Carnival Corporation Case Study Essay

1306 Words Apr 28th, 2013 6 Pages
Forces Scale Comments Rivalry | High | 1 | Suppliers | Moderate | 2 | Buyers | Low | 3 | Entry & Exit Barriers | Low | 4 | Substitutes | High | 5 |

1. The cruise line industry is effectively an oligopoly market, where several major cruise

liners make up more than 90% of the market shares. Carnival is constantly engaged in

marketing and pricing battles with these competitors, making internal rivalry central to

the industry. Additionally, cruise lines have historically been subject to heavy M&A

activity, and Carnival sometimes competes to acquire even more share. The cruise line

industry has relatively high competitor diversity and a moderate level of product

differentiation. Carnival
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The threat of integration by these suppliers is very low.

3. 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.

Carnival states that no one group of travel companies makes up more than 10% of their

business, signaling 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. This

prevents the fragmentation of the cruise in the way that other types of vacation

packages have fragmented as mechanisms and companies have emerged through

which customers can more cheaply book and customize individual pieces of their

vacation.

4. The risk of entry of new

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