budget for cost of research| Shareholder Confidence Over the last 5 years Carnival’s stock price has  collapsed. Granted, the worldwide economy has endured one of the worst periods in history, but In 2008 the stock was trading roughly 15% higher than what it is today, and between that time it fell as much as 70% to the 2009 lows. I believe Micky Arison (CEO) should be focusing on how to re-energize and grow the company in the face of some very difficult times. I believe this could be achieved by continuing to expand to new entrant markets in Asia, Europe and Australia. The United States has been saturated for some time, with little growth and shrinking profit margins due to fierce competition. In addition the company must provide a great experience for clientele in order to ensure repeat business, which is essential to Carnival’s success. Safety Concerns Over the last couple years Carnival has experienced several bad events and even worse publicity. This has caused many to suspect wrong doings and create concerns over safety. Incidents like the MS Costa Concordia in 2012, which was one of the worst  disasters in modern cruising history, in which 34 people were killed and the ship was a total loss costing nearly 600 million dollars are a nightmare for a cruise line. In a more recent case, the Carnival Triumph endured an engine fire disabling the ship and causing the boat to be stranded at sea for several days. Although no one was hurt, it  caused a severe inconvenience to the passengers and crew. Tales of rotten food and overflowing toilets ran for several days on international media. Safety should always be of utmost concern with any industry. The last thing people want or need is to have a feeling of insecurity  on a vacation. Cruises overall have been very safe for many years but still in the back of many people’s minds the thought of the Titanic lingers. Carnival needs to make sure people know that safety is  the top priority of the Carnival Corporation. Although it shouldn’t be pushed to the point where people get scared, it definitely needs to be continuously addressed. Carnival needs to constantly implement the most modern safety techniques and they must educate the crew how to keep passengers as safe as possible. Improvements and New Ship Building Because of the fierce competition in the cruise industry it is vital to constantly upgrade older ships and build larger and more desirable new ships with more features and amenities. A new trend in the industry over the last couple decades is to build bigger and bigger ships. Cruise lines such as Royal Caribbean have been very successful over the last decade by initially building  100,000 Gross Tons ships. Since then the Oasis Class that is well over 200,000 Gross Tons has been put in service. Carnival and its subsidiaries aren’t necessarily building the biggest ships but they are uilding larger ones as well. I believe this is very important because more and more people are going on cruises for the entertainment rather than the ports. Many cruise goers are like the typical individual who want th e newest and the best and this is the reason it is pivotal for Carnival to keep up with the new trends of constant upgrades and services. 6-C. How should it be put into action? Action Steps| Responsibility| Start-End  | Financial impacts| Questions? | Concern:| WHO? | WHEN? | HOW MUCH? | How should it be put in action? |   | Micky Arison (CEO), Howard S. Frank (COO), Upper Management| 4/1/13| Determine budget in conjunction with finance dept. | Concerning safety, it must be a top priority to follow the standard government mandated procedures, which are given to the entire Cruise Industry. Carnival can go above and beyond this by simple measures such as drills and employee training. They can go beyond the recommend amount of life jacket and lifeboat requirements. I believe the biggest concern is to hold top officials such as the Captain responsible for such disasters as the MS Costa Concordia. Carnival is doing a great job in terms of shipbuilding and upgrades. They have kept up with the competition so in my personal opinion I believe the company needs to make security a given so that passengers focus on the amenities of the cruise ship. The company should also take guest recommendations seriously and look at what competitors such as Royal Caribbean are doing in newer ships and follow as well. As for the Shareholders it is important for Carnival to insure that it is strong and well managed, generating consistent profits and growth. This is very important to any shareholder and I believe this can be achieved by expanding to new markets in  Asia, Europe and Australia. Logistics is also important to have available ships to move to these new ports to expand. 6-D. Who should do it and when should it take place? Action Steps| Responsibility| Start-End  | Financial impacts| Questions? | Concern:| WHO? | WHEN? | HOW MUCH? | Who Should Do it and when should it take place? |   | Micky Arison (CEO) Howard S. Frank (COO), Upper Management,  | 4/1/13| Determine budget in conjunction with finance dept. | Carnival and its subsidiaries future expansion and safety goals need to be implemented and enforced at senior management levels in order for the employees to know that it truly is important to the company’s success. It takes a strong leader to do what’s necessary for future growth and fend off new fierce competition within the industry. It is important to start as soon as possible because the competitors within the industry will try to take advantage of Carnival’s recent problems. I believe safety is a big concern with two major issues within a year of each other. This has brought bad press and will most likely follow up with loss of customers in the future. 6-E How much will it cost? Action Steps| Responsibility| Start-End  | Financial impacts| Questions? | Concern:| WHO? | WHEN? | HOW MUCH? | How much will it Cost? |   | Upper Management,Micky Arison (CEO),David Bernstein (CFO)| 4/1/13| Set budget for cost of research| Modern cruise ships  cost no less then 250 million dollars, with the most expensive costing well over 1 billion dollars. Carnival as well as the rest of the industry has absorbed these costs by constantly upgrading ships every year or two rather then building many ships at once. They also have sold older ships to other cruise lines, or even created new cruise lines with their older ships to cut costs and continue making more money with new locations around the world. As far as safety is a concerned it shouldn’t cost much considering a large amount of the cost of new cruise ships is equipping them with the most modern safety equipment available. It is very important for the employees be able to use and know this safety equipment because it is worthless if the staff doesn’t know how to use such equipment. Work Cited Carnival PLC. (2012, March 03). Carnival corporatoion ; plc 2012 annual report. Retrieved from http://phx. corporate-ir. et/phoenix. zhtml? c=140690;p=irol-reportsother2 Carnival PLC. (2010, March 03). Carnival corporatoion ; plc 2010 sustainability report fiscal year 2010. Retrieved from http://phx. corporate-ir. net/phoenix. zhtml? c=140690;p=irol-sustainability_env Carnival Corporation ; PLC. 2012 Annual Report. Washington, DC. Mar ch 7, 2013. http://phx. corporate-ir. net/phoenix. zhtml? c=140690;p=irol-reportsother4 Carnival Corporation. 2006 ;Retrieved from http://phx. corporate-ir. net/phoenix. zhtml? c=200767;p=irol-history; Morningstar 2013 ;Retrieved from http://insiders. morningstar. com/trading/board-of-directors. action? =CCL;region=USA;culture=en-us; The Financial Times Ltd. 2013 ;Retrieved from: http://markets. ft. com/research/Markets/Tearsheets/Directors-and-dealings? s=CCL:NYQ; â€Å"How Much Does a Cruise Ship Cost to Build. † Ship Cruises. N. p. , n. d. Web. 13 Mar. 2013. http://www. shipcruise. org/cruise-articles/489-cruise-ship-cost Kennon, Joshua. â€Å"Investing Lesson 4: Income Statement Analysis. † About. com Investing for Beginners. N. p. ,n. d. Web13Mar. 2013. http://beginnersinvest. about. com/od/incomestatementanalysis/a/income-statement-analysis. htm â€Å"Market Share | Cruise Market Watch. † Cruise Market Watch RSS. N. p. , n. d. Web. 12 Mar. 2013. 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