International Business

Carnival Cruise Lines Although sea voyages have held an aura of mystique for centuries, only in recent decades have the general masses been able to experience open seas and exotic ports of call as a purely recreational activity. Cruises, i.e., sea voyages for pleasure, offer passengers the convenience of an assigned cabin as they sail along a fixed itinerary that concludes at their original point of sea embarkation. Almost everything about the entire cruise industry is international, from the routes traveled to the use of flags of convenience to the locations of shipyards to the staffing of vessels. By far the largest cruise competitor is Carnival Corp., which claims more than 40 percent of the global cruise market and owns more than ten different lines. Because Carnival operates globally, it can treat the entire world as a source of both customers and supplies. At the same time, its widespread operations also leave Carnival vulnerable to political upheavals, health crises, economic recessions, and natural disasters. Still in all, the future outlook both for the industry and for Carnival is bright as more people the world over choose a holiday cruise. Questions 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 the cruise industry have proven very attractive in light of recent political and socio-economic events. 2. What