Carnival Cruise Lines (Research Paper Sample)

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Carnival Cruise Lines
The success of any business organization, including Carnival Cruise Lines, depends significantly on quality of the strategies implemented such as Customer Relationship Management (CRM) strategy. However, prior to the implementation of these strategies, it is often imperative for an organization to carry out a SWOT analysis. This will help in determining not only the organization’s strengths and weakness but also its associated opportunities and threats. Research confirms SWOT analysis as a useful tool of analysis since it helps managers gain a shared outlook on the state of the company and the key inherent risks (Kaufman et al. 262). Moreover, SWOT analysis can help discover critical influences of results and behavior in the organization.
SWOT analysis of Carnival Cruise Lines
A critical intrinsic and extrinsic analysis of Carnival Cruise Lines reveals a number of fundamental strengths weaknesses, opportunities and threats.
1 Strengths
One of Carnival’s strengths can be associated to its dominant market share. In general, the company’s market share is twice as large as its biggest competitor, and its competitiveness is well represented in almost every market segment worldwide (strong geographical presence). Carnival has a market share of 68% in Italy, 45% in France, 51% in Germany and 47% in UK. The existence of a higher market share gives the company a considerable bargaining power necessary in negotiating contracts with key manufactures of cruise ships. Another potential strength can be attributed to the company’s operational experience and excellence, especially due to the company’s large size. This has helped the company achieve below industry average costs consistently, and above average revenues. This is largely associated with the company’s valuable experience making smart strategic plays, and experience in owning and operating cruises. In addition, Carnival has a diversified staff made of personnel with distinct attributes. This makes it easier for the company to effectively handle customers with different dimensions.
2 Weaknesses
Despite its fundamental strengths, research reveals a number of salient weaknesses. First, the company has uncoordinated business operations. This is because; each cruise line of the company manages its own marketing, sales, ports, distribution, and logistics activities. The rationale behind the existence of uncoordinated carnival business operations is based on the fact that the company is run as an alliance of largely independent businesses by the Arison family. Additionally, Carnival is said have a poor safety record than other cruise companies. Besides the company’s most recent noticeable safety woe (Costa Concordia), a 2010-2011 research by the Center for Disease Control cited Carnival as having contributed greatly (56%) to all major viral outbreaks. The increased risk associated with the company’s services has made the company lose some of its customers to competitors. Moreover, it terms of finance, the company has historically been characterized by huge debt burdens. This has significantly lowers the company’s credit rating making it difficult to raise new funds.
3 Opportunities
The external business environment provides crucial opportunities for organizational growth. First, the cruise industry is characterized by strongly favorable demographics. For instance, Carnival’s target market (the young set) is currently growing across Europe and North America. This implies that the company can take advantage this trend to boost its revenue and market share. Moreover, the exploding Asian market provides a potential market for cruise lines. If suitably tapped, the Asian market can become an important market for Carnival for the next 10-20 years. In addition, with the advancement in Technology (IT infrastructure), the company has chance to improve it customer relationship through the implement.
4 Threats
Besides providing opportunities to the company, the current cruise industry poses some critical threats to the company’s smooth running. First, the company is experiencing stiff competition from its key competitors such Royal Caribbean Cruise Line and Star Cruise Line. Second, being a multinational conglomerate, the company’s operations are considerably vulnerable to geopolitical instability similar to previous the Arab spring revolutions in 2011. In addition, owing to the trends in the economic environment, the prices of fuel are likely to hike in the near future. This is primarily because of high volatility of fuel costs in short-run.
Strategic implementing CRM strategy of Carnival Cruise Lines
In order to improve its relationship with customers, and earn their loyalty, Carnival Cruise Lines needs apply customer relationship management (CRM) model, particularly the use of electronic customer relationship management (e-CRM) model. The Carnival Cruise Lines’ e-CRM model will just be similar like that of an airline company (see the figure). CRM is a regimented use of customer information in strengthening customer relationships by incessantly cleansing insights into customer or consumer needs, habits and economics; devising besieged and personalized value propositions as regards to those inputs; and tactically directing the company’s resources (time, people, finances) to activities, which build economic and long-term customer values.
Generally, the rationale for applying e-CRM is to enable Carnival Cruise Lines to better manage its customers via the introduction of reliable processes, systems and procedures. The e-CRM will empower Carnival Cruise Lines to provide personalized, innovative and high quality services to its customers
Figure: Architecture for an e-CRM model of an airline/cruise lines company
Carnival Cruise Lines can increase the effectiveness of the application of e-CRM model in three key ways. The first approach is through customer segmentation. Here, the company needs to know that mileage-based customer segmentation is inadequate. This can be achieved through the use of both needs-based and value-based approaches to drive its investment decisions and direct more insight to the needs and preferences of high-value customers. The second way is through e-CRM initiative development. However, in order to differentiate its self from its rivals, Carnival Cruise Lines should discard a ‘fast follower’ approach to e-CRM initiative development, in supportive of initiatives with high customer value return- those which respond to the desires and needs of its own customers. Finally, the e-CRM strategy should be aligned with the organizational and management. In this context, the company should instill a service mentality in its staff to empower them with an absolute view of the customer and their role in the e-CRM strategy.
In Cruise Lines industry, where Carnival Cruise Lines is inclusive, data mining and data analysis are central in pushing e-CRM ahead. Research postulates that the using the knowledge on data mining methods, the company’s business processes and marketing strategies can be used jointly in the successful implementation of an e-CRM. Historically, data mining has been very useful, especially in the initial phase of e-CRM, where passengers segments are based on based on personal patterns. By utilizing data mining, the customer value can be strengthened while taking into account operational costs in appraising a flight segment. For Carnival Cruise Lines , Data mining can be achieved through the implementation of an accounting system (to gather operational costs for each flight) and a monitoring system (to identify trends in consumer segments, the control service quality and discover outliers, since consumer behaviors are highly influenced by exogenous factors).
Other Strategic changes based on SWOT analysis of the company
Based on the Carnival’s SWOT analysis, the following strategic changes are equally crucial to the strategic plan. In order to continuously remain competitive and survival in the current cruise industry, the company needs to improve its areas of weaknesses and design measures to deal with the threats it is facing. First, the company needs to coordinate its business operations of different businesses. This is important in boosting the company’s operational efficiency. In order to achieve this, effective communication and free flow of information is desirable. Ideally, the management of the compan...