Carnival Case Issues Essays

Carnival Case Issues Essays Carnival Case Issues Essay Carnival Case Issues Essay 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. 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, Princess 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. 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 Italys 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 sta tes 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: 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. 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 Carnivals 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 Carnivals 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 companys 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 Carnivals 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; How Much Does a Cruise Ship Cost to Build. Ship Cruises. N. p. , n. d. Web. 13 Mar. 2013. shipcruise. org/cruise-articles/489-cruise-ship-cost Kennon, Joshua. 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 Market Share | Cruise Market Watch. Cruise Market Watch RSS. N. p. , n. d. Web. 12 Mar. 2013.

Marketing communication Essay Example | Topics and Well Written Essays - 3000 words

Marketing communication - Essay Example The selection of the proper target group and promoting the event is very much important. To satisfy the demanding customers the event management companies are creating new ways to win the customers mind. The Glastonbury Music and Art festival is one of the legendary events in the world. And to design a marketing campaign for this event is a challenging work to do. However, the proper marketing communication mix is discussed in this particular paper to make it the best event in UK. The events like Woodstock music festival, October Fest, many sports events like Football World Cup, Cricket World Cup, Olympics, and art and music festival like Glastonbury Festival of contemporary performing art are globally renowned events and managing these events with suitable marketing communication is a very challenging job Introduction: Marketing is concept that, boost up the sales. It is basically a presale activity. Marketing is something which needs innovation and creativity as the act of marketin g depends on the need and preferences of the consumers. The marketing is the blood of the company, without the proper act of marketing it is very hard to sell a product. Marketing consist of many factors and, it is always changing with the changes in the mind of the customer. There are many theories in marketing management but, most of the times these theories are better to be read in the books for the academic excellences but, in real life the marketing have ever changing dimensions. It should be remembered by each and every marketing person that, marketing is not only about the selling product in a fast manner. It should be remembered that the proper marketing strategy would give a long term effect on the product itself to modify into a brand. Most of the time marketing and sales is taken as the cause and effect, but marketer forget about another asset associated with the marketing and that is brand. This paper will take an attempt to identify the best marketing communication proc esses, advertising tag lines and best ethical practices of the advertising with the proper regulations for the event called The Glastonbury Music and Art festival. The paper will mostly focus on the best marketing campaign which includes media, PR and online promotions. The identification of target audience, conceptualizing the event and post event analysis is very much important for any event management company. The event management industry has given a new look to the global event business. The properly managed international events have a great effect on the economy of the country. The event management business and the core concept of globalizing the events have given a great repute to the cultural festivals. An Evaluation of Marketing Communications: The marketing mix: In this new era of marketing the traditional 4 Ps are not enough anymore. As every product is associated with some kinds of services so the 7 Ps are more relevant. Service marketing required some more specification s as far as the marketing is concern. The traditional four Ps of marketing are very important for the product marketing. However, according to Crane (1993) the additional three Ps are also very important for the service oriented business (Crane: 1993). And they are people, physical evidence and the process. According to Rutherford and O’Fallon (2007) the hospitality industry works with three main parties and they are the owner of the hotel, the management team and the

Importance of the Marketing Concept to McDonalds Assignment

Importance of the Marketing Concept to McDonalds - Assignment Example Marketers can only offer service propositions, but their â€Å"value† depends on customers’ experiences and assessments. An organisation uses the marketing concept by interpreting customers’ needs through their values, beliefs, and practices, adopting this understanding to guide organisational vision, mission, and core values, and finally implementing it through intelligence gathering, sharing, and application, one of which is through the marketing mix. See Figure 1 for the Marketing Concept. Organisations use the marketing concept because they are aware that it has been empirically related to higher sales, profitability, product quality, success of new products/services, employee morale, and general performance (Ailawadi, et al., 2006; Shiu and Yu, 2010; van Triest, et al., 2009). Figure 1: The Marketing Concept Source: Nakata and Sivakumar (2001, p.256) MCDONALD’S: COMPANY OVERVIEW McDonald’s Corporation operates and franchises McDonald’s r estaurants in 119 countries. McDonald’s restaurants offer a standard menu, which includes, â€Å"McDonald’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Snack Wraps, French fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages,† including local and limited-time products (Reuters.com, 2013). Furthermore, the company enjoys sustained growth with a global comparable sales growth of 3.1%. Sources showed that some of the target market’s needs and wants are: 1) the need to buy quick and tasty food for busy parents and businesspeople; 2) parents want to give treats to their... This discussion declares that the marketing concept has evolved significantly for the past sixty years. Most of the definitions of the marketing concept in the 1960s emphasise the relationship between organisations and customers, while current definitions in the twenty-first century seek to be more inclusive by embracing a stakeholder approach to defining and attaining â€Å"values†. As the paper stresses McDonald’s Corporation operates and franchises McDonald’s restaurants in 119 countries. McDonald’s restaurants offer a standard menu, which includes, â€Å"McDonald’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Snack Wraps, French fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages,† including local and limited-time products. The company enjoys sustained growth with a global comparable sales growth of 3.1%. The marketing concept is relevant to McDonald’s because of its tools of competition analysis and 7Ps marketing mix. For competition, the next contender to having the biggest global market share is Yum! Brands, Inc. KFC is expanding its menu through adding wraps and local food, even vegetables for some Asian markets. Burger King and Wendy’s are updating their store designs and layout. Apart from competition analysis, McDonald’s can be examined further through its 7Ps marketing mix.

The musical thought and influence of Brian Eno Essay - 1

The musical thought and influence of Brian Eno - Essay Example "This resource is very relevant for the topic of study, considering that it traces the history of Brian Eno and what he has been able to do in music, which earns him a name. Through this source, we get to understand that; while music has been introduced with different aims, Brian Eno’s contemporary music, which he has referred as the "ambient" music, has been customized to, and intended for a particular place, or meant to elicit a particular mood. He has sought to influence the people in different contexts, with music that is particularly tailor-made for that purpose. Consequently, he introduced â€Å"ambient music for airports†, after wondering how the architects of an airport in Germany would have managed to be very careful with the floor plan, but neglect the essence of having a soundtrack in the airport terminal. Brian Eno is held in high esteem as a visionary record producer, ambient composer and leading sound experimentalist. His influence is actually felt based o n the choice and the diversity of the musical genres and subjects he handles, such that despite being a confirmed atheist, Brian Eno has gone ahead and done an album inspired by Christian gospel music. Thus, he has been able to traverse different what he refers to as ‘community music’, music that is all-encompassing and all-inclusive, by establishing music that is able to transcend the individuality and sense of self, and making an individual to completely surrender to the tone, mood and texture elicited by the music.  

Cost Accounting Essay Example for Free

Cost Accounting Essay If you are starting out in a new business, especially a service/manufacturing business, understanding the cost accounting system and which cost accounting system will work best for your company, is the first step to being successful. Once you find someone to help you navigate those waters, let them help you sail the rough seas of direct and indirect inventory, direct and indirect labor costs, and how to allocate factory overhead as well. While it all may sound confusing, having the right person with the right knowledge and advice, can make all the difference to you and the success of your business. We learned in Chapter 19 that cost accounting systems calculate, register, and record product costs. Once these costs have been recorded, administrators and supervising personnel can use these costs for setting their product prices, controlling operations and developing financial statements. These reports can play an important role in the financial decision making process for your company so it is imperative that they are accurate and detailed. There are two different types of cost accounting systems. There are called job order cost systems and process cost systems. While both systems are used by manufacturing companies, the job order cost system is used by companies that manufacture custom products or groups of products that are alike. The process cost system, on the other hand, is chosen by manufacturing companies that make units of a product that are impossible to tell apart and are produced using a continuous production process. Once you have chosen your type of cost accounting system, you will need to know what types of costs that will need to be reported and the difference in those costs. First, you have direct materials cost and indirect materials cost. Direct materials costs are materials that will be used as an essential part of the finished product. For example, for an electrician, direct materials would be receptacles and wiring. To be considered and classified as a direct materials cost, it has to be used as an essential part of the finished product and it has to be a significant portion of the total cost of the finished product. If it does not fit these two requirements, then it is considered an indirect materials cost, or factory overhead cost. â€Å"Indirect materials are materials used in the production process, but which cannot be linked to a specific product or job. Alternatively, they may be used in such insubstantial quantities on a per-product basis that it is not worthwhile to track them as direct materials† (Bragg) .An example of an indirect materials cost, or factory overhead cost, for an electrician would be electrical tape and solder. Next, we have direct and indirect labor costs. As with direct materials costs, labor costs must also meet the same two requirements to be labeled direct labor costs. They must be an essential part of the finished product and must be a significant portion of the total cost of the finished product. If they meet these two requirements, these labor costs are considered direct labor costs. If they do not meet these requirements, they are indirect labor costs, or factory overhead costs. The janitor who cleans the building incurs labor costs for the company; however, the janitorial costs are not an essential cost of manufacturing their product. As a result, the janitorial labor costs are indirect labor costs, or factory overhead cost. So what are factory overhead costs and how do you measure and record it? Our textbook describes both in detail. Factory overhead costs are indirect costs of the product. As previously mentioned, these can be materials and labor costs that do not directly enter into the finished product. Some examples include: Heating and lighting the factory Property taxes on factory buildings and land Depreciation on factory plant and equipment Sandpaper, glue, buffing compound Power to run the machines Salaries of production supervisors Because factory overhead costs cannot be directly earmarked to jobs, they are instead, applied to jobs using a common measure related to each job. This common measure is called an activity base. The activity base used to apply overhead should reflect the use of factory overhead costs. Factory overhead costs are usually applied to jobs using a predetermined factory overhead rate computed as follows: Predetermined FactoryEstimated Total Factory Overhead Costs Overhead Rate = Estimated Activity Base For example, if a company estimated a total factory overhead cost of $50,000 for the year and the activity base as 10,000 direct labor hours, a predetermined factory overhead rate of $5 per direct labor hour is computed using the estimated amounts at the beginning of the period. Predetermined factory overhead rated are computed because managers need information about the product cost of each job in a timely manner. With timely information, managers can fine-tune manufacturing methods or product pricing. Remember, during each step of your manufacturing process, identify and record every cost as well as determine whether the costs are direct, indirect, or factory overhead. Keeping up with these costs will help you determine the final cost of each unit and whether or not to make any changes necessary for a more profitable future. Works Cited Bragg, Steven, â€Å"What are Indirect Materials?† Questions Answers – Accounting Tools 1 June 2013. Warren, Reeve and Duchac. ACCT 1101 Chapters 18-26 Managerial Accounting. Ohio: Cengage, 2012. Print.

Polymorphism In Object Oriented Design Information Technology Essay

Polymorphism In Object Oriented Design Information Technology Essay In large scale organizations measuring software quality is complex for the development of software product. High quality software would enhance the potential reuse of the software and reduce the software maintenance cost. Many of the presently available software metrics are applicable when the particular software product Polymorphism has been assured to improve reusability technique which is achieved through the POF, Polymorphism factor derived from the MOOD (Metrics for Object oriented design) metric. II BACKGROUND Software metrics are considered as key facts or ways to measure any kind of software product from the starting phase to the obsolete phase. These software metrics are available and used throughout the project to assess the software quality, cost estimation and time consuming to develop a software project. It is declared that the Traditional metrics are not applicable to Object Oriented design since Object Oriented Software metrics are applicable to class level and other characteristics such as abstraction, inheritance, modularity and Polymorphism. These metrics convey the software engineer how the modifications can be made in order to reduce the cost effectively and time consuming while designing software and to improve the quality, continuing capability and profitability of the software. In [7] nearly 100 metrics had already given to find out the complexity of the software code and in [8] they were more than 150 metrics are proposed in the field of Object oriented paradigm. The Object Oriented software metrics are differentiated into two types namely Static and Dynamic. Dynamic and Static code analysis are done during source code reviews. Static metrics are derived from the measurement on static analysis of the software code. Static code analysis is performed without executing any of the code. Static analysis is better to understand the security problems within the program code and can easily identify nearly 85% of the flaws in the programming code. Dynamic metrics are derived from the measurement on dynamic analysis of the software code. Dynamic analysis is based on the studying of the code behavior during execution. Earlier major work was focused on static metrics but more attention has given to Dynamic metrics as the results are derived at run time. In this binding it can be substitute to forms or objects that are related to polymorphism factor at the time of execution. III FORMS OF POLYMORPHISM Polymorphism is considered as one of the salient features of Object oriented Programming languages. This feature mainly deals with reusability technique. In object oriented analysis Polymorphism roots from message passing, substitutability and inheritance which yields to is-a relationship. This similarity may allow achieving variety of technologies like code sharing and reusability. Mainly Polymorphism is differentiated into 5 types in Object Oriented paradigm like generics, pure polymorphism, overloading, deferred methods and overriding, Both Polymorphic classes and methods are known as Generics. This paper mainly focuses on three definitions mainly Overloading, Overriding and pure polymorphism. Pure polymorphism is achieved by implementing same function to different types of arguments. Method overriding is possible when the implementation suggested in the super class is modified in the sub class. Next to that method overloading is achieved when different methods having same name. Method overloading is also known as Adhoc Polymorphism. The differentiation on Polymorphic behaviors in C++ are related to runtime binding decisions which are overriding methods or virtual functions and compile time linked decisions which are over loading functions. From this design polymorphic functions are categorize into different types. The Polymorphic member functions can formerly defined as where in a new declaration these characteristics may alter while the other remains the same. This will generate different types of Polymorphic implementations that affect the quality on Object Oriented paradigm. A) Pure Polymorphism This behavior is also known as parametric overloading where it can be identified similar name with different signature which is inside the class scope. This behavior inside a class scope is identified by implementing more functions with other signatures. B) Static Polymorphism In Object Oriented design methods related to similar name but with other method signature can be identified in other classes related and which are unlinked by inheritance relationships, which is also known as Overriding behavior. In C++ they can be categorized overriding methods into two different forms like virtual and non-virtual methods. The non -virtual overriding functions can be identified by other signatures which are related to other declarations. As they are based on Static binding can be called this from static Polymorphism. C) Dynamic Polymorphism This behavior has the capability to use the similar name with similar signature in an overriding function. In C++ it is called as adhoc polymorphism as it invokes run time decisions at execution by the compiler. Combination and Specialization are the two features derived from the Object Oriented design which results Dynamic and Static Polymorphism. The polymorphism forms discussed above consists single perspective where each pattern may be identified and combined to achieve class inheritance relationships. Fig 1. Simple Inheritance. Simple Inheritance states that one Parent can have many children, but each child can only have one Parent. Fig 1 illustrates that A is a Parent, B and C are Children to Parent A. Likewise P and Q are children to Parent B and M and N are children to Parent C Table 1 shows the derived set of metrics where it can be taken as the combination of dynamic and static polymorphism forms with respective to the simple inheritance relationship [2]. IV POLYMORPHISM FORMS METRICS Metrics Definition SPD Static Polymorphism in Descendants. DPA Dynamic Polymorphism in Ancestors DPD Dynamic Polymorphism in Descendants SPA Static Polymorphism in Ancestors. OVO Overloading in Standalone classes Table 1 In Object Orientation paradigm, generic methods and classes are able to decrease the description of newly created objects and classes. The OVO (Overloading in Stand-alone classes) metric is designed to calculate the intensity of method genericity in a class scope by numbering and calculating the function members which designed the same function. The Static and Dynamic metrics are designed to calculate each Static and Dynamic binding separately in Object oriented paradigm. Example 1 Class P { void a (int k); void a (float l); void a (int i , int l); void b (); void b (int n); } Class Q : public P { void a (); } Class R : public Q { void a (); void b(); } Class S { void a (); } A) Data Validation In order to validate Polymorphism metrics, product metric validation methodology is very useful to validate other suits of Object Oriented design metrics. This validation represents the capability of polymorphism metrics to predict the fault prone functions. Here the data is gathered from an open multi-agent systems development environment, known as LALO. [2] LALO has been maintaining its development since from 1993 at CRIM (Computer Research Institute for Montreal) where it approximately includes 40k source lines of code and 85 C++ classes. Here the analysis has been obtained from the Source Lines of Code, information about its classes and fault related data. B) Descriptive Statistics Table 2 shows the analysis for descriptive statistics which are related to Polymorphism metrics. Due to the reason that LALO objects contains very low and minor inheritance depth and week variance has been calculated from the descendants of polymorphism namely SPD and DPD. Here it is confirmed that week distribution of polymorphic forms is due to low usage of inheritance in LALO classes. Metric Max Min Mean Median StdDev OVO 15.00 0.00 3.47 3 2.71 SPA 18.00 0.00 3.54 1 4.63 SPD 111.00 0.00 3.73 0 13.87 DPA 5.00 0.00 0.73 0 1.29 DPD 28.00 0.00 0.77 0 3.35 SP 111.00 0.00 7.28 3.5 13.90 DP 28.00 0.00 1.50 0 3.49 Table 2 C) Polymorphism metrics and MOOD metrics Table 3 shows the correlation among the five polymorphism metrics and POF (Polymorphism factor) measurement derived from the MOOD (Metrics for Object oriented Design) metrics [6]. As per the analysis the POF from the MOOD metrics, SPA and DPA metrics from the Polymorphism metrics are maximum correlated as they captured the same forms of polymorphism namely overriding. OVO, SPD, DPD and POF have very poor correlation. OVO SP DP SPA SPD DPA DPD Pof .06 .50 .42 .98 .02 .72 .00 Table 3 D) Correlation between Polymorphism metrics. SPA and DPA calculates the count of member functions that are overridden between a class scope and its ancestors. This states that dynamic polymorphism and static polymorphism have similar quality impact in ancestors relationship. Since DP and SP are counted from the metrics SPA, DPD, DPA and SPD where DPA and SPA are nearly correlated and DPD and SPD calculations are not statically specified in the dataset and the expectations are SP would be maximum correlated with DP. SPA SPD DPA DPD SP DP OVO .06 .05 .04 .07 0 0 SPA 1.0 .03 .71 .00 .51 .42 SPD 1.0 .01 .67 .27 .13 DPA 1.0 .00 .43 .63 DPD 1.0 .22 .29 SP 1.0 .70 Table 4 F) Relation between Polymorphism metrics and Chidamber and Kemerer metrics. Here is the comparison between Chidamber and Kemerer (CK) metrics and Polymorphism metrics [9]. The six CK metrics are RFC Response for a Class. DIT Class Depth Inheritance Tree. CBO Coupling between Class. WMC Weighted Method per Class. NOC Number of Children. LCOM Lack of Cohesion among methods. a) DIT DIT is used to calculate maximum tree depth from class to root class. The high DIT has been found to lead more faults. However, more the tree depth, more the reusability factor because of method inheritance. Fig 2 Fig 3 Fig 4 Fig2 resembles simple inheritance where each parent can have more than one child but each child must have only one parent. In Fig3 P and Q are combined and inherited from Parent A and Fig4 shows high DIT as it illustrates high tree depth inheritance. b) NOC NOC counts the immediate sub-classes of a root class. As maximum DIT indicates the high tree depth, NOC counts the breath of the class hierarchy. High NOC increases the number of child classes, high reuse of the Base class is possible. High NOC has been found to lead low number of faults because of high reuse of Base class which is more desirable. Table 4 shows the values to compare only two CK metric represents a relation with two polymorphic metrics [2]. The highly related pair of metrics is NOC-SPD. Also the highly correlated metrics is DIT-SPA where these two relations are highly expected. Table4 Children in the classes are counted by NOC metric. Level of coupling is measured by SPD metric due to static Polymorphism having its descendants. Due to static polymorphism chances of having coupling is higher as greater the number of children. Inheritance depth tree is calculated in a class by using DIT metric. As per the static polymorphism, level of coupling with class R in Example 1 and its ancestors is measured by metric SPA. While measuring different forms of class dependencies in Polymorphism, it is observed that CBO represents a very low correlation with polymorphism metric which is calculating algorithm class coupling. Hence it is confirmed that the polymorphism metrics can get variety of variations of class scope coupling which are not highly captured by CBO metric [2]. A backward and forward logistic regression is performed while examine the relationship between CK metrics and Polymorphism metrics [2]. By combining these two Object oriented metrics a significant methodology related to fault prone class has been implemented. V REUSE, REUSEABILITY METRICS IN POLYMORPHISM As I discussed earlier, Reusability is the key concept to achieve Polymorphism, following are the metrics discussed under the concern of Reusability [1]. The key factor of developing and upgrading software by using the existing software has made our Engineers to focus more on systematic re-use where the organizations can make most benefit and get extensive advantage from the idea of reusability. A) Reuse and Reusability Metrics Reuse metric is obtained from number of efforts that takes place in the research area on economics of reuse. If the return on investment is positive then it can be analyzed that reuse is beneficial. It consists of maintaining the cost for reusing the libraries, modifying costs and reusable maintenance from the existing property, cost of searching, evaluating, identifying, integrating and selecting the potential articrafts. Different economic metrics has been introduced to measure the reuse metric which implements the cost benefit ratio. Durek and Gaffneys reuse metric based on economic factor is proposed and useful to measure the break -even point and the reusability cost. COCOMO based reuse model is used to calculate the total time that takes to implement the software with the functionality of reuse which is proposed by Gustafson and Balda [1]. Durek and Gaffneys reuse economic metric is represented as C= (b+E/n-1) R+1 Where C = Cost related to Software Development, usually less than 1. R = ratio of the reused code in the project. E = Cost to make code reusable, which is cost related to new code which is used to develop a component for reuse. B = reusing existing code in the project where the cost related to new code like adaption, searching and adaption cost. n=the number of reuses expected. As our interest is ultimately in measuring the cost but these metric needs the cost of creating the reused articrafts as input. B) Reuse Metric Level This reuse level metric is introduced by Frakes which implements threshold levels to gather and remove the items which are not reused very often. Suppose if the threshold level is 4 the object should be called 5 times for reuse. This metric also varies between the external and internal level. Total reuse level=Internal + External level. External reuse level=EU/T and Internal reuse level=IU/T. T=both internal and external items in the system. IU=number of reused external items EU=number of reused internal items. Each reused item which is EU and IU must have the values either 0 or 1.If the threshold level is less than the item reused then the value is always 1 or else it will be 0.This measure does not consider the number of items reused. Here this metric uses item instead of SLOC, as each item varies, some item would be large or small when compare to other items. In the later version of this metric, depending upon the size of the item, assigned a weight to each item. This is done because the threshold levels should be same in order to compare the projects. C) Measuring Polymorphism As the process would vary from execution to execution, the problem is with while measuring polymorphism, exactly what happens within an application. Example 2 List l; If(condition){ l=new ArrayList(); } else l=new Linked List(); l.add(); In Example 2, the Linked List implementation and the Array List implementation depends on the external condition. There is no prediction that the condition is always satisfied, with the implementation of the polymorphism. Dynamic analysis is the right way to measure polymorphism as it gathers the information at run time. Following is the metric that defines the amount of polymorphism has occurred [1]. PBI=UPD/Total Dispatches. Where PBI=Polymorphic Behavior Index. TD=UPD+NP. UPD= Polymorphic Dispatches that are unique NP=Non-polymorphic dispatches that are unique. TD=Total Dispatches. In the above example, List l=new Array List (); The List interface will declare the variable l and it is said to be Declared Interface. If the condition is true. Then Array List () is the Dispatched class in this Example. Both the Class and Interface are different and the relationship can be given as Conforms and implements. An interface might not directly implement by a class, it can be accessible through parent class. The actual method which is processed is the deepest inherited implementation of the method. Example 3 Class A{ void method 1(){} } Class B extends A{ B b=new B(); b.method1(); } The b.method1 () is dispatched to A.method1 () because it is the deepest inherited implementation method. Polymorphic Dispatch will be observed when the Dispatched Class and declared interface, both are different. Non -Polymorphic Dispatch is observed when the Dispatched Class is same as the declared interface. Example.4 Interface P{ a (); } Class Sample inherits P{ a();{} b();{} } Class Sample2 extends Sample{ b();{ super(); } } When Sample sp=new Sample(); sp.a(); The sp variable relates to a Sample object. The Sample class consists method a() implementation, so Sample.a() will be dispatched. The Dispatch class, Sample is same as the declared interface, so this is considered to be a Non-Polymorphic dispatch. Sample2 sp2=new Sample2 (); sp2.a(); Since sp2 relates to an object of type Sample2 the dispatched method is Sample a ().Although Sample2 not requires a method a() implementation ,Sample.a() is the deepest inherited implementation method. Sample is the class that is dispatched here. This is Polymorphic dispatch as the Dispatched class is Sample and declared interface is Sample 2. P sp3=new sample(); sp3.a(); Here in this case, since Sample.a() is dispatched, the Dispatched class is Sample and Declared interface is P . As Dispatched class Sample and Declared interface P both are different this is Polymorphic Dispatch. D) Inherited Method Call using Inherited Class. Sample sp4= new Sample2(); sp4.a(); Here the dispatched method is Sample. a () while declared interface of sp4 is Sample. So this is considered to be a Non polymorphic dispatch as both the declared interface and Dispatch class is same, Sample. Sample sp5=new Sample2(); sp5.b(); Here sp5 implements the inherited method b() from Sample2. Sample2.b() overrides the Samples b() and this inheritance substitutes the functionality from the Samples b() method, Here, dispatched method is Sample2.b() as it is the deepest implementation method . Hence it is known as Polymorphic dispatch as the Dispatch class is Sample2 and declared interface is Sample means both are different. ` VI INTERNAL AND EXTERNAL REUSE Software reuse is often differentiated as External reuse and internal reuse. Considering internal reuse, these are the calls made to the desired code that is previously mentioned for the given application. External reuse is considered when calling the code that is coming from external source to the application of the project. When comparing both the internal and external reuse, external is more beneficial than internal.But both internal and external reuse are been used, for instance if the developer reusing the same method rather than developing new methods which performs the same action. Internal methods are created by the application developers, which are defined as methods. Internal methods also include implementing the custom code extending the API and the API interface. When any method calls an internal method then internal method call is generated. Generally it happens internal methods calling to internal methods. Sometimes API will call these internal methods when these methods are passed as handlers into the API.As this external method to internal method calling is a strategy of application developers decision, these are still considered as an internal method call. External methods are obtained from external source where developers cannot modify it, which includes external libraries and API. Suppose if internal method calling an external method then call to the external method is generated. Here it must not be considered external to external method calling. Example 5 Class sample extends java.lang.Thread { void method p () { method q (); } void method q (String s) { System.out.println (This is an Example); } public void run () { method p (); } public static void main(String args[]) { this .start() } In Example 5 when the Sample class is executed, Java launcher calls the main () method. As the Sample class extends thread class and calling the start () function will insert the Thread class in Java Scheduler. As a consequence Java scheduler calls run () method, where the run () calls the method p (), which in turns calls the method q().method q() internally calls the System.out.println(). For instance when System.out.println () is executed, many internal API callings will happen like PrintWriter called by String Buffer. However these are not considered as external or internal method calls. VII TOOLS FOR SOFTWARE METRICS Fig 5 Process for Dynamic Metrics A) E-MTRACE The process of evaluating the Polymorphism metric is the comparison held in same domain of Polymorphism with two software applications, where it is manually determined by the source code to examine their reusability and reuse issues of performance. In order to avoid or remove unnecessary values like system method calling that is invoked by JVM there is a need of filter. The data which is filtered is examined to recognize non-polymorphic and also polymorphic dispatches from where the values are derived. The tool that is implemented to capture all this related information is known as E-MTRACE [1].This tool uses JVMTI, JVM Tool Interface that is examined and control s the process of execution running in the JVM (Java Virtual Machine). File Hook is used to insert the byte codes into methods.JVM is interrupted by the File Hook, when the JVM is loading java .class file to heap. The File Hook inserts the profiling instrumentation code and interprets .class file before calling any method. During runtime the instrumentation code can be inserted. The instrumentation code is executed while calling a method. The program stack is used by the instrumentation code to recognize the Dispatch class. Then to trace the Declared interface it uses the Local Variable Table. EMTRACE Analyzer tool would be processed, once the Dispatched class and the Declared Interface are identified, which evaluate the list of non polymorphic and polymorphic dispatches results. B) Resharper and CodeRush. Resharper and CodeRush are the tools available to extend the native functionality of Microsoft Visual Studio latest versions These tools executes the static analysis of the code like error detection without compiling the code. These tools provides enhanced features like error correction, code generation, syntax highlighting, optimization, formatting and many other features. VIII CONCLUSION Considering quality factor, it is not an easy task to examine and to avoid the complexity, several properties mainly Polymorphism factor in Object oriented design has proposed and paid special attention by Application developers and Software Engineering Society. This Paper mainly discussed on Polymorphism metrics related to Static and Dynamic behavior with respect to Object Oriented Analysis [2] and focused on the Comparison among Chidamber Kemmerer metrics, MOOD(Metrics for Object Oriented Design) metrics and Polymorphism metrics. It is noted that (NOC-SPD) (DIT-SPA) from Chidamber Kemmerer and Polymorphism metrics are highly correlated [2]. In addition to that this Paper also discusses about tools like E-MTRACE which deals with Polymorphic behavior. E-MTRACE is a tool that is developed to measure java applications [1]. This Polymorphic behavior metric is used to examine the interface that has most polymorphic dispatches. So these interfaces may introduce the basis for new technology frameworks and APIs. Moreover, it is necessary to note that the metrics and measures capture the valuable related data from the starting phases of the product development lifecycle giving Engineers a chance to evaluate early fault prone area and advancing the quality factor and to maintain the continuing capability of Software product.