Carnival Cruises

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In general, the level of competition in an industry increases with the number of firms in the industry. If all firms in an industry are small in size, relative to the size of the industry, it is a fragmented industry. If a small number of firms controls a large share of the industry’s output or sales, it is a consolidated industry.

The type of competition in fragmented industries is generally very different from that in consolidated industries.

A consolidated (concentrated) industry, like the cruise industry, typically has a more attractive industry structure, though the nature and extent of competition in consolidated industries is hard to predict. Such industries typically exhibit high entry barriers, differentiated products, established brand preferences, and often high profitability. In some consolidated industries, incumbents fight with each other tooth and nail and hurt industry profitability as well as their own, as such is the case with the rivalry between Carnival Corps and RCI.

Since Carnival's founding, the cruise industry has become more competitive due to increased capacity, price discounting, and an environment where all the cruise brands are beginning to look and sound alike. Carnival now faces the challenge of deciding how best to burnish its brand to succeed in the future.

2- From my point of view, we are studying a case of oligopolies, industries in which a very small number of firms accounts for a very large share of the industry’s output.

There are some barriers to entry in the market for cruises, in the forms of heavy capital requirements, registration and licensing regulations, and the increasing economies of scale in operating vessels of larger size. The market has therefore developed an oligopolistic structure, in which a small number of suppliers dominate the supply of short ocean cruises

A key characteristic of an oligopoly is that competitors are mutually interdependent; a competitive move by one company will...
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