Premium Essay

Strategic Management on Cruise

In: Business and Management

Submitted By peggycheang87
Words 10749
Pages 43
MGMT 619
Spring 2009

Carnival Corporation

[pic]

Team 6

Amy Clogher
Jacob Griego
Ted Noble
David Sciortino
Deepa Sethi
Executive Summary

Carnival Corporation is the leading cruise line company in the international cruising industry, with 11 major cruise line brands and is clearly a winning company. It controls almost 50% of the cruise line market and is a broad line provider. The company does not face any considerable challenges within its industry and has adequately responded to all threats. Although 2008 was a challenging year due to the economic crisis, Carnival posted net income for 2008 of $2.3 billion (15.9% of sales). Carnival’s strategy is to be a broad line provider with a wide scope on a large scale. Carnival maintains this strategy by focusing on cost leadership in the contemporary and bargain lines, and then differentiating in the premium and luxury lines of their product mix.

Industry & Competition

The cruise line industry is a moderately attractive, 3-star industry that is characterized by top incumbents capturing a majority of the economic value in the industry, high fixed costs, cost savings achieved from economies of scale, and a high degree of rivalry between the top two industry incumbents. The cruise line industry has reached the growth stage after the inflection point. It is predicted that the growth stage will be longer in the cruise line industry due to frequent product upgrades and niche enhancements that forestall movement into maturity. The cruise industry has developed into a duopoly. While Carnival has 47% of the market, its closest rival is Royal Caribbean with 22% of the market. Norwegian Cruise Lines is a much smaller cruise line that is 50% owned by Star Cruise Lines in Hong Kong and 50% owned by Apollo Management.

Strategy

In addition to Carnival being the market leader in…...

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