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Paper Topic:

Case Study: Carnival Corporation

Carnival Corporation : Acquiring Princess Cruise Line (2002

A Case Analysis

1 . What is Carnival Corporation 's current strategy and how well is it working

a . Strategic /Financial Analysis i . Strengths

One of Carnival Corporation 's greatest strengths lies in its sheer market clout - with a share of approximately 32 in 2002 , its market comprises the biggest chunk in the cruise industry . Its acquisition of Princess Cruise Lines , the third largest cruise operator , places them at an immense strategic advantage over their competitors with a combined market share of almost

half the Carnival 's aggressive approach to expansion has allowed it to dominate in the cruise industry . Through the acquisition of a considerable of number of cruise operators , the company has grown to encompass the widest range of cruise vacation offerings for different demographics Cruise vacations are a comparable alternative to land-based vacations and is even relatively cheaper than resorts or theme parks such as World Disney World . Given the luxurious amenities , the myriad of entertainment and food offerings , and its reputation for peerless onboard service , the cruise vacation serves as a very attractive choice for vacationers

A pioneer in the cruise industry , Carnival has the advantage of having the most operational experience . This allows them to break-even at a lower point than their competitors . Being a large company , their economies of scale also gives them competitive advantage by allowing them to lower costs as the company produces more units without sacrificing profitability

ii . Weaknesses

Carnival 's willingness to engage in questionable business practices counts as one of their greatest weaknesses . They falsified records regarding pollution discharges from several of their ships and have pleaded guilty to these charges . They were also cited for exploitation of crews by the American Maritime union because of giving out low wages Not only do these cases bring negative publicity to the company Carnival could also suffer from losses accrued from to fines and settlements

In the financial arena , 33 of the company 's operating expenses are fixed in nature and could not be reduced to correspond to decreases in passenger loads (and consequently , passenger revenue . This means that the amount of revenue that the company would generate is somewhat dependent on the costs of these operational expenses - any increase in these expenses would result in a decrease in the company 's profits

iii . Opportunities

Carnival 's opportunities for growth and expansion lie greatly in the largely untapped North American market . 85 -88 percent of this population have not taken cruise vacations yet . Because of this , cruise vacations targeting young , first-time passengers serves as a great marketing opportunity for the company

Carnival 's product range caters to a wide range of clientele with different demographics , characteristics , and growth requirements , which can be generally classified into three segments : contemporary , premium and luxury segments . With this in mind , Carnival has plenty of avenues to explore for increasing opportunities in the future . With the increase in affluence of the American middle class and as more women join the...

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