The U.S. Environmental Protection Agency has changed laws to reduce the sulfur content (emission) in fuel oil used aboard ships. This increases the demand for lower sulfur fuel, which raises the prices of the fuel. Carnival may have to deal with a significant increase in fuel prices. Carnival experienced bad press when three passengers fell off ships in a three week period. There were a total of 22 incidents of passengers falling overboard in 2009. Such events reflect negatively on the company and the industry creating bad publicity. The company is at risk of declines in its business from terrorist attacks and geopolitical unrest, even if not targeted specifically to its ships. The threat of terrorism and pirates overtaking cruise ships is a concern for companies in this industry, and also negatively affect consumers’ perceptions of cruising The company can be adversely affected by particularly bad hurricane seasons, natural disasters, and inclement weather patterns. Many of the company’s cruises are to Caribbean destinations, where hurricanes pose a major threat to business. Other cruise lines offering cheaper packages along hotel and air travel. 7
Carnival Corporation Porter Five Forces Analysis Porter Five Forces Analysis is a strategic management tool to analyse industry and the underlying levers of profitability. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Porter Five Forces focuses on - how Carnival Corporation can build a sustainable competitive advantage in Resorts & Casinos industry. Managers at Carnival Corporation can not only use Porter Five Forces to develop a strategic position with in Resorts & Casinos industry but also can explore profitable opportunities in whole Services sector. Carnival Corporation Porter Five (5) Forces Analysis for Services Industry Threats of New Entrants- low Carnival Corporation and Plc faces low threats of new entrants as entry into the high-end cruise line industry requires capital of approximately $1 billion since it costs, on average, $400 million to build a ship. Further, large cruise ships employ hundreds of sailors and crew that are trained for sea duty which necessitates training, creating substantial additional costs. This is a significant barrier to entry for any new competitor wanting to build a new cruise line from scratch. Lastly, brand recognition is very important in the cruise line industry, which means that it would take time for a new competitor to build an identity and reputation, slowing or preventing their ability to compete with an established company such as Carnival Corporation. 8
However, Carnival Corporations might face the threat of new entrants in Asia. As the Asian operations, markets, and customers are much less defined than in the Americas or Europe, and expectations of cruise quality and scale are lower. So, the numerous Asian companies might be able to tap into this fast-growing market.
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- Fall '19
- Carnival Cruise Lines, Cruise ship, Holland America Line, Cruise lines, Carnival Corporation and PLC