Carnival Cruises

Question 1

Global forces

- development of transocean air service : pros and cons

 took business passengers from liners

- competitive change: advent of jet travel 60’s

 growing mass market for budget minded international travellers

immune of economic recessions: during that, people just took shorter cruises, with nearby embarkation ports

- all inclusive prices / day vs travels to big cities  bargain

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- Question 2

- Cruise line industry: part of the larger global tourist industry= 10% of global spending

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New target : economic middle class in addition to the rich = groups with income but not a rich customer segment

Shipping lines “getting there is half the fun”

Conversion more shipboard space to low priced accommodations

Retired the giant luxury liners

Globalization : the shipping company can be registered as a national legal entity (ex: Liberian/Mongolian), and it can take advantage of the lower taxes and less stringent rules on its employment practices that those countries offer

No income taxes, but port fees wherever the ship docks

- This has come about because there are more women in the workplace, which gives households more disposable income.

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Question 2 Carnival

Cruises to every continent

Fun ship concept = transformation of liners’ travel

Opportunity : liners retired  buy used ships at cheap price

- growing affluence = more people can afford vacation

fun ship concept : take group tours and visit theme parks+las vegas

- operates in different areas of the world : diversification and product differentiation

- different targets / segments

- entire cruise line is international

- nationality of the companies

- “flags of convenience” : 30 countries offer shipping companies

- panamian company, whereas it’s listed on the NYstock exchange, headquarters in mimai, and American passengers principally

- no income taxes (nor panamian, nor US)

- international cruises = records of bed days = high revenues  long travels

- additional revenues with shore excursions

- benefit on governements’ subsidies on shipbuilding

- international agreements : seamen can virtually enter any port in the world  companies can hire the best staff for the cheapest price : costs decrease

 + access to skilled international staff

- cruising for the masses

- ship-resorts : restaurants, theme dinners, games, spas, activities, casinos, international products

- since cruises occur outside the confines of any country: cruise lines avoid national laws restricting gambling

- Operations all over the world  whole world is a source of customers and suppliers

- Ships mobile  possibility to move capital assets where they can best serve the needs

- Tokk advantage of terrorists’ threats : ex: 9/11 : fear of flying

- Growing income in many countries (china, India for ex.)  new customers

- People already aware of the attraction/benefits of cruises = easy target  no need to make huge advertising campaigns to make people aware  people just have to be convinced of the enjoyment procured by cruises

- Carnival is using its assets effectively

- To consistently exceed guests expectations