An easy way to defeat the Kraken is by pushing the cargo net with the boxes in it over the Kraken up the stairs. Cut the tentacles that are on the two masts. When both tentacles have let go, the Kraken's mouth will come up. Take the guns and shoot one of the barrels. The Kraken will then go back into the water. Repeat this process again. After you've done that twice, take a torch and use it on a cannon while the Kraken's mouth is up. Do the cannon again when the Kraken is up and then you have won.