Analysis of the External Environment

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|Group No.1| Andrews Nayoni, Keren Castellanos, Mesfin Tessema, | |Yisehak Mohamed and Christopher Mbi Ojong |

I. Analysis of the External Environment

a. General Environment

By doing a PESTEL analysis we identify general factors that influence the environment where Carnival Corporation operates:

|Political |Economic | | | | |Various international and national laws, regulations and |Increasing fuel price that affects operational costs | |treaties. |Fluctuating exchange rates that affects operational costs as| |Unexpected terrorist attacks that can influence customer |well | |vacation decisions | | |Socio-cultural |Technological | | | | |Different life styles of people influence vacation decisions|Large ships with larger staterooms and many balconies | |Different level of incomes of prospective customers all |Energy efficient ships that would accommodate large number | |around the world |of passengers | | |Innovation in cruise facilities | |Environmental |Legal | | | | |Commitment to pollution prevention and improvement of |Compliance with international and national regulations and | |environmental good environmental management practices |laws | |Environmental and natural conditions such as hurricanes |The cruise industry is usually faced with issues of | | |legislation on tax that affects their earnings. | | |Safety laws |

b. Competitive industry environment

To understand the strategies that Carnival has to implement in order to develop opportunities in its environment we conducted an analysis Five Forces Model:


The bargaining power of supplier of food and beverages is low as there are many sources to obtain these products at competitive prices. On the other hand, fuel and port facilities suppliers have a greater bargaining power as their number is limited.


According to the industry figures there are many customers of cruise services ( 51 million people); this combined with the fact that it is not likely that customers will take over the role of the cruise it can be said that the bargaining power of customers is low.

The threats of potential entrants

The cruise industry has many barriers for new entrants. Economies of scale are required; capital requirements are high in order to have a large fleet of ships; and access to distribution channels (travel agents) requires considerable marketing efforts and time to build relations.

The threats of...
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