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HISTORY
A man named Ted Arison had an idea of refurbishing an old ocean liner. American Travel Services Incorporated, under the direction of Mr. Arison, bought two ocean liners from Canadian Pacific Empress Lines for $6.5 million in 17. These two ships were named the Mardi Gras and the Carnivale. Unfortunately, the Mardi Gras was very slow and high maintenance. On its first voyage, it ran aground in Miami Harbor. Later, Mr. Arison and American Travel Services Incorporated bought another old liner from Union Castle Lines and named it the Festivale. From 17 to 174, Carnival began losing money. To attract new customers each liner began having planned activities, casinos, nightclubs, and discos. Finally, in 174, American Travel Services was ready to pull out of the joint venture. So, Ted Arison bought out ATSI for $1 cash. Unfortunately, he also acquired the $5 million debt that went along with it. As luck would have it, however, the following month after the buyout by Arison, the repaired Mardi Gras began showing a profit. For the remainder of the year, it operated at or above than 100-percent capacity.
Following this successful year, Mr. Arison along with his son, Micky Arison and Vice President of Sales Bob Dickinson, began to change the Carnival marketing strategy. Carnival's target market became first time and young travelers. Carnival prided themselves on having a "Family-Like" atmosphere to work in. They began an open door policy for communication, they began to promote from within (advancement strategy), and their prices were in moderation. They also began to offer vacation packages. Some vacation packages even included passages to exotic Caribbean ports. Carnival was the first cruise operator to use multimedia advertising promotions. This cruise line eventually became known as the "Fun Ship".
In 1 to 15 there were two additions to the cruise line, the Imagination and the Ryndam. Unfortunately, Carnival was never able to successfully run a Spanish market. Nevertheless, Carnival Corporation is expanding internally and externally generated by growth and acquisitions. The company now owns 44 percent of the cruise market. Carnival Conquest, the largest of the "Fun Ships", was launched from New Orleans on Dec. 1, 00. In 00, Carnival Glory a "Conquest-class" ship will begin year-round cruises from Port Canaveral, Florida. In 004, Carnival Miracle and Carnival Valor will make their deput. In 005, Carnival will debut its fourth 110,000-ton "Conquest-class" vessel. By the year 006 they plan on adding 17 more ships. "Today's Carnival" is a vastly different company than the one started from humble beginnings three decades ago. The following is a list of over 1 different cruise brands that they have
Carnival Cruise Line (18ships)
Princess Cruises (10ships)
Holland America Line (11ships)
Costa Cruises (8ships)
P&O Cruises (4ships)
Cunard Line (ships)
Windstar Cruises (ships)
Seabourn Cruise line (ships)
Ocean Village (1ship)
Swan Hellenic (1ship)
AIDA (ships)
A'ROSA (1ship)
P&O Cruises Australia (1ship)
MISSION STATEMENT
As stated on their website, Carnivals mission is to deliver exceptional vacation experiences through the worlds best-known cruise brands that cater to a variety of different lifestyles and budgets, all at an outstanding value unrivaled on land or at sea.
COMPETITORS
Carnival Corporation is the #1 cruise operator, catering to more than million passengers each year. Its top three competitors are NLC, Royal Caribbean Cruises, and Royal Olympic. Other less threatening competitors include Disney Cruise Lines, Star Cruises and Club Mditerrane.
SWOT ANALYSIS
STRENGTHS
1. Carnival is known for Carnival Destiny, the largest cruise ship in the world. The square tonnage is 101,5, which is over 0,000 more than any other ship in Carnival's fleet. It can hold up to ,64 passengers with double occupancy.
. The Fun Oriented Philosophy is there to keep everyone involved. There are various activities to keep young and old alike entertained. The ship has been designed to cater to everyone's interests.
. Not everyone wants to dress up to go to dinner on a cruise. The non-formal dress setting keeps the atmosphere light and happy. People do not feel the need to be embarrassed, and Carnival has gotten great response to it.
4. By the year 006, the company plans on allowing 17 more ships to make there debut.
5. Who wants to be on a cruise and sit in their room all day? Carnival ships are fully equipped to handle the entertainment of all the passengers. With casinos, shopping centers, weight and exercise rooms, activities, bars, lounges, ballrooms, etc. there is more than one way to tickle your fancy.
6. The advertising team for Carnival is doing its job well for it leads it competitors in advertising and promotion. The Carnival Cruise Line is a common name because of such advertising and promotion efforts.
7. The company has more cruise lines and travels to more destinations than any other cruise line.
8. Carnival is a very affordable cruise line.
WEAKNESSES
1. Carnival has not fully tapped into the market.
. The cruise line is only discounted during the off season. This discourages people to use Carnival during the busy season because they can not get a reduced rate.
. The fact that Carnival is usually at a 100% capacity isnt always good news. There is always the risk of overcrowding or overbooking. If this should happen, Carnival may need to refund money because of unhappy customers.
4. There are only so many ports that Carnival can go to and there are none that other cruises have not traveled to. The ships all have a specific route that they follow, and some people do not want that specific route. They want to be able to hit several different ports that may not be offered by one cruise. Unfortunately, port choice is limited.
OPPORTUNITIES
1. Most people want to get away for awhile. They want a unique vacation that they will remember forever. Instead of having the hassle of trying to drive across the country to spend a couple of days somewhere, they can take a week off and not have to worry about anything. Carnival takes care of all their travel worries including airfare, hotel, food, and entertainment accommodations. For the accommodations that Carnival cant provide, a partnership can be formed with complimentary companies.
. The pricing of the Carnival Cruise Line is very moderate compared to other Cruises. It ranges from $75 to $100 a day, where the competitors range from $75 to over $1000 a day! Because of this difference, Carnival has the room to slightly raise prices in exchange for more services.
. It is truly a company that can take care of all of a traveler's needs. Carnival Corporation owns five cruises, a chain of hotels, an airline, and a bus line. Travelers can be flown from where they live, have a bus deliver them to the cruise, and be able stay in a hotel all through Carnival. But there are still markets that can be penetrated by the company. Car rental is any example. Even non-related markets are good ideas.
4. Ever since the popularity of the movie Titanic, people have gone wild wanting to take a Trans-Atlantic Cruise. If Carnival can cash in on this, they could make a good profit and provide more port options.
5. The idea behind Carnival is the Fun Ship philosophy. They want people of all ages to enjoy their cruise. They have everything from Nautilus workout rooms, to indoor and outdoor pools, casinos, shopping centers, exciting ports of call, etc. From the youngest child to the oldest person, there is something for everyone on Carnival Cruise Lines. If marketing these facts to the percent of people who do not travel on Cruise ships does not work, Carnival has the ability to survey this untapped market though business deals with various statistical companies. This way, they can find out what they want from a cruise vacation and provide it for them.
6. Carnival can add more ships to shadow certain routes to prevent overcrowding or overbooking of overly popular cruise lines.
THREATS
1. There are various competitors in the market of cruise lines. With so many to choose from, it is not always easy to be able to decide what is best for the dollar.
. There are so many other vacation spots that require less planning. For example people could go to the beach, take a bus tour across the country, go to Disney World, etc. People usually regard cruises for the rich, or for those people who do not want to take the time to plan their vacation out.
. There is only a limited target audience that Carnival can reach due to its cost. For $75 a day and higher, there is only a certain portion of the population that would consider a cruise.
4. When serious mishaps occur, it could spell disaster for a cruise line. It has yet to be determined the extent the fire aboard Ecstasy has had on business.
CENTRAL ISSUES AFFECTING CARNIVAL
There are a few issues that are greatly affecting the growth potential of Carnival Corporation. Carnival needs to find ways to reach more of the North American population that has never had the cruise experience. The over 0% of the population that has never taken a cruise is too large to be ignored. Also, the number of port options is too limited. More cruise ship routes need to be planed and/or created. Finally, there are too many other markets outside of cruise vacations. The company is missing out on a large amount of revenue and growth potential by not venturing out into these markets.
CENTRAL RECOMENDATION
Carnival Corporation should try to tap into the 0% of people who do not take cruise vacations. The company can afford to explore external opportunities aggressively. This means forward, backward and horizontal integration strategies are all possibilities. With Carnival being so strong in the market, they can afford the minor risk of aggressive tactics such as buying out competitors.
IMPLEMENTATION
Financial Accountability
Who is responsible?
How much will it cost?
How will you pay for it?
When will you implement this strategy?
How will competitors react?
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