...CARNIVAL CORPORATION STRATEGY REPORT GRIFFIN CONSULTING GROUP Benjamin Levin Jennifer Jones Tom Slade Wednesday, April 11, 2012 2 CONTENTS Executive Summary ..................................................................................................................... 4 Company Background ................................................................................................................ 5 History ....................................................................................................................................... 5 Costa Concordia Incident .......................................................................................................... 6 Business Model and Operations Summary .......................................................................... 8 Five Forces Framework ............................................................................................................. 11 Internal Rivalry ...................................................................................................................... 11 Supplier Power ....................................................................................................................... 13 Buyer Power............................................................................................................................ 14 Entry and Exit ....................................................................................................................
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...Carnival Cruise Lines: Exploiting a Sea of Global Opportunity I must go down to the seas again, for the call of the running tide Is a wild call and a clear call that may not be denied –– John Masefield, The Seekers I n recent years, the call of the sea has spurred the cruise business. Sea voyage, of course, have had an aura of mystique for centuries, but only in recent decades has the experience of the open sea and exotic ports of call been available to mass market. Historically, the recreational sea voyage has been an essentially elitist endeavor. Certainly, members of the lower classes occasionally found themselves on the open sea, but usually as displaced job seekers or crew members aboard ships. In recent years, however, the cruise industry has undergone a sea of change of sorts, and demographic groups it now targets include the working middle class as well as the idle rich. What’s a Cruise, and What Happened to the Cruise Industry? A “ cruise” is a sea voyage taken for pleasure ( as opposed to, say, passage on a whaling ship, an assignment in the navy, or a ferry to get you from point A to point B). Typically, passengers enjoy cabin accommodations for the duration of a fixed itinerary that brings them back to their original point of embarkation. There was a time when ships (called passenger liners) transported a certain class of people across oceans and seas for business or pleasure, but the advent of transoceanic air service after World War II offered a speedier...
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...Key Points The birth of the modern cruise industry can be dated back to the 1960s. With the Airline industry taking off, shipping companies began to reposition themselves as providers of transportation to that of vacation travel. As the means of travel changed, so did its consumer base. Cruising was dominated by brands that served a more affluent customer base, providing fine dining, formal atmospheres and a high degree of personal service. However this also rapidly transformed the market and brands like Carnival Cruise lines emerged. Carnival cruises is the market leader in the low-price cruise market. They strategically achieved this position by emphasizing on-board activities, and targeting a relatively younger cruiser. However, after acquiring 24 percent of the berth space in North America, it has plateaued in being able to set itself apart from its competitors. The case in question outlines key attributes that assist in determining if it wise that the brand make a lateral shift from their current low-priced market to that of a premium one. This analysis will be assessed by means of a brand strategy, possible marketing initiatives and various concepts discussed in-class. The case goes on to highlight that although Carnival Cruises is a key player in the entry level cruise business, it has room for significant improvement. As more competitors emerge, a “sea of sameness” begins to overtake the minds of potential cruisers. The author investigates the foundations of Carnival’s...
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...case study is an analysis on the current situation (data from around 2Q of 2010). The case compares Royal Caribbean to its main competitor, Carnival, through the entirety of the study. The most discussed issue in the case is of Royal Caribbean and its situation relative to the world economy as its recovering from one of the worst recessions since the great depression. From where the timeline of the case begins (2Q of 2010) it had made a large recovery in profit and had cut costs as well. However, even despite the forecasts predicting a further increase in profit, Royal Caribbean along with the cruise line industry is still in a delicate position. The case constantly brings up the point that cruises are solely a purchase based off of discretionary income. In times of economic struggle, discretionary items like cruises are left out of the budget. Another issue that the case brought up with every factor discussed is Royal Caribbean being 2nd place in the world for market share, bested by Carnival Cruise Lines. The case goes back and forth debating whether or not its position within the market share is a good thing. While they by far are in 2nd place, Royal Caribbean has a special niche in the market being the luxury cruise liner with the newer and nicer ships. Overall, the largest theme in this case study is the uncertainty of the cruise industry with the unpredictable economy that may or may not be recovering. Strategic & Financial Objectives The first and most important financial...
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...Centralized Planning in Cruise Industry Abstract This paper identifies the conventional supply chain planning system MRP (materials resource planning) and the complexity of global cruise supply chain management and suggests a contemporary centralized ERP (enterprise resource planning) to solve supply chain issues. Introduction and background The ever-expanding cruise ship industry seems to have no end to its own growth. In the 1980s the growth beat every expectation and since then, the sustained growth has repeatedly given the cruise sector the title of the fastest growing segment in the tourism industry with an 8.4% average annual growth from 1980 to 2003 and a projected similar pattern for the coming years. Another sign of booming business is the fact that every cruise company is ordering 1–2 ships per year to increase their capacity. With these increasing size and capacity expansions, the problem of supply chain and logistics management is also compounded. The ships benefit from very tiny time windows to re-supply and these are not increasing proportionally with size. Therefore, these bigger ships will create new challenges on an operational level. To worsen the problem, cruise ships are committed to the supplies present onboard once leaving the port. Therefore, demand forecasting must be very precise if the safety stock is to be reduced in this space-starved environment, while preventing costly stock outs. Overall planning of supply chain Cruise industry consists of a truly...
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...Alicia Trezza Zak Jones Carnival Cruise Lines 1. Conduct a SWOT analysis for Carnival: what are its strengths, weaknesses, opportunities and threats? In doing so, please evaluate its major competitors. Strengths - Carnival has 75 ships in its fleet and is continuing to brand the company as the “fun ships” - There are large barriers of entry into the cruise businesses. Ships are extremely costly and time consuming to build. - Carnival cruises provide a vacation that includes all activities, food, beverages and transportation to multiple destinations in one low price, appealing the budget friendly cruisers. - Carnival builds it ships specifically for entertainment and fun, the most important factors people are looking for when booking a vacation. - Carnival markets to all travel agents. With a variety of cruise ship offerings, Carnival has vacations that appeal to a variety of demographics, budgets and niches. - Carnival has ample opportunity during each cruise for ancillary revenues. Even through the cruises are “all-inclusive”, Carnival charges for short off boat excursions, casino play, and alcohol. - Ships almost always sailed full and satisfaction rates were extremely high. Weaknesses - Past issues, such as one ship hitting a sandbar on the first voyage leave lingering impressions on vacationers. - Customer loyalty is low. It appears customers are only willing to take 1-2 cruise vacations in a few year spans, despite Carnival’s high satisfaction ratings. -...
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...1. The growth of cruise-line industry has been influenced by factors like: -increase in and expansion of technology (refurbishment of cruises, installation of discos and casinos,etc..) - liberalization of cross border trade and resource movements (international field, ship crews from over 100 countries, use of locally product from all over the world, treating the world as a source) -increased globally competition (development of air-service had changed the objective of Carnival Corporationidea of fun ship vacation) -development of services that support IB (advantages of lower taxes and less stringent employment rules) 2. In the past, ships were only used for transporting people across oceans and seas for business or pleasure, but the sea voyage was an essentially elitist endeavor, and very luxury and expensive. The advent of transoceanic air service after World War II offered a speedier and less expensive alternative, and airlines captured passengers from ocean liners. Furthermore, advances in jet technology made air travel a viable option for a growing mass market of budget-minded international travelers. As a consequence, cruise companies one by one retired the great luxury lines for travels. In this context, carnival cruise lines saw an opportunity to expand mass-market sea travel by promoting the idea of the ”fun ship” vacation, an excursion designed to be a little less formal and luxurious than the traditional ocean liner. Moreover, a lot of these vacationers...
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...Carnival Cruise Lines: Exploiting a Sea of Global Opportunity International business 13th ed. Summary: This case describes the history of the cruise industry and defines it, then it talks about the current state of the Cruise industry, then it goes on to discusses the business in international waters, after that it states the main points in Carnival Cruise Line operations, finally it argues the overseas environment. SWOT Analysis: Strengths: 1. Carnival cruise lines is one of three major companies that has the share of 91% of the market and it is the largest of all three. 2. That being said it is very strong financially. 3. The financial strengths of carnival cruise line generates international connections that will be very helpful in this line of business. 4. Another point resulting from the financial strengths is the ability to cover their customers geographically being based in different countries. 5. The ability to target different segments hence it has different cruises with different costs. Threats: 1. The health problem that faced them in 2006 where a virus hit the cruise caused bad publicity which causes carnival to take the infected ship out of service which caused financial losses. 2. Any health epidemics causes carnival to avoid ports of the country infected which also can cause financial losses. 3. The weather causes a major threat which normally forces the company to cancel the trip...
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...2, 3): Carnival Corp has been known for health and safety records, a key component in consumer decision-making in the cruise industry. In order to begin improvements, a pause strategy needs to be utilized to allow the company to take a step back from aggressive growth and focus more towards consumer necessities. Many complaints stem from issues like sanitization of rooms, quality of food, and ship malfunctions. Keying in on ship maintenance, restoration, and efficiency will significantly decrease the chance of malfunctions. While implementing more stringent and attentive guidelines towards guest amenities and conditions of food storage/quality to help increase consumer appeal. Pros * Allows focus towards proactive improvement of overall health and safety environment * Opportunity to address customer complaints with effectiveness * Better consumer reports from changes * Proliferation of trust and support from consumers * Reduction of direct costs from efficiency of improvements/upgrades Cons * Overall growth will be put on hold * Hard to estimate overall initial costs of improvements * Costs associated with implementation process * Strategy is temporary; Follow-up plan must be ready B. Marketing Strategy (CI#1, 2): Carnival Corporation & PLC is a global cruise company, consisting of some of the industries most recognized brands. In order to reach the different consumer demographics and utilize their nine different cruise lines...
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...Carnival Cruise Lines 1-3. The global forces that have contributed to the growth of cruise-line industry are the nationality of competitors. Companies can obtain ‘flags of convenience’ from about 30 different countries, and travel to many different ports. This can tend to make it easier for companies to be based out of other countries and save money on taxes and such. 1-4. Legally, Carnival is a Panamanian company, and Carnival’s revenue is not subject to U.S. or Panamanian income taxes. 1-5. The Global Recession greatly impact the global cruise industry. People were less willing to spend money on vacations which took a toll. Having a very diverse work force can strongly help the global cruise industry. Making it easier for customers that don’t speak English as a first language. 1-6. If Carnival offered discount travel to embarkation ports that might entice more German or French travelers to go on Carnival Cruises. Also, if Carnival were to create ports closer to those regions these travelers may be compelled to cruise. 1-7. Percentage of first time cruisers is declining. Industry members are worried that repeat cruise goers will get bored and move on to resort/destination vacations instead. I would market mainly to first time cruisers, offer large discounts or specific cruises for first timers. Cruise industries need to keep creating new things and having niche cruise lines in order to keep repeat customers returning. Though future gas prices, taxes, and interest...
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...Carnival Cruise Lines is the largest cruise company in North America and carries over 700,000 passengers over a week. Carnival has captured the "fun" psychographic and has a strong reputation for an enjoyable, relaxed cruise. Furthermore, Carnival has a strong market expansion strategy for selling the mass-market cruise category and first-time cruisers. They have a clear vision and knowledge about the industry and a commitment to their brand essence. Because of their strong brand image they are able to achieve double-digit growth in the industry. One area that Carnival needs to improve upon in order to stay competitive within the industry is information technology. Carnival has a large IS group, but the focus has been on maintenance and operations of the existing infrastructure. They had trouble figuring out who to market and using data they had gathered from customers, they could figure out where to focus their energy. One of the issue of Carnival was that they felt like they didn’t need to be the IT innovator but they need to keep up with their competition. Carnival’s management had been discussing what strategy to use in order to get a better understanding of their customers and how to make them loyal to the cruise line. One option was to use CRM software. CRM had been a fad that had recently swept the industry, but due to Carnival's conservative stance toward IT they decided not to implement it. I think that CRM could help Carnival gather and analyze customer data in order...
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...MGMT 619 Spring 2009 Carnival Corporation [pic] Team 6 Amy Clogher Jacob Griego Ted Noble David Sciortino Deepa Sethi Executive Summary Carnival Corporation is the leading cruise line company in the international cruising industry, with 11 major cruise line brands and is clearly a winning company. It controls almost 50% of the cruise line market and is a broad line provider. The company does not face any considerable challenges within its industry and has adequately responded to all threats. Although 2008 was a challenging year due to the economic crisis, Carnival posted net income for 2008 of $2.3 billion (15.9% of sales). Carnival’s strategy is to be a broad line provider with a wide scope on a large scale. Carnival maintains this strategy by focusing on cost leadership in the contemporary and bargain lines, and then differentiating in the premium and luxury lines of their product mix. Industry & Competition The cruise line industry is a moderately attractive, 3-star industry that is characterized by top incumbents capturing a majority of the economic value in the industry, high fixed costs, cost savings achieved from economies of scale, and a high degree of rivalry between the top two industry incumbents. The cruise line industry has reached the growth stage after the inflection point. It is predicted that the growth stage will be longer in the cruise line industry due to frequent product upgrades and niche enhancements that forestall...
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...Assignment 2: External and Internal Environments Professor Rufus Robinson February 2, 2014 Business 499 The industry that I chose to research is the travel and cruise ship industry. The cruise industry is a small part of the travel/leisure industry. The U.S. cruise industry has experienced substantial growth in recent years. Nationwide, direct spending by cruise lines and passengers increased from $9.4 billion to $14.7 billion, (56%) between 2000 & 2004. Including multiplier effects, the U.S. cruise industry supported 315,830 jobs and provided $12.4 billion in wages and salaries in 2004. In recent years, the cruise industry has seen remarkable growth in the ports of Bar Harbor and Portland, Maine. Bar Harbor hosted 76 cruise ship visits in 2005, a 36 percent increase above the 56 ships that came to town in 2001. According to Portland’s Seaport Statistics, Maine’s largest city hosted over 40,000 cruise ship passengers in 2001 and 2002, up from about 14,000 passengers in 1999. Portland welcomed 45,225 cruise ship passengers in 2005. Cruise ship passengers provide a stimulus to the local retail economy of host ports. Todd Gabe and Thomas Allen: http://umaine.edu/centro/files/2011/07/ME-Cruise-Ships-2005.pdf Cruise lines are differentiated according to the market that they serve. The industry is divided into three different segments, luxury, premium and contemporary. The luxury segment caters wealthier clientele and the price starts at more than $500 daily...
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...Case Study Title: “Carnival Cruise Lines” Program MSC HTM 544: Strategic Management for Travel and Tourism Business Instructor Name: Professor: Ada Lo Student Name: Zheng Chen Jerry 1 Jerry, (Zheng Chen) 鄭晨 13105284g Table of Content Vision ＆ Mission ＆ Goals ＆ Strategies ....................................... 3 Vision of Carnival ........................................................................................... 3 Mission Statement of Carnival ........................................................................ 3 Strategies being pursued by Carnival .............................................................. 3 Its Long-term Goals ......................................................................................... 3 Congruence of Mission, vision, goals, strategy and business model of Carnival............................................................................................................ 4 An internal factor analysis summary .......................................................... 5 External factor analysis summary ............................................................... 6 Strategic Groups within the Cruise industry ................................................ 7 Facing Issues and Solutions .............................................................................. 8 Issues............................................................................................................
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