Facts of the Case

- Health Cruises Inc.

o A Miami based firm that was created by self-styled innovator and entrepreneur Susan Isom.

o Packages cruises to Caribbean islands such as Martinique and the Bahamas.

- Main goals

o To promote good health habits without the pressures of day-to-day living.

o Provide guests with relaxation and comfort through many different health programs on the ship.

o Entitle guests to a supportive environment that will give them confidence to achieve their desired goals.

o Put an emphasis on breaking crucial bad habits such as smoking and over-eating.

- Management crew

o The ship comes packaged with ten consulting psychologists and health specialists who develop a program to examine and monitor the behavior of passengers as well as charter a ship.

o Chairperson DeForrest Young is responsible for management decisions.

o Pittsford and LaRue advertising executive Susan Carolyn is accountable for promoting the ship.

- Expenses

o The initial capital to get the ship up and running is over $250,000.

o Most of it going to the $220,000 ship rental and crew wages.

o The initial advertising expense is $65,000.

o There is also a $10,000 fee for other administrative expenses

Central Problem

- Main issues

o There was a less than expected passenger turnout in relation to advertising executive Carolyn Sukhan’s prediction.

o Only two hundred passengers registered for the cruise a month before sail date, falling short of the three hundred passenger prediction.

o The two hundred passengers average $1,500 per stateroom.

- Options

o The board is faced with tough decisions with what to do next.

o They can cancel the entire cruise and just take the losses.

o They can run the cruise with the two hundred passengers they have now and hope that a couple more will trickle in

o They can shell out more money on advertising and hope for a positive turnout.

- Additional Costs

o Since the passenger turnout is not what the board had expected they can try to advertise more in hope that a positive turnout will occur.

o Advertising executive, Carolyn Sukhan stated that if the company put in an additional $6,000 for advertising an estimated twenty more passengers would sign up.

o She also affirmed that if the company spent $15,000 for additional advertising an estimated turnout of forty passengers would occur.

- Budget

o The limited budget the company is dealt with will play a big role in what it does.

o They will need to provide incentives to their shareholders in order to obtain more funds.

o This will be a tough and rigorous process the board will face.