Carnival Corporation, the world’s most prominent leisure travel firm, offers amazing holidays at an incredible value to customers worldwide. This business began operations in 1972 as a “division of the American International Travel service.” Carnival Corporation utilizes a skilled, committed, and varied staff committed to achieving the company’s aims and objectives. Its nine cruise line brands provide millions of passengers with a diverse selection of holiday choices that cater to individuals of all origins, ethnicities, and languages. Its strategic positioning is based on three fundamental divisions; contemporary, premium, and luxury.
Carnival Corporation’s cruise products deliver amazing holidays and great value for passengers from all sorts of backgrounds and every kind of vacation or event, particularly when compared to comparable land-based vacation alternatives. This paper analyzes Carnival Corporation by providing the VRIO analysis, Porter five forces analysis, Carnival BCG matrix, and balanced scorecard, the environmental and financial analysis.
Carnival Customer VRIO analysis is a resource-oriented analysis based on the information given in the Carnival Corporation case study (Buzatu et al., 2019, p.244). The resource-based strategic analysis approach is predicated on the premise that strategic resources may enable Carnival Customer to establish a sustained competitive edge over its industry competitors (Nofrizal, & Soviyanti, 2018, n.p). This long-term competitive advantage enables Carnival Customer to earn above-average earnings and withstand competitive challenges.
Table 1: VRIO Analysis.
|Carnival Resources||Value(Is the resource Valuable for Carnival?)||Rareness||Imitation Risk||Organization||Competitive Advantage|
|Local and international presence||Yes, since it diversifies income sources and insulates the financial sheet of the business from economic cycles.||Yes||Competitors may imitate the resources||Carnival is among the most diverse business||Carnival provides a strong competitive advantage in the job market|
|Brand recognition or awareness||Yes||Yes, Carnival consumers own one of the industry’s most recognizable brands.||No||The Company’s customer has used its market leadership position in a variety of areas.||Its Competitive advantage is sustainable|
|The flexibility of Supply Chain Network||Valuable||It is rare||Its nearby rivals’ supply chain are also flexible and share certain suppliers.||The organization fully utilizes the supply chain network.||Carnival corporation keeps its operations in action. The business is running effectively.|
|The Management Team’s Track Record at company name||Valuable||Rare||Its competitors find it difficult to imitate Carnival’s track record in its leadership.||Competent||It possesses a robust competitive advantage|
|Pricing Approaches||Valuable||Not rare||The industry regularly imitates the pricing strategies||Carnival is competent since it has an engine for pricing analytics||Its C. A is temporary|
|Adjacent industry opportunities and corresponding new resources are needed to join those industries.||Valuable only if they can create additional revenue streams||Not rare||These resources are imitable or can be copied by the competitors.||The Company’s full potential and capabilities are not yet fully utilized.||Potential|
|Financial resources||Valuable||Not rare||All the Company’s rivals have access to financial mechanisms and market liquidity.||Carnival’s financial position is sustainable.||Temporary|
|Consumer population||Valuable, customers enables product pro-creation||Rare, the Company has built a productive customer relationship||It is not easy imitating the community dedication and its culture||The organization still experience some upside||Strong|
|Copyrights, Intellectual Property Rights, and Trademarks||Extremely valuable to prevent competition||IPR rights and others are rare and cannot be copied by rivals.||While the risk of copying is minimal, the likelihood of disruption is significant given the corporation’s margins.||Until now, the Company has not fully used its intellectual property and other assets.||Strong|
|Personnel Capable of Managing Legal and Regulatory Responsibilities||Valuable||Not rare||Rivals can copy||Competent||Not a significant factor|
Porter Five Forces Analysis for Carnival Corporation
This is an effective and strategic management technique used to examine the industry and determine the underlying levers of profitability (Chappelow, 2019). Carnival Corporation executives may utilize Porter Five Forces to get a deeper understanding of how the five negative factors influence profitability and to develop a strategy to increase Carnival Corporation’s advantage in the marketplace and long-term profitability in the Resorts and Casinos sector. It is often used to assess a business’s industry structure and strategy (Perera, 2020). Porter outlined five unavoidable factors that affect every market and sector on Earth, with exceptions. They are often used to evaluate the competitiveness, profitability, and attractiveness of an industry.
Threats of Possible Substitutes and Emerging Companies
Emerging companies in the Resorts and Casinos industry offer advance and innovative ways of operations, putting pressure on Carnival Business via lower value strategies, price savings, and new consumer value proposals (Perera, 2020). Carnival must thus overcome such impediments and form strong obstacles to retain its competitive superiority. The Company can outperform these competitors by emerging new products and services. Additionally, these risks may be mitigated by attaining economies of scale; this reduces the unit’s fixed cost. Investing in human capital and conducting and optimizing R&D (Chappelow, 2019). When established businesses such as Carnival Corporation continually redefine the industry’s standards, newcomers are less inclined to join. It significantly reduces the window of extraordinary earnings accessible to new businesses, deterring new entries.
Bargaining Supplier’s Power
Almost every business in the Resorts & Casinos industry purchases raw materials from a variety of suppliers (Chappelow, 2019). Suppliers in a dominating position may erode Carnival Company’s market margins. Suppliers with considerable negotiating power in the Services domain use their position to get favorable pricing from businesses in the Resorts & Casinos sector (Perera, 2020). Overall, increased supplier negotiating power reduces Resorts & Casinos’ profitability. Carnival needs to create an efficient supply chain consisting of many suppliers to tackle the suppliers’ bargaining power. Experiment with different product materials and designs; if the value of raw resources upsurges, the Company may prefer another by creating devoted suppliers who are reliant on the Company.
Buyers’ Bargaining Power
Consumers are always a demanding group of individuals (Chappelow, 2019). They aim to get the highest-quality goods at the lowest possible price. This put a burden on Carnival Corporation’s earnings in the long run. Carnival Corporation’s smaller and more robust client base strengthens customers’ bargaining position and ability to demand more discounts and offers (Perera, 2020). The Company needs to establish a big consumer base and quickly develop new goods to tackle this bargaining power.
Rivalry or Contention among the Existing Entrants
If the rivalry among existing sector players is strong, it will drive down prices and decrease the sector’s overall profitability. Carnival Corporation operates in the highly competitive Resorts & Casinos industry. This competition does have an effect on the organization’s long-term prosperity (Chappelow, 2019). To tackle this intense rivalry, Carnival Company needs to establish a viable differentiating strategy, increase its size to contest effectively, and collaborate with rivals to expand the market rather than fight for a tiny share of the market.
The BCG matrix is an effective management tool that assists in evaluating the position and potential of a key corporate unit. Carnival Company’s BCG Matrix will assist the Company in implementing business strategy at the divisional level (Chiu, & Lin, 2019). The research will begin by identifying Carnival’s critical business units within the BCG Matrix.
Stars: Carnival Corporation’s strategic business unit (SBU) for financial services is a shining star in the BCG matrix. It conducts business with significant future development potential. Carnival derives a significant portion of its revenue from this SBU (Guță, 2017). Carnival needs to integrate its supply chain by purchasing other companies vertically. This will assist it in increasing earnings due to the potential of this strategic business unit.
Cash Cow: This has generated substantial income for Carnival. Carnival has a sizable market, though the total industry decreases as businesses manage their suppliers in-house rather than subcontracting.
Question Mark: Carnival’s BCG matrix has a question mark on local foods; recent market trends indicate that customers focus more on regional cuisines or foods. As a result, this market is seeing rapid development (Chiu, & Lin, 2019). Therefore, the Company needs to invest in innovativeness and come up with goods preferred by the consumers.
Plastic Bags: this has been a thorn in the Carnival BCG matrix; the key business has declined in the past few years. Additionally, it works in a market that is contracting due to growing environmental concerns (Chiu, & Lin, 2019). Carnival Company’s suggested approach is to sell this critical business unit and minimize its losses.
Financial Analysis for Carnival Corporation
After achieving the title of “World’s Most Popular Cruise Line,” the business entered the stock market with a 20% initial public offering, enabling the availability of cash required for projected growth (Verbeek, 2018). Today, Carnival Corporation offers a unique and complicated situation: it is a dual-listed business, or one created by two firms listed separately, have distinct management and ownership structures, yet operate in the market as a single entity.
Carnival has below-average liquidity; nevertheless, their current ratio is competitive with their largest rival, with a five-year average comparable to the rival in 2010 (Soviyanti, 2018). Carnival’s quick and current ratios are lower than those of its rivals. A comparative study of Carnival’s 2020 balance sheet and revenue statement as filed with the United States Securities and Exchange Commission (SEC).
Carnival’s main line of business is water transportation services. It compares its financial ratios to the mean values obtained for the particular industrial sector and all sectors. Having made this comparison, it is clear that Carnival Corporation’s financial position in 2020 was poorer than that of half of all businesses involved in the activity of “Water Transportation” (Verbeek, 2018). This is due to comparing the Company’s financial ratios to the average for the United States. Carnival Corporation’s financial condition is poorer than most publicly traded businesses that file financial statements with the United States SEC.
Balanced Scorecard of Carnival Corporation
This is a strategic organization performance metric that allows companies to identify and improve their internal processes in order to boost their external outcomes. It evaluates past performance data and makes suggestions to businesses on how to make better informed future decisions (Riandini, 2018). The balanced scorecard compels Carnival to ‘balance’ its operations to maximize economic performance. Additionally, it caused the Company to associate quantifiable measures with each viewpoint, thus boosting responsibility. Finally, it serves as a framework for conveying Carnival’s strategies to a wider audience.
Different markets have varying norms or environmental protections, affecting a corporation’s profitability in such markets. Even within a nation, states often have variable ecological and liability rules (Nofrizal, & Soviyanti, 2018, n.p). For instance, Florida and Texas have different liability rules in the event of accidents or catastrophes. Before joining emerging markets or establishing a new company, a firm should do an in-depth analysis of the necessities needed within the sorroundings to function in those markets. Factors that a business needs to consider in advance are as follows: weather, ecological laws, climate change, and environmental pollution (water and air) regulations in the Resorts & Casinos sector, recycling, and waste control in the services sector, among other factors.
In summary, this company’s competitive advantage over rivals is the breadth of its services to its clients in every three market categories, ranging from budget cruises to luxury cruises. Additionally, it provides both long and short holiday cruises on large fleet ships that include various activities. This business is now deemed successful due to its growth of activities and great profitability. For this company to continue expanding in the future, this business must focus on its existing strengths and opportunities and seek the most effective methods to address its current threats and weaknesses in order to create a competitive edge that will enable future development.
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