The Leisure-Cruise Industry February 17, 2011 Business Management Introduction One of the rapid producing leisure industry divisions, the cruise industry faces several challenges. Whereas supply continues to rise at double-digit levels, demand battles to keep speed. Known the demands on communications and the jeopardy of an eroding on-shore practice, less port are in a location to provide accommodation the cruise lines as supply grows. At the similar time, the community sector’s inspection of manufacturing practices associated to the surroundings, duty, safety, protection and work increases.
Regardless of these confronts, numerous cruise lines report record levels of productivity. This analysis will calculate the leisure-cruise industry and help come to the conclusion on if entering the market is a great idea. This report will focus on the Porter’s Approach to Industry Analysis. Each force will be identified in their separate sections as well as the power of each force to permit a new entire in the market. Porter’s Six Forces Michael Porter, an authority on competitive strategy, contends that a corporation is most concerned with the intensity of competition within its industry (Wheelen and Hunger pg110).
The level of this intensity is determined by basic competitive forces (Wheelen and Hunger pg110). Threat of New Entrants: Low As stated in the book, new entrants to an industry typically bring ton it new capacity, a desire to gain market share and substantial resources (Wheelen and Hunger pg 111). When taking into consideration ingoing a leisure cruise industry, assets is key obligation. In my opinion threat of new entrants is low because as stated from Cruise News “Just in one of the ships Royal Caribbean spent one billion dollars”.
So companies must be finically stable and be knowledgeable to enter the leisure cruise industry. In addition, since 2009 government has made it a requirement for every passenger to have a passport or passport id which I think is an inconvenient from the law before. Rivalry among Existing Firms: High Rivalry among existing firm is high for the reason that there are quite a few existing cruise lines. There are nine main cruise line, these include Ambassador International, Carnival Corporation, Crystal Cruises, Disney Cruise Lines, Louis Cruises, Regent Seven Seas Cruise Lines, Royal Caribbean Cruises Ltd. Silversea Cruises and Star Cruises (Cruising). The major cruises out of these are Royal Caribbean and Carnival Corporation. These cruises line are known for using their popularity to their advantage by raising their prices at any given time. But on the other hand, all the ships are comparable. All passage can anticipate the equivalent experience on board. In addition Rivalry is at a peek because getting rid of a cruise industry cost more than to just keep into development. Threat of Substitute Products or Service: Medium
A substitute product is a product that appears to be different but can satisfy the same need as another product (Wheelen and Hunger pg 112). Threat of substitute products or service is medium because as I stated before all the cruises are similar in decor and prices. But the biggest threats are on land resorts and hotel. Cruises have to maintain all the benefits that resorts have to entertaining all members of the family. Cruise lines have become a great get away for everyone or any family for a reasonable price. I feel that this is the reason cruise lines are so popular in this economy.
As stated from Cruise Line International Association cruise line has expanded to keep up with the threat by “introduced innovative onboard amenities and facilities, including cell phone access, Internet cafes and wireless fidelity (Wi-Fi) zones, rock-climbing walls, bowling alleys, surfing pools, multiform villas, multiple themed restaurants and expansive spas, health and fitness facilities that easily rival land based options (CLIA). ”I feel this will be a great asset to the cruise industry by keeping up with new technology and entertainment.
Bargaining Power of Buyers: Medium Passengers are the key buyers in cruise industry. For example Royal Caribbean has a revenue of 6. 7 million year to day and a income of half a million dollars as stated from (Forbes, 2010). They’re not making as much as they would like, but due to the fix cost of fuel and maintaining the ship its better than nothing. Buyers affect an industry through their ability to force down prices, bargain for higher quality or more services, and play competitors against each other (Wheelen and Hunger pg112).
The cruise industry as provide their buyers well vacation package which include numerous deals to satisfy the consumer needs with reasonable prices. Bargaining Powers of Suppliers: High Suppliers can affect an industry through their ability to raise prices or reduce the quality of purchase goods and service (Wheelen and Hunger pg 113). Fuel costs are the main battle in the cruise line industry. For example “Royal Caribbean Cruises Ltd. said it’s ending fuel surcharges for now for certain cruises because the global price of oil has come down and stabilized” (Royal).
So this is a perfect example of bargaining powers of suppliers. The suppliers are in power over the fuel cost. Furthermore, supplying the ship with a crew that is able to run the ship and maintain the ship for the consumer’s satisfaction. This will include providing customers with clean surroundings; delightful food, entertainment, and an overall remember able experience. Relative Power of Other Stakeholders: Low Now a day, anyone can book a cruise trip with technology today. But the original rout to purchase cruise line vacation was by booking it with a travel agents.
Since the knowledge of purchasing tickets online; travel agents are hardly needed. Moreover, this means that travel agents increase there price to earn more commission. The online websites are unable to do that because most of the website is run by the cruise industry. Conclusion After producing this Leisure-Cruise industry Porter’s analysis, I have come to the conclusion that if someone want to enter this industry, assets is key obligation. Also be aware of the rivalry among existing firm, threat of substitute products or service, and know that buyers affect an industry through their ability to force down prices.
Furthermore, suppliers can affect an industry through their ability to raise prices and have knowledge on relative power other stakeholders. If you take in counter all this elements that you are sure to succeed. Works Cited “Carnival Cruise Lines: Carnival Cruise Lines News and Photos – South Florida Sun-Sentinel. com. ” South Florida – Broward, Palm Beach and Miami-Dade Breaking News, Sports, Weather, Traffic, Hurricane Coverage, Restaurants, Jobs, Real Estate, Classifieds and Consumer Help – South Florida Sun-Sentinel. com. Web. 14 Feb. 2011. <http://www. sun-sentinel. om/topic/economy-business-finance/tourism-leisure-industry/carnival-cruise-lines-ORCRP017224. topic>. “CLIA – Cruise Line International Association. ” Cruise Lines International Association. Web. 14 Feb. 2011. <http://www2. cruising. org/Press/sourcebook2010/profile_cruise_industry. cfm>. “Cruise News – Updated Daily! The Latest Cruise News from and about the Cruise Travel Industry. ” Cruisemates Cruise Ship Guide; Cruise Ship Reviews, Message Boards and Bargains. Web. 14 Feb. 2011. <http://www. cruisemates. com/articles/news/#story32>. “Cruising. Cruisejunkie. com Cruise Page. Web. 14 Feb. 2011. <http://www. cruisejunkie. com/cruise. html>. “Royal Caribbean Cruises Ends Fuel Charges – Travel – Cruise Travel – Msnbc. com. ” Breaking News, Weather, Business, Health, Entertainment, Sports, Politics, Travel, Science, Technology, Local, US & World News – Msnbc. com. Web. 14 Feb. 2011. <http://www. msnbc. msn. com/id/27365253/ns/travel-cruise_travel/>. “RCL-Royal Caribbean Cruises LTD Income Statement-Forbes. com, Web. 16 Feb 2011. ” <http://finapps. forbes. com/finapps/jsp/finance/compinfo/IncomeStatemen