Carnival Porter 5 Forces

1847 words 8 pages
CARNIVAL CORPORATION & PLC PORTER’S 5 FORCES
Porter’s 5 forces model allows to analyse the factors outside the Cruise industry that influence the nature of Carnival competition within it, the forces inside the Cruise industry that influence the way in which Carnival compete, and so the company’s likely profitability. With an understanding of where power lies, Carnival can take advantages of a situation of strength, improve a situation of weakness and avoid taking wrong strategies. Porter has identified five competitive forces that shape every industry and every market: bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitutes and rivalry among competitors. A sixth element has also been added
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Another important factor is the branding and image of the two major players in the cruise industry, Carnival and Royal Caribbean that combined have the major share market. A new entrant would have high investments in marketing and advertising in order to become recognized as a true competitor to Carnival and Royal Caribbean. Most buyers are inclined to choose a well-established cruise line due to the customer loyalty, it would take years for a newly introduced cruise company to develop a well-recognized identity and they maybe have to adopt a discount ticket to compensate the lack of brand recognition.
The easiest way to enter the cruise industry appears to be via mergers, acquisitions and takeovers thus limiting the number of potential entrants.
In summary, with the huge capital requirement, difficult achievement of economies of scales and constraint of brand equity, the threat of new entrants in the cruise industry is low.
Lastly, there are strict government and international regulations on Maritime cruise that are involved with a cruise company. Obtaining proper permits to operate, as well as the political connections, would also cost to a company a large amount of time and resources.

Threat of substitutes. MODERATE/HIGH
Substitutes for a cruise include many other types of

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