Analysis of Carnival Corporation

INTRODUCTION

Carnival cruise was founded by Ted Arison in 1972.  Today, Carnival Corporation is the largest player in the global cruise industry, operating 101 ships and 10 different cruise brands [1].  This strategic analysis of Carnival Corporation begins by exploring the five elements of strategy followed by the generic firm strategy, a VRIN/VRIO analysis, and finally a balanced scorecard.  

THE FIVE ELEMENTS OF STRATEGY

          Carnival has mastered the arena strategy element by targeting the contemporary, premium and ultra-luxury market segments [2] on a global scale (see Appendix A, Table 1 for details on the individual cruise lines and pricing features).  Carnival’s global sales distribution is as follows: North America (50%), Europe (35%), Australia / Asia (12%) and all others (3%) [3].

Through various joint ventures (primary vehicles), Carnival has succeeded in reaching every tier of the cruise market.  Generating $400 million in its 1987 initial public offering (IPO), Carnival began an expansion strategy which included the purchase of Holland America Line in 1989, Seabourn Cruise, expanding Carnival into the ultra-luxury market segment, and Cunard Lines in 1999, establishing Carnival in the transatlantic market.  In 2000, Carnival entered the European market through its purchase of European industry leader, Costa Cruises.  In 2003, Carnival emerged as the premier global cruise company through its merger with P&O Princess Cruises [4]. The joint venture, Iberocruceros, was founded in 2007 with Orizonia Corporacion, Spain’s largest travel company [5]. Carnival is currently exploring a joint venture with China State Shipbuilding Corporation aimed at capturing the growing Asian market [6].   

Carnival Corporation operates under a broad differentiation strategy, with multiple brands focused on various market segments.  For instance, trademarks developed by Carnival Cruise Line identify the Carnival product and differentiate Carnival’s services from those of its competitors, including “Fun Ship”, “Carnival Cruise Vacation Protection Plan”, “Sail & Sign”, and “World’s Most Popular Cruise Line” [7]. Likewise, the Holland America Line differentiates itself by visiting all seven continents with five-star dining from guest chefs and ‘Dancing with the Stars’ themed cruises [8] (See Appendix A, Table 2 for each Cruise line’s specific differentiators).