1. What global forces have contributed to the growth of the cruise industry?
Two major factors that have contributed to the growth of the cruise industry are the change in the competitive environment brought about by the advent of transoceanic airline service and increasing discretionary incomes. As demand for liner travel declined in response to the development of less expensive and much faster air service, shipping lines were forced to respond to the new market conditions by developing sea travel for the middle class, i.e., cruises. In addition, all-inclusive prices, a wide range of on-board and on-shore offerings, and the additional safety and security measures provided by ...view middle of the document...
Relatively few countries (Finland, France, Germany, Italy, Japan, and South Korea, for example) have shipyards capable of building cruise ships. Consequently, governments (e.g., Italy) may choose to subsidize the ship-building industry in order to secure contracts for their domestic firms. The favorable location of the Caribbean/Bahamas and the Hawaiian Islands makes them busy destinations year round, while Alaska is strictly a seasonal favorite. Because of their professional skills and fluency in English, Philippine workers comprise nearly a third of the seamen worldwide. Yet many other crew members also come from Eastern Europe, Vietnam, and China. Finally, in addition to the fact that many ships are designed to accommodate the economic realities of the mass market, others are specifically designed to appeal to the cultural preferences of their clientele (e.g., Costa, based in Italy, offers a distinctive Italian flavor).
4. Although most cruise line passengers are from the United States, the average number of vacation days taken by U.S. residents is lower than in most other high-income countries. For instance, the number is 13 days per year in the United States as compared to 42 days in Italy, 37 in France, 35 in Germany, and 25 in Japan. How might the cruise lines increase sales to people outside the United States?
Given that the majority of people in the targeted income segment ($20,000-$60,000 per year) have yet to take a cruise, the major task confronting the cruise line industry is one of marketing. In addition to promoting the many appealing features of its various cruises and lines throughout the developed world and selected developing countries, Carnival could partner with foreign airlines and travel agents in order to get foreign vacationers to its many ports of embarkation.
5. What threats exist for the future performance of the cruise line industry and specifically Carnival Cruise Lines? If you were in charge of Carnival Cruise Lines, how would you (a) try to prevent these threats from becoming a reality, and (b) deal with them if they do become a reality?
While the potential market for Carnival seems very attractive, port capacity could well become an issue. The deep water and the massive facilities required to dock a liner in any port are limited. In...