Reference no: EM132236059

Carnival CEO, Micky Arison, fails to provide interviews after the Costa Concordia sinks

IN THE IMMEDIATE aftermath of a Carnival-owned cruise ship running aground off the Italian coast in January 2012, the then Carnival CEO, Micky Arison, was accused of not doing enough to publicly acknowledge the seriousness of the incident, which claimed 32 lives. At the time, journalists discussed CEO Arison's low profile as follows. Arison's management style differs from that of many other CEOs. Each cruise line under the Carnival Corp umbrella (and there are 10 of them) is managed as an autonomous unit with their own responsible management team. The cruise lines operate their own websites and sales, marketing and reservations systems. The cruise lines include Carnival Cruise Lines, Cunard, P&O and, of course, Costa Cruises (based in Italy). Together they have enabled Carnival Corp to be the largest cruise ship company in the world, with Royal Caribbean Cruises Ltd the second biggest company, being only half the size. Annual revenue is around US$16 billion, with healthy profit margins for shareholders. After the Costa Concordia disaster, Arison left the on-the-spot handling of the disaster to the Italian unit, feeling it was best placed to manage it. He didn't participate in interviews after the accident. There was a feeling that he may have been trying to keep the spotlight off the Carnival parent company and the other units. Despite that, the Carnival Corp share price lost 14% on the first day after the accident (also affecting the CEO, who owns almost one-third of the shares). He has been criticised harshly by commentators such as the head of Torrenzano Group, Richard Torrenzano. Torrenzano Group is a New York crisis-communications consultancy firm: ‘You can't be invisible when the spotlight is shining on you'. On the other hand, Arison has been applauded by people like the former Carnival executive and existing board member, Bob Dickinson, for his actions out of the public gaze, where his steadiness has reassured the company. There have been public statements made by Arison about the Costa Concordia, in media releases, on his Twitter feed and by his own assurance that all parties affected will be assisted. He has also said that there will be a company-wide safety and emergency procedures audit. Post-disaster events Life for Carnival Corp and Arison has been difficult since the Costa Concordia: there have been lawsuits to fight, the Costa Concordia refloat was delayed and there have been issues with other company ships. In one case in February 2013, the passengers on Carnival Triumph were stranded for 4 days with sanitation problems after an engine fire. Cancellations and diversions of cruises received probably undue media attention. Revenue and profits fell markedly because bookings fell 80%–90% immediately after the sinking. Arnold Donald became the new CEO in June 2013 when Arison moved aside for him (although Arison remained Carnival chairman). Some analysts think that there is not enough obvious change at the top as a result of style similarity between the former and the new CEO. Wyn Ellis from Numis complained about this, saying that an outsider would have been more acceptable as CEO. On the other hand, a Deutsche Bank analyst, Richard Carter, found Donald's openness refreshing, as he conducted reviews of the business and its culture, travelling widely to get to know company executives and investors and industry analysts. Donald has expressed optimism about the ability of Carnival Corp to recover from negative perceptions following the series of setbacks to the brand image. ‘We have 10 million guests a year, 4 million on Carnival alone. All of these people are sailing every week and having positive, joyful experiences.' Both Arison and his successor have stressed that the Costa Concordia was the rarest of events. The cruise ship industry Carnival Corp was not the only company to suffer initial customer jitters post, Costa Concordia. Passengers were nervous about safety. However, once the disaster ceased to be in the news, the cruise industry rebounded. Cruises are regarded as good value for money, especially as cruise lines have been heavily discounting prices to fill the increasing passenger capacity as new ships come into operation. Cruise Lines International Association says embarkations in the UK in 2012 increased by 10%. Profits are down, however, because of factors like increasing fuel prices and a reduction of prices in order to attract passengers.

Which of the six general environmental forces influenced Arison's decision to avoid communicating about the sinking of the Costa Concordia? Discuss.