Strategic Analysis Of Carnival Corporation And Plc Tourism Essay

Worlds have since clip immemorial been fascinated with ships, seas and oceans. Whilst ships have in the past been used chiefly for transit of goods and people and of class for war, seafaring has ever been associated with travel to new and unusual finishs, exhilaration and love affair.

With the modern-day twenty-four hours and age being steadfastly focused on new options for leisure, exhilaration and life experiences, the western touristry industry has shrewdly used this human captivation with the seas to develop an highly desirable touristry option ; viz. sea and ocean sails. Such sails offer exciting and enjoyable holiday options for people. They are offered by specialized sail line drives and supply clients the experience of going on the high seas in big, good appointed and epicurean ocean traveling vass. Cruise holidays provide clients with luxury experiences and chances to prosecute in legion leisure activities like ( a ) Sun bathing on expansive ocean line drive decks, ( B ) usage of big swimming pools, ( degree Celsius ) a scope of organic structure comfort activities through the usage of watering place, gyms and Jacuzzis, ( vitamin D ) assorted types of feeding and dining options, and ( vitamin E ) a scope of on ship vacation activities like games, competitions, singing and dancing.

The modern twenty-four hours sail industry emerged in the seventiess in North America ( Dowling, 2006 ) . Whilst cruises originally aimed to supply clients with epicurean trans-ocean transit options, the industry has since so transformed into a holiday option for people to go to set down based finishs or to sightseeing locations in the oceans ( Dowling, 2006 ) . A sail now stands for a complete start-to-finish experience in luxury, comfort and the good life, instead than an option for going from point A to point B ( Dowling, 2006 ) . Whilst sail vacationists still form a really little section ( merely approximately 2 % ) of the planetary touristry industry, their volumes grew from 500,000 riders in 1970 to 6.6 million riders in 2000 ( Gisnas et al, 2008 ) . Such volumes have continued to turn during the last decennary and are estimated to be 17 million one-year riders today ( Gisnas et al, 2008 ) . The industry experienced important growing in the seventiess, when it foremost emerged, and has been turning at between 8 and 9 % since so ( Gisnas et al, 2008 ) . Sectoral growing in the sail sector has besides non been cyclical like other transporting sections ( Gisnas et al, 2008 ) .

Carnival Corporation and plc ( Carnival Corporation ) is the universe ‘s largest operator of sail ships. With 11 single trade names and a entire fleet of 96 vass, the administration operates sails in North America, Europe and Australia ( Carnival… , 2010 ) . Whilst the planetary recession affected the travel and touristry industry significantly and besides affected the grosss of the company to some extent, Carnival Corporation expects to turn significantly in the coming old ages, as recessive forces weaken and single and concern disbursement starts traveling upwards one time once more ( Carnival… , 2010 ) .

This specific analysis efforts to ( a ) examine the operations and mechanisms of the sail industry, ( B ) analyse the schemes and operations of Carnival Corporation, and ( degree Celsius ) recommend suited future growing schemes for the company.

2. Overview of Cruise Industry

2.1. Brief history of Cruise Industry

The first sail path, historical records reveal, was established by British P & A ; O in 1882 with the debut of S/Y Ceylon for pleasance cruising ( Cartwright & A ; Baird, 1999 ) . The ship operated on the western seashore of Norway and was good known to wealthy UK citizens ( Cartwright & A ; Baird, 1999 ) . The most celebrated illustration of a sail line drive of those yearss is that of the Titanic, which sank on her inaugural ocean trip from Southampton to New York, in April 1912, after a hit with an iceberg ( Cartwright & A ; Baird, 1999 ) . Whilst trans-ocean services between North America and Europe expanded greatly between the two great wars, the outgrowth of commercial aircraft after the closing of the Second World War led to the riddance of human transit through ships ( Cartwright & A ; Baird, 1999 ) . The old ages that followed the closing of human transit through ships nevertheless saw the outgrowth and the steady growing of pleasance and touristry oriented sails ( Cartwright & A ; Baird, 1999 ) .

The sail market is presently dominated by three of import administrations viz. , Carnival Corporation ( the topic of this survey ) , Royal Caribbean International and Star Cruises. Whilst the industry was home to a figure of participants in the 1970s and 1980s, progressive amalgamations and confederations have led to the formation of oligopolistic market state of affairs that is dominated by three strong entities ( Gisnas et al, 2008 ) . Carnival Corporation leads the concern with a 45 % market portion, followed by Royal Caribbean ( 21 % ) and Star Cruises ( 10 % ) ( Gisnas et al, 2008 ) . Appendix 1 provides inside informations of the capacities of the major sail line drives.

The sail market is divided into two chief geographic sections, ( a ) the US market and ( B ) the European market. The US market, which includes North America and the Caribbean, forms 62 % of the entire market, whereas Europe histories for 24 % of sail users ( Kamery, 2004 ) . The European market, whilst smaller than the US market, is turning fleetly and is expected to increase by more than 9 % per annum in the coming old ages ( Kamery, 2004 ) . The UK market has until now been the dominant European market, even as the German, Norse, Benelux, Austrian and Swiss markets are demoing strong growing ( Kamery, 2004 ) .

Cruises can be segmented into five chief classs, viz. modern-day sails, budget sails, premium sails, luxury sails and particular sails. Appendix 2 provides inside informations of the different types of sails.

The industry can otherwise be segmented by linguistic communications, which surprisingly is an of import point of distinction ( Gisnas et al, 2008 ) . Persons prefer to travel on sails with people who speak the same linguistic communication ( Gisnas et al, 2008 ) . Important market sections are ( a ) American households, ( B ) senior citizens from the EU, ( degree Celsius ) conferences and inducements, ( vitamin D ) subjects and ( vitamin E ) escapade ( Gisnas et al, 2008 ) . In North America the mark population for sails companies comprises of grownups, who are more than 25 old ages in age and earn more than 40,000 USD per annum ( Gisnas et al, 2008 ) .

The mark market includes ( a ) people who have cruised before, ( B ) vacationists who have non antecedently engaged in sails and ( degree Celsius ) non vacationists every bit good ( Gisnas et al, 2008 ) . The section makes up practically 44 % of the US population ( Gisnas et al, 2008 ) . Whilst the mean age of riders has come down to merely below 45 in the US, The mean age of riders in the UK is besides coming down significantly ( Gisnas et al, 2008 ) .

The potency of the market is high because the bing incursion rate at 3 % for North America, 1 % for Europe and 2 % for UK is really low. The chief markets continue to be North America and Europe. The Asiatic market is nevertheless turning really easy. Appendix 3 Provides inside informations of riders both by nationality and by beginning.

3. Analysis of Carnival Corporation

3.1. Company Overview

Carnival Corporation & A ; plc is the market leader of the sail industry. Carnival Corporation was founded in 1972 by Ted Arison ( Carnival… , 2010 ) . Both Carnival Corporation and Carnival plc have grown organically, every bit good as through amalgamations that have led to important additions in organizational operations ( Carnival… , 2010 ) .

The present administration came approximately from a amalgamation between Carnival Corporation and P & A ; O Princess Cruises plc, wherein it was agreed that P & A ; O would be listed on the London Stock Exchange ( Carnival… , 2010 ) . The administration is therefore dually listed on the London and New York Stock Exchanges and has head offices at Miami, USA, and at Southampton, UK ( Carnival… , 2010 ) .

The company has 11 sail line trade names, each of which controls a geographical location. To lucubrate, AIDA cruises controls the German concern, Carnival Cruise lines, Holland America Line, Princess Cruises, and the Seaborne Cruise Line operate in the United States, Cunard Line, Ocean Village, and P & A ; O Cruises service the UK market, Costa Cruises controls the Italian concern, Iberio Cruises controls the Spanish concern, and P & A ; O Cruises Australia controls the Australian concern ( Carnival… , 2010 ) .

The administration earned grosss of 13.1 billion USD in 2009 compared to 14.65 billion USD in 2008. It owns 93 ships, has a rider capacity of 180,746, and employs 85,000 people. Carnival Corporation carried 8500 riders in 2009 ( Carnival… , 2010 ) .

3.2. Operational Performance

The operations and fiscal public presentation of the company suffered significantly in 2009 compared to 2008. The gross revenues and net income figures for these two old ages are provided below.




Gross saless





Percentage Motion

( 10 % )

Net Net incomes





( 19 % )

Net Net income Ratio



Whilst the company direction provinces that they have been able to buffer the impact of the recession efficaciously, the fiscal analysis of cardinal public presentation indexs reveals a different image. Both gross revenues and net incomes have come down aggressively ( Carnival… , 2010 ) . It besides needs to be noticed that the gross revenues of the administration have come down by 10 % , even as the sail industry overall contracted merely by 3 % in 2009 ( Carnival… , 2010 ) .

Other operational and profitability ratios like ROI and have besides come down in the aftermath of decrease in gross revenues and profitableness.

3.3. PESTEL Analysis

The PESTEL frame works helps analysts to analyze environmental factors in a methodical mode ( Porter, 1980 ) . The specific scrutiny of political, economic, societal, technological, environmental and legal factors assist in understanding cardinal alteration drivers and external influences on the working of administrations ( Porter, 1980 ) . A PESTEL analysis helps organizational directions in alining organizational schemes with environmental worlds and work towards guaranting that administrations do non intentionally follow strategic regulations that are at discrepancy or in resistance to environmental forces ( Porter, 1980 ) .

With sail lines basically being international in the nature of their operations, their working can be significantly affected by terrorist act related conditions ( Porter, 1980 ) . Increase in terrorist act activities constantly leads to stricter in-migration Torahs and to decrease in touristry enthusiasm ( Porter, 1980 ) . Apart from terrorist act, sail activity can besides be affected by political instability in geographical locations that are portion of the sail web, every bit good as by touristry related revenue enhancement policies in different states ( Porter, 1980 ) .

Tourism, being an basically discretional activity is strongly influenced by alterations in planetary economic conditions ( Porter, 1980 ) . The last two old ages have seen decrease in touristry concern and sail activity. Apart from the economic environment, the motion of exchange rates can besides impact touristry and accordingly cruise activity. Whilst touristry is presently traveling through a hard stage, ( holding reduced by 4 % in 2008 and 2009, and expected to turn by 0.3 % in 2010 ) a station recession roar is likely sing that touristry contributes about 10.6 % of planetary GBP.

Social and cultural characteristics play of import functions in the sail industry ( Porter, 1980 ) . The bulk of sail clients come from flush and western societal sections and topographic point great emphasis on lifestyle quality ( Porter, 1980 ) . The market for sails has until now been dominated by clients from the advanced western states.

Cruise line drives are invariably puting in engineering to do their ships more clients friendly every bit good as easier to run. Internet gross revenues enable clients to cut down costs through riddance of mediators ( Porter, 1980 ) .

The touristry industry, because of the associated travel costs, is strongly associated with emanation of green house gases. Any kind of rationing of crude oil merchandises can as such lead to significantly inauspicious effects upon the touristry and sail sector.

The sail concern can besides be influenced to some extent by trade Torahs and imposts processs and ordinance. The bing planetary visa government is enormously skewed in favor of the dwellers of rich states and this can impact the growing of sail clients from the emerging states.

3.4. Critical Success Factors

Analysis of available information leads to the decision that success in the transportation industry will depend basically upon economic systems of graduated table and grade of distinction ( Gisnas et al, 2008 ) . Widening this construct to the sail industry, the critical success factors in the industry can be narrowed down to the four following factors ( Gisnas et al, 2008 ) .

Exploitation of scale economic systems: Economies of graduated table can be achieved in different operational countries like vas size, care programmes, and economic systems of hotel operations

Merchandise Differentiation: This can be achieved through the conceptualization and execution of different types of sails.

Coevals of Customer Loyalty: This will enable companies to obtain higher portions of repetition client concern

Management of Strategic Investments: This will enable an administration to acquire infrastructural advantage through optimization of investings, both in footings of money and costs.

4. Strategic Recommendation

Carnival Corporation is presently sing hard environmental conditions because of the planetary recession that was triggered off by the lodging prostration and the subprime crises in the USA ( Porter, 1980 ) . With the economic systems of flush North American and European states, wherein the brunt of the crises, planetary touristry was significantly affected during the past two old ages ( Porter, 1980 ) . The majority of the sail industry services the citizens of the United States, the UK and other flush European states and a crisp economic downswing in these states will expectedly hold significantly adverse on the gross revenues and operational public presentation of the members of this sector ( Porter, 1980 ) .

The strategic growing programs for carnival Corporation must consequently integrate the impact of the excess normally hard current environment ( Porter, 1980 ) . Whilst the current economic environment is disputing the company ‘s operational and fiscal capablenesss, it is besides supplying important chances to strong bing participants ( Porter, 1980 ) . The growing recommendations for Carnival Corporation have been based upon the information obtained from the PESTEL analysis, the use of strategic theories like Porter ‘s generic growing scheme and Ansoff ‘s growing matrix, the critical success factors for members of the industry and the chances and menaces that exists in the current environment ( Porter, 1980 ) .

Michael Porter, in his seminal part towards corporate scheme forwarded the theory that companies can accomplish competitory advantage merely through the acceptance of specific schemes, viz. cost leading, distinction, or niche business ( Porter, 1980 ) . Porter went on to province that whilst many administrations feel the demand to follow more than one of such schemes, such an attitude was basically defective, and the desire by company directions to follow basically distinguishable operational schemes could take to loss of focal point, confusion in growing aims and battle in contradictory and self destructive actions ( Porter, 1980 ) .

Carnival Corporation has invariably followed a scheme of differentiating of merchandises from that of its rivals. Whilst the administration ‘s growing is besides due to its beginning and operations in the highly strong US and British markets, the company has invariably differentiated its offerings through invention in the types and lengths of sails to its clients. The company is otherwise strongly focused on sustainability and is taking action to cut down its C footmark through the lowering of energy usage on its ships, continuing clean air, and cut downing operational waste.

The PESTEL analysis reveals that whilst the industry is vulnerable to planetary terrorist act actions and the political instability of states that form portion of the operational country of the industry ( Porter, 1980 ) . Apart from such political factors, the industry is vulnerable to economic downswings. It is nevertheless going obvious that the downswing has perchance bottomed out and that western economic systems are traveling towards recovery ( Porter, 1980 ) . Whilst recent economic developments in Greece and Spain are perturbing, wide economic indexs show the possibility of some economic betterment in 2010 and tauten upward economic motion in 2011.

This state of affairs provides abundant chances to the company ‘s growing programs. Whilst 2009 has seen a dip in the company ‘s gross revenues and profitableness, fiscal studies reveal that the company has a really strong hard currency place and comfy purchase ratios. With its considerable fiscal ability and its experience in growing through buyouts and acquisitions, the current economic fortunes should supply important chances for the company to get smaller and financially weaker administrations, who would be happening it hard to last in the present fortunes.

Igor Ansoff ‘s theoretical account of growing stipulates that companies move in their growing curve from selling presently available services in bing markets through assorted stages to selling new merchandises in new markets (, 2009 ) . Ansoff ‘s growing theoretical account is provided in appendix 4. Carnival Corporation should clearly follow a carefully formulated scheme of external and internal growing. External growing should be targeted through the hunt and acquisition of attractive patrol car lines whose operations and viability has suffered because of the crises. The corporate direction should sharply reconnoiter for acquisition and utilize its strong fiscal resources to good consequence. Such a scheme will besides take to better graduated table economic systems and will of class need efficient direction of strategic investings (, 2009 ) .

The company, in conformity with Ansoff ‘s theoretical account should steadily prosecute schemes for distinguishing their services through the conceptualization and execution of different sail subjects. It is besides opportune for the company to earnestly look at the emerging Asiatic touristry sector, sooner through the acquisition of a local sail operator. The Asiatic economic system is fairing much better than the European economic system and important accumulation is happening in the upper in-between category sections of China and India. Such population sections are wholly unexposed to cruise holidaies and supply fertile land for Carnival Corporation to thrust their Asiatic operations.

Carefully conceived strategic program of organic and acquisitive growing will enable the company to consolidate its leading place and exploit current environmental chances (, 2009 ) .

5. Decisions