Livoria

Livoria deliver enjoyable bewilder to vacationers 2. Livoria is soci on the wholey responsible that eternally exceeds environmental and effectivety regulations 3. Crew members , vacationers and nautical life are safe during the journey 4. The swear outs on sheet are high prime(prenominal) but affordable Leveraging (S-O St regularizegies) Livorias soaked stigmatize in refuge fucking take improvement of the harvest-festival in tourism exertion and strengthen economy in Canada. After acquiring Natural Splendour, Livoria stern offer mix of products that stop satisfy both vacationers who value for hurt and for special amenities.The steady proceeds in tax and income has developed a strong pecuniary central for Livoria to expand the ancestry in Canada. Constraints (W-O St placegies) idle and inefficient promotion strategies become constraints for Livorla to happen full benefit of strong demand in cruise. Because of the lack of web-based betrothal system, Livoria t hat tummy hope on Sales agent for mesh. This non only cause Livoria to dominate the opportunity to capture Saleslers who prefer booking online, but in addition increases the passenger acquisition equal. Even worst, Livoria attracts younger community ho less unforced to spend on cruises.Vulnerability (S-T Strategies) As Livoria is known as outstanding guard duty among competitors, It evoke give confident to vacationers that the probability of on-board b at long last of disease In the cruise Is minimal. Its unique services such as whale honoring and ports of call slew serve a recession market In cruise Industry. This allows Llvorla to compete with large brand operators in the market. professionalblem (W-T Strategies) Canadian market Is relatively small for cruise Industry and the Industry Is already dominated by large cruise ships and large brand operators. The matched force among rivals Is very Intense..The disaster of prepare causes Llvorla over 3 cardinals rela te comprise. In the future, Sandwich will still potentially ravish Llvorlas pecuniary stability as Its damage Insurance reportage Is Ilmlted. Llvorlas high mental process cost and Ineffective marketing strategies can drive It out of the headache easily. Issue Terrorist beleaguer Is a severer external scourge for Llvorla. Base on the make of the past terrorist attacks, Llvorlas gross Is pass judgment to drop around 35% In 2011. Fortunately, the effect should only last for a year. In addltlon, the accident ofSandwich will Increase the indemnify cost for Llvorla In 2011. Comblnlng with the fix Llvorlas financial health. If management does not bind contingency plan, Llvorla Is expected to have 32. 4M character losses In 2011. Current financial situation In 2010 fiscal year, Llvorla performed better than planned. integral passenger was almost 2% to a greater extent than planned. taxation was 6. 6% more than than budgeted, so was net Income 15. 7%. (Appendix 2) tending(p ) the terrorist attack Incident and 6 Millions animise cos n 2011, solvency ana llqu101ty 0T Llvorla are Delng concerned. I ne new long consideration debt to equity is 1. which implies that Livoria has danger of overleveraging. Fortunately, Income in the lead tax and pursual is 6. 43 times interest outgo and current asset is 1. 75 times current liability. moreover, Livoria has over 10 Million cash and marketable securities which is enough to pay off repair cost and interest expense next year. This conclude that the solvency and liquidity of Livoria is not an issue. analyse over the course of 4 years, Livoria indicateed increase in tax, expense and net income. However, in 2010 fiscal year, the annually growth rate of tax income is lower compare to 2009 (13% vs. 31%).This also causes the annually growth rate of net income drop from 67% in 2009 to 33% in 2010. Given both cruises, Sandwich and natural Splendour were operating at more than 90% capacity, even there was no terr orist attack incident, Livoria would not have impressive growth in number of passengers in the shape up future. Assumptions 1) count on material, credit card and Sales agent commission is shifting to gross. Thus, if revenue drops 35%, so does these variable cost. 2) Dry moorage revenue waistband the same as nourishment conveys should be performed no bet good or bad season. 3) Livoria can book 2.M in groovy gain by selling the run ironical tail 4) All maintenance, redevelopment and repair for Sandwich can be end before the blood of May next year. Thus, Sandwich can service in 2011 cruise season 5) Termination cost for all kinds of hollow are also $6,000 each 6) Training cost for inexpert wear outs is $1,000 each. Alternative 1) Divesting the Fraser dry dock. Pro During the economic downturn, it is wise to spin off non-core business, so that companion can focus its limited resources to improve its core business. Dry dock business is non-core business for Livoria. It only contributed 8. of companys total revenue in 2010. If removing inter-division transaction and associated mastermind material cost, dry dock real reported 667 thousands loss. Con selling price for dry dock is only 4. 3 Million which is not enough to cover the estimated repair cost for Sandwich in 2011. posterior on, Livoria has to spend two Million on return every year. More importantly, reputation for safety is core competency of Livoria. Livoria is relying this to go on competitive in the market. Livoria can no longer ensure maintenance works are well performed and exceed regulation standards if it contracts the maintenance ork out.The effects on aim 2011 net income for divesting dry dock Divesting dry dock will worse off than status quo. 2) Target more profitable market fragment Base on customer field conducted in 2010, Annual family income of our customers is $72 thousand vs. $78 thousand in the effort. It is mainly because we have more customers who under 40 year s white-haired than the constancy (40% vs. 29%). The revenue per passengers per day for this group is only $209 vs. $334 for 40 to 60 years overage group. In aaaltlon, we naa OITTlcult to attract reprise customers. I nere was only customers were repeated vs. % in the industry. from each one repeat customer can generate $2000 vs. $1800 from first timer. The effects on project 2011 net income for aligning customer mix to industry fair Net Income before tax (691. 15) 3) Hire unskilled mob and hospitality from underdeveloped countries. Pro It is a W-T strategy that prevents firms weakness from knifelike competition in the industry. Because of registering in Canada, Livoria has higher operating costs than competitors. By hiring employees in underdeveloped which commonly practice in all kinds of businesses, Livoria can lower its proletariat cost by 30%.It is unfavourable for Livoria to tarry competitive in the industry. Con Experienced crew is sublime and invaluable. By swap ping all experienced crew by unskilled labour, Livoria may risk losing its core competency reputation of safety. Moreover, this may also affect our tonus of service. Superior service is also critical to survive in the industry as well. Furthermore, termination and training costs can branch the benefits of labour cost saving. The effects on project 2011 net income for hiring unskilled labour Net Income before tax.LivoriaKey Success Factors 1. Livoria deliver enjoyable experience to vacationers 2. Livoria is socially responsible that always exceeds environmental and safety regulations 3. Crew members , vacationers and marine life are safe during the journey 4. The services on cruise are high quality but affordable Leveraging (S-O Strategies)Livorias strong brand in safety can take advantage of the growth in tourism industry and strengthen economy in Canada. After acquiring Natural Splendour, Livoria can offer mix of products that can satisfy both vacationers who value for price an d for special amenities. The steady growth in revenue and income has developed a strong financial fundamental for Livoria to expand the business in Canada. Constraints (W-O Strategies)Ineffective and inefficient promotion strategies become constraints for Livoria to get full benefit of strong demand in cruise. Because of the lack of web-based booking system, Livoria only can rely on Sales agent for booking. This not only cause Livoria to miss the opportunity to capture Saleslers who prefer booking online, but also increases the passenger acquisition cost. Even worst, Livoria attracts younger people who less willing to spend on cruises. Vulnerability (S-T Strategies)As Livoria is known as outstanding safety among competitors, it can give confident to vacationers that the probability of on-board outbreak of disease in the cruise is minimal. Its unique services such as whale watching and ports of call can serve a niche market in cruise industry. This allows Livoria to compete with larg e brand operators in the market. Problem (W-T Strategies)Canadian market is relatively small for cruise industry and the industry is already dominated by large cruise ships and large brand operators. The competitive force among rivals is very intense. . The accident of Sandwich causes Livoria over 3 Millions repair cost. In the future, Sandwich will still potentially harm Livorias financial stability as its damage insurance coverage is limited. Livorias high operation cost and ineffective marketingstrategies can drive it out of the business easily.Issue Terrorist attack is a severer external threat for Livoria. Base on the effects of the past terrorist attacks, Livorias revenue is expected to drop around 35% in 2011. Fortunately, the effect should only last for a year. In addition, the accident of Sandwich will increase the repair cost for Livoria in 2011. Combining with the scheduled refurbishment, the repair cost can reach 6 Million. This will seriously affect Livorias financial h ealth. If management does not have contingency plan, Livoria is expected to have $2.4M record losses in 2011. Current financial situationIn 2010 fiscal year, Livoria performed better than planned. Total passenger was almost 2% more than planned. Revenue was 6.6% more than budgeted, so was net income 15.7%. (Appendix 2) Given the terrorist attack incident and 6 Millions repair cost in 2011, solvency and liquidity of Livoria are being concerned. The current long term debt to equity is 1.23 which implies that Livoria has risk of overleveraging. Fortunately, Income before tax and interest is 6.43 times interest expense and current asset is 1.75 times current liability.Moreover, Livoria has over 10 Million cash and marketable securities which is enough to pay off repair cost and interest expense next year. This conclude that the solvency and liquidity of Livoria is not an issue. Comparing over the course of 4 years, Livoria recorded increase in revenue, expense and net income. However, i n 2010 fiscal year, the annually growth rate of revenue is lower compare to 2009 (13% vs. 31%). This also causes the annually growth rate of net income drop from 67% in 2009 to 33% in 2010. Given both cruises, Sandwich and natural Splendour were operating at more than 90% capacity, even there was no terrorist attack incident, Livoria would not have impressive growth in number of passengers in the near future.Assumptions 1) Direct material, credit card and Sales agent commission is variable to revenue. Thus, if revenue drops 35%, so does these variable costs. 2) Dry dock revenue stays the same as maintenance works should be performed nomatter good or bad season. 3) Livoria can book 2.3 M in capital gain by selling the dry dock 4) All maintenance, refurbishment and repair for Sandwich can be finished before the beginning of May next year. Thus, Sandwich can service in 2011 cruise season 5) Termination cost for all kinds of labour are also $6,000 each 6) Training cost for unskilled lab ours is $1,000 each.Alternative 1) Divesting the Fraser dry dock. Pro During the economic downturn, it is wise to spin off non-core business, so that company can focus its limited resources to improve its core business. Dry dock business is non-core business for Livoria. It only contributed 8.5% of companys total revenue in 2010. If removing inter-division transaction and associated direct material cost, dry dock actually reported 667 thousands loss. Con Selling price for dry dock is only 4.3 Million which is not enough to cover the estimated repair cost for Sandwich in 2011. Later on, Livoria has to spend two Million on refurbishment every year. More importantly, reputation for safety is core competency of Livoria.Livoria is relying this to stay competitive in the market. Livoria can no longer ensure maintenance works are well performed and exceed regulation standards if it contracts the maintenance work out. The effects on project 2011 net income for divesting dry dock Divesting d ry dock will worse off than status quo.2) Target more profitable market segment Base on customer survey conducted in 2010, Annual family income of our customers is $72 thousand vs. $78 thousand in the industry. It is mainly because we have more customers who under 40 years old than the industry (40% vs. 29%). The revenue per passengers per day for this group is only $209 vs. $334 for 40 to 60 years old group. In addition, we had difficult to attract repeat customers. There was only 20% of customers were repeated vs. 40% in the industry. Each repeat customer can generate $2000 vs. $1800 from first timer. The effects on project 2011 net income for aligning customer mix to industry average Net Income before tax$ (691.15)3) Hire unskilled crew and hospitality from underdeveloped countries. Pro It is a W-T strategy that prevents firms weakness from intense competition in the industry. Because of registering in Canada, Livoria has higher operating costs than competitors. By hiring employe es in underdeveloped which commonly practice in all kinds of businesses, Livoria can lower its labour cost by 30%. It is critical for Livoria to stay competitive in the industry. Con Experienced crew is rare and invaluable. By swapping all experienced crew by unskilled labour, Livoria may risk losing its core competency reputation of safety. Moreover, this may also affect our quality of service. Superior service is also critical to survive in the industry as well. Furthermore, termination and training costs can offset the benefits of labour cost saving.The effects on project 2011 net income for hiring unskilled labour Net Income before tax$ (3,550.04)