Carnival Corporation Case Study

Topics: Holland America Line, Carnival Cruise Lines, Cruise line Pages: 7 (2234 words) Published: April 1, 2012
Carnival Corporation as the largest cruise line in the world is being a leader and innovator in the cruise line industry. Many of the onboard activities and services were introduced to strengthen the competencies between competitors. The challenges of the Carnival were being overcome by the management with creative and innovative strategies. As a corporate entity, Carnival did not refuse to withdraw money to settle the ocean pollution charged by public. The expansions of cruise line market via acquisition of a few subsidiaries dominate the cruise line in the world.

1. Strengths (internal factors)
First, the largest cruise line in the world, as the leader and innovator in the cruise industry (growth from two converted ocean liners into an organization with multiples cruise lines). Second, the belief of management and Board of Directors that the company will grows better. It motivates the employees to work hard. Third, internal grow in term of vessels that approximately ten vessels are under construction. Fourth, employees loyalty (the longest period employees remain in this organization is around eight years) because Carnival management treating well to their employees in terms of wages). Fifth, creative and innovative corporate officers that is ready to face challenges. Sixth, Carnival has operational experience and economic of scales that causing them to have lowest break even point in the same industry. Weaknesses

First, in 1972, the speed of ship was slow. Second, the long-term debt within 1999 and 2001 is increased (the payback of debt may lower the revenue and thus decreasing the dividend payment for shareholders). Third, the expand market (business) of Carnival causing the difficulty in managing the business. Fourth, reducing on net income in 2001 is because of higher costs and expenses.

2. Opportunities (external factors)
First, the expansion through acquisition can reduce the competitors in same industry and has the ability to compete with other competitors (lower advertising costs). Second, collaboration with travel agents can promote cruises. Third, the industry is expected to have bright future in passengers, consolidation through mergers, buyout, and smaller cruise operator failure, and the expansion of the industry worldwide. Fourth, expand of target customers from older people to younger people. Fifth, expand of onboard activities (casino, disco, and nightclub). Threats

First, terrorist events that were happen in 11 September 2001. Second, negative publicity in 2002 where Carnival subjected by the ocean pollution charges and “Norwalk-like” virus that affect the cruise industry. Third, the increased of fuel costs and airline costs that affect the industry. Fourth, the failure of Carnival discontinued operations of Fiesta marina Lines that affect the company image. Fifth, Persian Gulf War that was increased competitors in the cruise industry especially in Caribbean area. Sixth, Royal Caribbean Cruise Lines had institute a major shipbuilding program that challenges Carnival. The emergence of Walt Disney Company in the cruise market; and the prospect of new ships on the horizon give impact to the “family” cruise vacation segment.

3. Core competencies
Yes, Carnival has core competencies because it is the competency crosses divisional boundaries, Carnival can do exceedingly well, and must continuously reinvest in it: i) Adding diversion onboard – such as disco, nightclubs, casino, and others. Carnival also tries to attract younger cruisers by providing vacation package that included airfare to the port of embarkation and home after the cruise. ii) Product positioning – Carnival believes that cruise market comprised to three segments (contemporary, premium, luxury) with different passenger demographics, characteristics, and growth requirements. iii) Travel agents – collaborate with travel agents to promote cruises. Carnival also training travel agents from nonaffiliated travel firm to...
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