Carnival Corporations Competitive Forces
Carnival corporations need to use the five forces of competition to position itself in the competitive market through analysis of how the market is either intense or attractive. Carnival corporations will be able to identify where the power of the business is lying for the business. The company will also be able to identify its strength and its current competitive position and strategies that need to be laid down in determining the next move for the business (Porter,2016). The company will use the five forces in understanding the following:
Supplier power
Carnival corporations will be able to analyze their supplier power and be able to detect how suppliers can drive prices up with ease. For the supplier power to be conclusively determined the number of suppliers and their input in the business. Additionally, the uniqueness of the products will also be identified and even the services. Also, Carnival corporations will be able to determine the relative size of the business and also their strength in maintaining a consistent supply of goods and services. The cost of switching from one supplier to the other will be determined for the organization to have well planned strategy to do its business effectively and efficiently.
Buyer power
Carnival corporations will make an assessment of how buyers are able to easily drive the prices of their products down with ease. The business will determine the number of customers available in the market and their purchase value. Also, the company will understand the importance of all individual buyers and come up with strategies on how to maintaina them and also attract others through offering quality services. Additionally, the cost of the buyer ability to switch from one supplier to another will be determined and if it will be able to achieve powerful buyers, it will be able to make dictation of the terms of business.
Competition Rivalry
To determine the competitive rivalry of a business, Carnival Corporations will determine competitor’s capability in terms of finances and number of customers. Also the size of competitors business will be important to determine the level of competition for the business (Lewis, 2017). If there competitors will have large number of undifferentiated goods and services, then the market will be less attractive for the business and will not be suitable for Carnival corporations. There will be stiff competition and the number of buyers for each competitor will reduce drastically.
Threat of Substitution
Carnival corporations will need to understand which close substitutes that exists in the market and come up with strategies to ensure customers do not switch to the competitors. Customers tend to switch to alternatives when price of product increases which may lead to blow to the business as it losses competitors. Substitution will be a threat to the supplier’s power and also market attractiveness.
Threat of new Entry
Carnival corporations should understand that when the market becomes attractive, it attracts new entrants who lead to erosion of the profitability of a business. Carnival corporations should come up with barriers that are durable and strong o prevent entry of new businesses. The company should focus on patenting its products, increasing economies of scale, having higher requirement of capital which will decline profitability to a rate that is competitive.
The competitive forces will help the company to understand the profitability level of the market and come up with decisions that will help in assessing the capability of being in the market. Additionally, the company will decide on whether to increase its market capacity and also come up with competitive strategies.
PEST Analysis for Carnival Corporations
Carnival Corporations will use PEST analysis in monitoring and analyzing macro-environmental factors that are likely to impact the business performance (Alava, & Mu, 2018). PEST will help Carnival Corporations in having a clear understanding of related external and internal factors. Carnival will use apply PEST analysis in understanding the market.
Political factors
Carnival corporations will understand the degree of intervention for a business and the impact it creates to a business. The political factors the company should focus on include the political stability for a business to effectively operate. In most cases, politics lead to instability and great losses while a stable government leads to stable economy. The company should understand also the level of corruption, foreign trade policy, labor law and tax policy. In addition the organizations will analyze the impact of government towards infrastructure, level of education and regulations of health. These factors will help Carnival Corporation to understand whether the market is attractive.
Economical factors
Carnival corporations will understand the performance of economy of the lace its investment will be. The company will understand the exchange rates, rate of inflation, unemployment rate and also the level of disposable income for the consumers. The factors will help the organization to understand the direct and indirect impact in the long term of a business. Economic factors affect the power of purchasing for a available consumers ad leads to possible change in demand and supply of an economy. The company will also affect the way price of products and services will be set.
Social Factors
Social factors will determine demographic characteristics of a the business environment, values and customs and also norms of people who will surround the business operations. Mostly, the factors will be based on growth rate, attitudes of careers, distribution of age, distribution of income, safety emphasis cultural barriers, health consciousness and the lifestyle of the people. The factors will help marketers to know the group of customer’s t target and how to approach them. The social factors will also determine the willingness of people to offer labor for the business and which conditions they will be willing to work in.
Technological factors
Carnival Corporations will analyze the available technology and understand the available innovations to boost business operations. The technological factors will determine the level of automation, innovation, development and research activities, change in technology and the level of awareness in technology in a given market. These actors will help in determination of whether to enter the market, how to launch its products and also outsourcing activities of production globally. Technology will help Carnival corporations in ensuring the company does not us a lot of money in technological development that has chances of becoming obsolete as a result of technological disruption. The other factors that Carnival corporations should focus on are environmental and legal factors. Environmental factors are important for raw materials are scarce in supply and also helps in making decisions on ensuing pollution of the environment are minimal. Legal factors will help the company understand the laws in the market which include consumer protection, patent and copyright laws among others. For the company to operate effectively there will be need to ensure legal measures laid down are adhered to and the company does not act ultra vires.
Alava, R. P., & Mu, J. M. (2018). PEST Analysis Based on A Case Study for. Neutrosophic Sets and Systems, 84.
Lewis, R. (2017). Porter’s Five Forces of competitive advantage.
Porter, M. (2016). GBN Education: The Five Forces of Strategy. Education.