80 PART I Comprehensive Cases
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LE,ARI{ING OBJECTIVES AND
OVERALL CASE STUDY GOAL
The Student's Role
You are the Organizational Development consulting
team that has been hired by the senior leadership team
of Allure Cruise Line to help them facilitate the expan-
sion of their business and to address other issues the
organization is currently facing.
Learning Objectives
Upon cgmpletion gf this case Study, you will be able to:
. Give examples of the variables orgelnizations engaged
internationally that have diverse workforces need to con-
sicler in or<ler to ensure their success and effectiveness,
within the context of three key strategies: Btrsine.rs,
Orgunizutir>nnl, and People Strate gie,s'
. Explain and apply the international strategy develop-
ment alcl implementation process and the factors that
organizations must take into account and evaluate when
'r.Note:The clata usecl to clevelop this case study was garnered throueh
the manage rs of an existing cruise line.The name of the cruise line. as
well as the indivicluals in the case study. and some data havc been
changed to protect the confidentiality ol tlte cruise line; spccific datti
changes can be found in Section 4 of this studY.
SOt-lnC'E,Wancla V. Chaves. PhD,. University of Ttrmpa. and Steven
R. Yacovelli. Ed.D.,TopDog Learning Center.
considering international expansion of their busin
ancl be able to apply these to a real life case stt
(Business StrutegY)'
, Describe how organizations need to consider their stt
ture, organizational culture, and their processes to c<
pete internationally ( O rgttrtiztttionnl Strategy )'
r Articulate how organizations can and need to set up
address their human resources management functi
when working internationally and when sending emp
ees abroad (PeoPle Stroteg,Y).
. Give examples clf the current challenges with the pe<
issues facing human resource managers and organ
tional leaders of Allure Cruise Line'
. Develop ancl present a plan to address the identi
people challenges in a timely and business-foct
manner.
. Articulate how the situation affecting Allure is similr
or different than other corporate environments'
THE BUSINESS_ALLURE CRUISE LII\
Overview
Allure Cruise Line is a small North American cr
line. It currently has three ships in its fleet and is ir
process of planning to add new ships and itinerarir
ih. uptoming several years. Allure Cruise Line
been in existence since 1993, and during this time
grown to develop a reputation for providing on
itr. highest quality cruise experiences availi
Figure 1 notes the overall Vision and Missio
Allure Cruise Line.
Allure Cruise Line's three ships have a passe
cap4city of 2,500. Currently, the ships sail out of
FIGURE I Allure's Vision and Mission Statements
e$Rws*QN
Our vision is to continuously provide
unforoettoble experiences for our
oor.Jno"r, ond'be the customer
serviceleoder in the cruise industry'
Qt*R {ifi*$$*eN
Our mission is to deliver unique vocolion experiences
chorocterized by exceptionol'guest service ond o wide
orroy of ilinerories thoi coter t6 o voriely of different
lifestyles.
 CASE 3 AllLrrc ('ruise Line -Challcnses ol'strateqic Cirowth and C)rganizational Effectiveness: part I
LlrLi,.lcrdale. Floricla. and have several itineraries
riirlrirt the Caribbean from which passensers can
cltol:c. including destinations such as San Juan, Puerto
Ri.r. St.'fhomas. U.S.V.l.:Nassau. Bahanras: St. Croix,
L'.\ \'.1.. ancl others. Their corporate oflices are in
\lirrii. Florida. and their clpcratine offices are in Fort
Lurr,lerclale.The cruise line is flagged in Liberia.
1\'orl"lirrce
Erreir .hi;r has a crew of 1.(XX) o1'which 190 are officers
rlp l',,1I'd.'fhe crerv reprresents 40 different countries and
liili,;irilities. The captain and liis executivc leadership
icr.uri :rrc all from Greece. lj,pically. crew rnembers sign
c()lttr,icls lot'six to ten months.'fheir contracts are
l'cnr'i\e rl. al'ter a foltr-week to trvo-month brcak. based
on ili,.'colttpanv's lvish to rehire them as well as the
intrlr!riirti()n ancl visii regulations of their country.
Olli.. r': si_gn cclntriicts fol up to three to six months and
t\pir'.rllr renew their contracts alter taking a two-r-nonth
ble .r'H. i)Lre to the fact that thc staffins olt the ship is han-
dlctl rirror.rsh short-ternt contracts. the makeup of the
cr*r s rrr a state of constant change.
Ship's {}rganizational Structure
'l'hc t,rL:rrnizalion within the ships is structured hierarchi-
callr'.'l he captain is the senior rankirrg officer on board.
His t'. rrior leaclership team inclr-rdes three executivc
of'l'icr:r',: the staff captain, the hotel director, ancl the
cltiel ,:iruincer.
l'ir: stall captain. r,vho is second in command on
bolrtl. i: in charge of the bridge tearr, navisation team.
dcck ticpartment. safety, arnd sanitation.'fhe staff captain
itlso t)\t.'r'sceS the rnanaging of the crew. inclucling all of
thc rrrcr;rlc and discipline issues with the crew.
.l'li,'
hotel director oversees all of the areas within the
shipr ir,'i'trrining to the purser or suest services. including
thc r { )i)nrs. restaurants. ceisinos. ancl entertainment
tttlbtrlli',
i.
I];,' chici ensineer is il-r charge of all the clperations
pe rtrrirrrrrs to the ship's inlrastruc-ture. including the
cttgirr,,' i'()om. mechanical rnaintenance. shipboar<1 com-
Ptltci'' I ,lLrprbilg. and electrical.
I{. rr1y1'1i1rn to ther executive officers ctn the ship are
sc\cr.rl rilhgl. layers of oflicer.s (titled ".olficers'. and
"pctl\ tillicers") who are directly
in char-ge of the crew
tllct.ttl', i''..l-hc organizatictn is non-unionized. Figure 2
dcpict'. tliis rclationship and are.rs of responsibility.
Organ irlt ional Culture Ontloartl
,'\s*itlr .thcr cruise li'cs. the cultu'e on boarcl the ships
l\ \L'l'\ r'()ntl)lL-t'. It is chalacterized l-ry three co-existinq
.litter, iti tLtl,u,-ar,
(ii r,11,,1.1 tttttl Rcuditta.ss
irrllue nce cl primarilr, b), the cultures ol'the marrine ltnd
iirilitlrlr'. thu'culture on the ships. as previotrslr,statecl. is
,r lrie rarchical one in *,hich crew nrembc-rs are erpected
L-
8t
FIGURE 2 Allure's Shipboard Executive Committee
STAFF HOTET CHIEF
CAPTAIN DIRECTOR ENGINEER
Bridge teom, Guest Engine Room
Novrgotion Services, Mechanicol
teom, Deck Rooms, Mointenance,
Deporlment, Reslouronfs, Shipboord
Sofely, & Cosinos, & Onboord Computers,
Sonitotion Entertoinmenl Plumbing, &
Electricol
to follow orders. primarily to maintain the safety of the
guests on the ships.
(2) Serv'ice
The primary focus on board is to provide the highest
le vel of guest service available. The crew is trained and
instructed on how to ensure that the guests' needs
ancl expectations are exceeded during their trip.
(3) Munugeiltent
The culture of the senior leadership team, and the coun-
try from which the team members originate, has a great
influence on the way in which the ship and its crew are
managed.
As on all cruise ships, in addition to the dynamics of the
presence of these three coexisting organizational norms,
the complexity of life onboard is magnified due to the close
quarters within which the crew live and work. For example,
a crew rnember who works in the dining room may share a
cabin with three other dining room servers.If personal con-
tlicts arise in the shared cabin, this can greatly impact the
rvorking relationship among the crew members.
These potential conflicts are not limited to room-
mate situations either. Crew members socialize and
fraternize together. and they dine together regardless of
their rank (either in an Officer's Mess or a Crew
Member's Mess area). The space in which the crew can
spend time during non-w<lrking hours is extremely
limited. There are usually only one or two social areas
tor crew to enjoy onboard since the majority of the space
onboard is typically reserved for the passenger enter-
tainment and revenue-generating areas. At Allure,
however, because the ships are slightly cllder. space is
even more limited than on newer designed ships.
In addition. other factors influencing the culture on
board. which cannot be underestimated, include the
exceptional diversity of cultural backgrounds among the
crew members as well as the constant rotations and
cltan-ees in the makeup of the crew.
Allure Cmise Line's Company Structure
The Executive Leadership Team of the Allure Cruise
Line company is comprised of seven senior executives
 , FIGUR.E 5 Allure's Organizational Strucfure
who work at Allure's corporate offices in Miami and
report to the president/CEo of the organization.
The executive vice president of operations is
responsible for all of the operations on the ships with the
exception of the hotel operations. He oversees the phys-
ical infrastructure, engines, operating systems, as well as
the safety operations onboard.
The vice president of hotel operations is in charge
of all of the hotel operations onboard
including
the front desk, housekeeping, dining, concierge, and
bell services.
The vice president of entertainment manages all of
the entertainment components of the cruise experience
including the stage, crew staff, children's programming,
and gambling in the casinos onboard.
The executive vice president of special projects
oversees any special initiatives including new ship
launches, business partnerships, and any global efforts
that are pursued by the organization.
The vice president of sales and marketing is in
charge of group sales, marketing, promotions, public
relations, and community relations.
The vice president of finance and information
technology is in charge of Allure's financial reporting,
strategic planning, forecasting, and information
technology.
The vice president of human resources oversees all
of the HR functions for the ships, including recruitment
and retention, compensation and benefits, training and
development, career movement, and staff forecastin
and planning.
Figure 3 depicts the reporting structure of the Allur
Cruise Line organization.
Corporate Goals
The organuation is planning the expansion of its businer
to the Mediterranean.It would like to add two new ships
1
its fleet within the next five years. Also, the organization
currently experiencing some morale issues among its cre
and some cross-cultural challenges on board the thre
existing ships.These issues are beginning to have an impa
on the service that is being provided to the passengers.
The leadership team is concerned and has hire
your team to help them address these issues as well as'
help them with the strategic planning and implement
tion process for their expansion.
INTERVIEW WITH ALLURE CRUISE
LINE E,XE,CUTIVE
Interviews were conducted with several members
Allure's senior leadership team to obtain more inform
tion regarding the cruise industry and Allure's curre
challenges.
Following you will find the dialogues from the inte
view with Rebecca Brandon,Vice President of Operatiol
who works as part of Allure's offshore team. She provid,
:+',11i'il:'!:
t:r:,ini:
CASE 3 Allure Cruise Line-Challenges of Strategic Growth and Organizational Effectiveness: part
tiil::::jt '
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';t:: .l
a fuistorical
perspective of the cruise industry and Allure
Cruise Lines:
,,,., "At the start of the cruise industry, there was q
'. divided market: for the rich and poor (if you've
seen'Titanic' you know about the term steerage).
It was a very class-based means of travel and
, vacationing. Today, however, the distinctions are
, blurred, but they still exist based on the service
and packages provided to customers.
"Today everyone is a VIP, but distinctions
come in the packages they receive. At the end of
the 1980s and beginning of the 1990s, the cruise
industry took off, and there were many different
cruise lines available to passengers.
"As for the history of Allure, we ordered its
first ship in 1990, which took two and a half years
to build. That ship, the'Allure Regent,' set sail in
1993, and our fleet has expanded to three ships in
operation today. Since the launching of the
'Regent,' Allure has really become quite a
wealthy company, and we are privately funded
(as opposed to being publicly traded).
"Since the launching of the 'Regent,' our cus-
tomer base has developed to about 60 percent
repeat customers and 40 percent new customers.
We have a very loyal, strong customer base with a
higher level of disposable income (in the older
cruiser market), and we want to continue to focus
on them. About 60 percent of our customers are
U.S. customers. Interestingly, 80 percent of the
people in the U.S. have never been on a cruise. So
there is a lot of opportunity to expand our reach
and target these potential customers.
"The main reason we retain this returning busi-
ness is through our competitive advantage: We
strive to provide the highest level of service pro-
vided to our passengers. Therefore, we really need
to hire high-quality people who are very service
oriented;it is Allure's service and name that distin-
guish it in the market. In addition, we try to change
itineraries often-in summer and winter. Since our
passengers are mostly returning folks, they tend to
wait for a change to travel.We provide the service
they expect with new and exciting itineraries, and.
they keep coming back to sail with us.
"The support for sustaining this has mqny
variables, one of which is around our technolog-
ical infrastructure (our VP of HR can address
the'people' side of the operation better than I).
In today's market, passengers want technology
onboard (e.g., high-speed Internet in their cab-
ins). Now since our ships are already over ten
years old, we have had to retrofit the ships to
increase the technology on board, but we are
still not where we need to be. One of our chal-
lenges is we are losing in the market due to our
1 s3
being behind on technology.We need to find a
way to keep up.
"More technically speaking, the engines on
cruise vessels today have different propulsion
systems that are much more efficient and cost
effective than when the'Regent' was designed.
Those ships,like ours, that still have fuel-burning
systems are not set up to be the most competitive
and run as cost-effectively qs newer designs. New
ships today also have high-end designs: large
atriums, malls, large open spaces. Our ships are
more comfortable, but maybe not as'fancy.'
"For the rest of the operation, we have some
other logistical issues that may be preventing us
from being the most efficient. For example, in
our dining options for passengers: Many of the
more modern ships have what is called'freestyle
dining' (e.g., have ll restaurants onboard, and
passengers can choose any of them in which to
dine versus the more restrictive assignment to a
specific dining time and restaurant each
evening). Allure is not able to provide this option
to our passengers because we simply do not have
the space. In order to have freestyle dining
onboard, we would need to increase the number
of crew members working in the restaurants, and
we do not have any extra living space to accom-
modate the necessary increase in crew. One of
the challenges we need your help in addressing is
how do we determine how we can improve our
dining experience with our existing labor.
"Another operational issue is the entertain-
ment we provide passengers. Whereas in the past
casinos were the main entertainment onboard,
this is no longer the case. Passengers want
fireworks, high-tech Broadway-style theatrical
productions, etc. However, we are limited again in
what we can provide in terms of these high-tech
experiences. Our casinos still bring in the most
revenue; therefore, we have no plans of taking
them off our ships.
" In conjunction with these operational issues
are the world events and their impact on the
travel industry overalL Due to recent events, such
as the September 1lth attacks in the United States
and the crisis in the Middle East, more cruise
lines are leaving from closer destinations because
many passengers prefer to drive to reach the
ports of departure. Also, security measures
onboard have significantly increased (i.e., metal
detectors, baggage screening, increased scrutiny
of documentation-birthdays, Social Security
lr'lumber, names, family groups, etc.). The crew
has had to be trained on these new security mea-
sures that Allure is now taking. Allure is not the
cheapest package on the market. Since people are
finding themselves with less disposable income,
 our loyal customers are traveling less frequently.
However, Allure is still doing well financially.
"But at Allure, we do not want to rest on our
current good fortune. We want to continue to
develop new itineraries and expand our business.
We have surveyed our loyal cu,stomers, and there
is a strong interest on their part to see us add some
European itineraries. Therefore, we want to move
to the Mediterranean.We are closely watching the
ftnancial markets. If we decide to build new ships,
it wiII have a big impact on their price. Not only do
price tluctuations affect the building of the ships,
but they also impact anything else that will be
onboard (e.g., carpeting, furniture, art).We would
like to focus on our 60 percent repeat customers.
"With the new expansion of our company and
when we add the nvo new ships, there may be
increased challenges for the three current, older
ships First,we know thatwe couldpotentially cause
the cannibalization of our own customer base with
ctntomers wanting to sail only on our new ships. In
addition, our crew members will more than likely
want to work on the new shipg which could impact
our overall service and their morale.
"Several questions arise from this decision to
expand our fleet. We need to determine where
the new ships would sail. Wo4ld we send them to
the Mediterranean or send the'older ships thereT
How wiII we market these new ships and set
ourselves up to compete in that market? We could
potentially put the new ships on our current [re-
quent routes and the older ships on the new itiner-
aries (this would keep the mileage down on the
new ships and help control depreciation of
assets). Do we tailor different ships (the newer
and the older) and cruise experiences to dffirent
customers? Wil we establish a separate division, a
new cruise line, or expand the current organiza-
tion? We want to be careful not to dilute our prod-
uct nor change what has worked in the past; we
need to maintain our guest service standards high.
We do not want to play with it at all.
"From you, our O.D. Consulting team, we
could use your expertise to help develop this
expansion strategy."
The following is a list of recommended websites and books, current as of this writing:
WEBSITES
www.imo. org/Conventions/contents. asp? doc_id
651&topic id-257
www.cruising.org/
www. cruisej obline. com/
www.shipyards.com/
ASSIGNME,NT
Dynamics of the Cruise Industry
The cruise industry is the epitome of an internatic
operation and business: (1) Ships travel to and fi
ports of calls around the world, (2) the crew memt
working onboard come from a wide variety of countr
and (3) they serve customers from all over the g1<
This presents many opportunities but also complex c
lenges for the cruise business.
Your assignment for this part of the case study i
spend some time studying the cruise industry.In orde
effectively help Allure with its expansion and curr
challenges, you need to be knowledgeable about the
tory, dynamics, major players, and challenges of
cruise line industry.
As a team, you are to conduct research regarc
the cruise industry and business. You are to edu<
yourself about the following questions/issues:
/ Who are the "major players" in the North Amer
cruise industry?
/ What are the business statistics about these "playe
Asset size? Fleet size? Passenger volume? Crew to
senger ratios? Where are they located? Organizatir
structure?
,/ What are the route structures? Where do they sail to?
./ Where are these major players flagged? Where are t
corporate offices? Where are their operating offices?
,/ What are the plans for expansion for the major player
,/ What factors distinguish the major players from
another?
./ What is the shipboard organizational structure? V
types of positions are on these cruise lines?
,/ What is the historical perspective of the cruise in,
try? Who were the first lines? What were they like
there any correlation with the cruise industry and o
organizations?
/ What are the major "laws" that the cruise industries r
to abide by? Are there any laws specific to operatin
North America/the United States?
/ What is the state of the cruise industry? Is it gror
or shrinking? How does the world economy and 1
tical climate affect the cruise industry? How r
this affect fleet deployment and route selection/p
of call?
- www.hal-pc. org/-nugent/company. html
www.cybercruises. com/orderbook. htm
www. shipsandcruises. com/
www. cruis eindustrynews. com/
www.courts. state.ny.us/tandv/cruiserights.html