Bargaining power of suppliers moderate high supplier

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Bargaining Power of Suppliers- moderate high Supplier Power within the cruise line industry is moderately strong. Most of a cruise ship’s supplies are bought on an open, competitive market. So, the threat of integration by these suppliers is very low. One notable exception is Carnival’s newbuilds consisting 6 major shipyards that have recently built cruise ships, and 2-3 more that either perform conversions or have built ships before 2000. Capacity and capability at these main builders is also limited, so Carnival Corporation relies on a limited number of manufacturers for its newbuilds. Bargaining Power of Buyers- relatively low Buyer power within the cruise line industry is relatively low. By contrast to most other vacations, more than two thirds of cruises are still booked through travel agents.3 Carnival states that no one group of travel companies makes up more than 10% of their business, signalling that buyer concentration is low, which reduces their power. Further, customers are spread around the world and do not have any mechanisms through which they can express a collective voice or exert collective power, leaving them with minimal control. Additionally, customers do not have the ability or resources to create the cruise experience by themselves – it is, by nature, a highly packaged deal. Threats of Substitute Products or Services- moderate Considering that a cruise is a vacation for most customers, the cruise line industry faces a significant threat of substitution from other types of vacations. Travelling by air land has traditionally been less expensive than cruises. Any vacation can be substituted for, and there is not a high cost to change, which makes the threat of substitution seem very high. Customers who are apt to go on a cruise might instead choose an all-inclusive resort vacation if the price and service appears more appealing. However, cruise liners, such as Carnival Corporation, aggressively promote the high level of service they offer. In addition, the experience offered by a cruise is very unique, and differs from other types of vacations enough that customers who prefer cruises are likely to choose them over other types of vacations, so long as the cost is not a substantial barrier. 9
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Rivalry among the Existing Competitors- high Carnival is the leading company within the cruise line industry due to its multiple fleets and significant international presence. The cruise line industry is effectively an oligopoly market, where several major cruise liners make up more than 90% of the market shares. If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. The competition does take toll on the overall long term profitability of the organization.
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  • Fall '19
  • Carnival Cruise Lines, Cruise ship, Holland America Line, Cruise lines, Carnival Corporation and PLC

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