Carnival Cruise Line is working as a subsidiary of Carnival Corporation & PLC dealing in the travel and hospitality industry and offering and selling its products and services via cruise ships all over the world. It has been dealing in the travel and hospitality industry. The firm was established in 1972, with its headquarters located in Florida, United States.
The company generated strong revenue of 22.85 US billion dollars and have a passenger’s capacity of almost 249,000 with having 104 ships as of 2019 (Carnival, 2019). From the perspective of the global cruise travel industry, the consideration of Porter’s five forces would be of great help for developing policies to generate a wider and deep look on the firm’s position in the industry.
Competitive Rivalry in The Market
The cruise travel industry is considered to be one of the most complex sectors globally to cater to the growing travelling in context to leisure and business of the societal needs. As a result of this increase, several companies and corporations have captured the market to cover the need for travel and tourism, resulting in fierce competition among established players. Technological advancements have further increased the competition among companies to adopt new ways. The major competitor of the firm is MSC cruises and TUI group based on passenger capacity.
Carnival cruise line is one of the world’s largest cruise travelers. In terms of passenger’s capacity in Europe which can Accommodate almost 3.2 million passengers with different ships deployed, while at the same time others can accommodate 2.2 and 1.1 million passengers on board (Statista, 2021). Therefore, the presence of such big firms in the industry makes the competition level more complex.
Threat of Substitutes
The threat of having substitutes is typically moderate in the cruise travel industry because of the availability of different platforms available for travelling purpose which can affect time and cost respectively. In this circumstance, the substitutes could be aeroplane, train, or road transportation. However, they do not give the services that the buyer is looking for while making a purchase.
The cruise business provides recreational facilities, a pleasant aquatic environment, and other amenities that a person engaged in leisure pursuit’s demands. The cruise industry has set up a strong belief among consumers that it offers high value even if the price paid by them is high (Ahn et al, 2021). As a consequence, the industry has a moderate number of substitute products and services.
The Threat of New Entrants
The threat of new entrants in the cruise travel industry is considered low as there are loads of big cruise firms already operating globally and have maintained the barriers to entry high enough to keep most new entrants away. There are indeed massive costs associated with the manufacture and purchase of ships, setup, distribution networks, and marketing activities.
Existing companies in the sector have built an economy of scale, making it more difficult for competitors to gain good market penetration. Moreover, in context to the industry have high exit barriers due to which a firm may find it difficult in selling their assets and recover the costs (Clayton et al, 2014). Hence, reducing the way of entry for new firms in the sector.
Bargaining Power of Buyers
The Bargaining power of consumers in the context of the cruise and travel industry is moderate because there are so many channels available for travelling and tourism purpose that fulfil the needs. Buyers in the industry are those who are going on vocational trips, leisure activities, and anything else that has to do with having a good time. Consumer power refers to the ability of purchasers, their representatives, and industry customers to influencing the price charged and purchasing terms.
Consumers’ power increases as they know market pricing and ranges (Moreno et al., 2017) and also with the help of travel agents. Keeping in view such a method, buyers’ bargaining power is considered moderate in the industry.
Bargaining Power of Suppliers
The Bargaining power of suppliers in the cruise industry is medium. Because there are a limited number of shipbuilding sites and dock workers, cruise companies must tolerate the high price. Additionally, because the ship constructor maintains the model of the ship he constructs, the corporation must raise a significant amount of funds to return to the station platform.
Raw material suppliers, labor sources, and fuel providers are examples of cruise industry suppliers. Big fuel and ship suppliers can show an influence on the industry’s system dynamics and can swing the supply chain (Véronneau et al, 2017). Hence, the bargaining power of suppliers is medium in context to the cruise travelling sector.
References
Ahn, J., Shamim, A. and Park, J., 2021. Impacts of cruise industry corporate social responsibility reputation on customers’ loyalty: Mediating role of trust and identification. International Journal of Hospitality Management, 92, p.102706.
Carnival, 2019. Annual Report. [online] Carnivalcorp.com. Available at: https://www.carnivalcorp.com/static-files/9ba84dfd-b96a-486f-8617-34e49820077a.
Clayton, A., Ajagunna, I. and Pinnock, F., 2014. The future of tourism in an emerging economy: the reality of the cruise industry in Caribbean. Worldwide Hospitality and Tourism Themes.
Moreno, F.M., Lafuente, J.G., Carreón, F.Á. and Moreno, S.M., 2017. The characterization of the millennials and their buying behavior. International Journal of Marketing Studies, 9(5), pp.135-144.
Statista, 2021. Biggest cruise companies in Europe 2019 | Statista. [online] Statista. Available at: https://www.statista.com/statistics/1096746/biggest-cruise-companies-in-europe/.
Véronneau, S., Roy, J. and Beaulieu, M., 2015. Cruise ship suppliers: A field study of the supplier relationship characteristics in a service supply chain. Tourism Management Perspectives, 16, pp.76-84.