Competitive Analysis of Carnival Corporation - Essay Example

Having made this point, it would just be right to signal that Carnival Corporation as a global company has its generic strategy because the company of course has its competitors. According to Wert (2009), “carnival’s generic strategy is best described as a blend of low-cost and differentiation”. This is like arguing that the company does not put all its eggs in one basket. Rather, it distributes the available generic strategies prudently to ensure that wider scopes of customer needs are met. By low-cost strategy, the company masters winning the hearts of as many clients with little economic standing as possible. For the high class who would prefer segregated forms of products and services, the company caters to this through the differentiation generic strategy.

Interestingly, the types of generic strategies identified earlier can be broken further down into whether they are implemented with a broad or narrow focus. Porter explains that the measure of either a broad or narrow focus constitutes the scope of the generic strategy. Concerning the generic strategies blended by Carnival Corporation (which are low cost and differentiation), the diagram below may give a representation of the different scopes available to Carnival Corporation.

Writing on Carnival Corporation, Wert (2009), notes that Carnival Corporation pursues the scope of cost leadership and product differentiation. This means that Carnival Corporation undertakes a broad scope. The cost leadership broad generic strategy used by Carnival Corporation, the company does so in two major ways. First, the company proactively amass revenue and profit by charging low costs whiles ensuring that industry average prices are maintained. It is not surprising that the current ratio, quick ratio, and cash per share are all quoted as low with values of 0.215, 0.154, and 0 respectively (Covestor, 2012). The debt/equity, interest coverage ratio, and book value per share are all quoted as average with values of 0.621, 1.17, and 0 respectively (Covestor, 2012). The second way by which the company implements cost leadership is by “increasing market share through charging lower prices, while still making a reasonable profit on each sale because you've reduced costs” (Mind Tools, 2012).

Differentiation involves making your products or services different from and more attractive than those of your competitors. Concerning the product differentiation broad generic strategy, the company plays the game more to the implication of the name of strategy where Carnival Corporation makes their products and services different from competitors in terms of the product quality, packaging appearance, and attitude towards work. In the bid to stand out tall in the industry, the company ensures that it trades not just products but quality service to its customers. This way, the company becomes the preferred destination for customers if the customers know they would even have to pay the same low price somewhere else for the same set of product delivery.

Indeed the Management Study Guide (2012) notes that one crucial area of competitive analysis for any company is “identifying present as well as potential competitors. As far as the cruise ship operation industry is concerned, Carnival Corporation has several key competitors. These companies are described as key competitors because they trade in the same kind of business as Carnival Corporation and they also have a similar global image as Carnival Corporation. These companies have the same customer base as Carnival Corporation and the companies include Disney, Caribbean, and Delphin Kreuzfarhten. Benchmarking the competitors of Carnival Corporation against it, it would be said that these are companies in the industry that command a lot of respect and hold greater shares in their respective stock markets. This means that they serve as useful alternatives to customers in the cruise ship industry. Indeed, even before indicating the appropriateness or otherwise of the generic strategy used by Carnival Corporation, it would be very important to state that with the capacities of the three companies, Carnival Corporation has a massive responsibility of ensuring that it always has enough room and space to contain its customers. This is an important step to take because, in an event where customers cannot rely on Carnival Corporation for space, they may be equally accommodated by any of these companies, and judging from the fact that all of these companies have very good strategic plans, the possibility that deferring customers would stay with them forever is higher.

Finally, concerning the competitors, it would be said that the combined generic strategy of Carnival Corporation is a step in the right direction because these competitors use one of the strategies or the other. This means that Carnival Corporation is in a better position to offer all that the three competitors can offer their customers at go. For now, the company is using its generic strategy rightly because the application has led to the company being labeled as the leader in its industry.