Threat of new entrants – Carnival Corporation has only a small threat of new entrants in their market. It takes a huge amount of money to get into the cruise business because capital expenditures are large. There are also many regulations and licenses concerning world travel that would have to be acquired before beginning. For these reasons, it is difficult for new entrants to get into the cruise line business. However, there have been a couple of new entrants such as Disney. Bargaining power of buyers – In the cruise vacation market, buyers do not have the power to affect the market that much.
If they want to take a cruise, they have to pay the price. Threat of substitute products or services – This is definitely a threat to Carnival Corporation. Consumers can easily replace the cruise vacation with cheaper land based vacations. They can make individual arraignments for all of the services they need, or they can purchase an all inclusive land based vacation that is quite similar to the cruise package. Any of these options are quite easy to book today with the addition of online companies like Travelocity. com or Expedia. com.
Bargaining power of suppliers – With respect to the suppliers of ships, there are not many suppliers. Part of Carnival Corporation’s strategy is to keep the most state-of-the-art ships with all of the amenities that the cruise customers prefer. They also feel that they need more ships in order to grow their company at the rate they would like. This could put the shipbuilders in a nice position of demanding more money for the ships. I would also assume that depending on where there ships are based (they wholly own, and partially own several cruise lines), suppliers may have good bargaining power.
One area in particular that suppliers have a great amount of bargaining power, regardless of base of operations, is fuel. This supplier could cause Carnival Corporation’s profit margin to deteriorate rapidly. Rivalry among competing firms – At the current time, there is a very strong rivalry among the top competitors in this industry. Many of the larger companies are merging with, or buying, other cruise lines in order to maintain margins and capture a larger market share. Relative power of unions, governments, special interest groups, etc.
– This could be an area that may cause Carnival Corporation some problems. Unions have already tried to unionize Carnival’s shipboard employees. If that occurs, Carnival Corporation’s margins will shrink drastically because they use very inexpensive labor aboard the ships. Concerning the environment, special interest groups such as Greenpeace could have an effect on Carnival’s operations. Since Carnival’s area of operations is in many countries, those governments have a lot of power to dictate to Carnival Corporation.
As far as the societal environment is concerned, Carnival Corporation needs to be cognizant of several factors. To begin with, the current state of the economy has to be considered. They must recognize that the lion’s share of their contemporary segment has lost some of its disposable income and are less likely to take a vacation at this time. Technologically speaking, Carnival should recognize that many individuals are using the Internet to book their vacations and consider how to take advantage of that particular distribution system.
With the current state of instability in the world political arena, Carnival Corporation needs to realize that many people are uncomfortable traveling abroad at this time and make some adjustments to offset travelers’ fears. Finally, they should realize the need to be as environmentally friendly as possible to avoid any conflict with environmental groups. They also should realize the huge market potential of the aging Baby Boomer demographic that will have more money and time to spend on vacationing.
In the task environment, they need not worry about new entrants but rather on the competition merging and cutting into the market share. They should always keep in mind that individuals have several options when it comes to vacations and make sure that the can compete with those options in both price and conveniences offered. They should also keep their relationships with foreign governments in the forefront of their mind so as not to close themselves out of some areas. Finally, they should make sure that they keep their employees happy in order to keep them from unionizing.