Carnival Cruise Lines company overview and operations

Carnival Cruise Lines

What threats exist for the future performance of the cruise-line industry and, specifically, of Carnival Cruise Lines? If you were in charge of Carnival, how would you (a) try to prevent these threats from becoming reality, and (b) deal with them if they were realized?

There are numerous threats imaginable that could potentially affect Carnival Cruise Lines in the future; everything from the swine flu, to greater regulation of international water, carbon taxes and even terrorism could play a role. Basically, anything that would somehow disrupt the cruise lines business flow could be considered a threat to their profitability and sustainability. Furthermore, the range of the specific types of potential threats seem to fail within three broader categories; threats to safety, threats from regulatory agencies, and threats imposed from suitable alternatives.

The first threat mentioned, threats to safety, involves anything that could injure passengers' while participating on a cruise trip. The obvious examples are terrorism and any form of transmittable illness such as the swine flu or a host of others. Any such event could negatively affect the publicity of the industry in such a way that it significantly decreases demand for a lengthy period due to the negative publicity that the cruise line would undoubtedly receive. There have already been reports of the norovirus pathogen infecting nearly seven hundred people on one cruise liner (Public Health & Drinking Water 2006). To alleviate the potential for health and safety risks all measures should be taken to provide the appropriate screenings and on-board security and care. If a single incident occurs the detriment to the industry could be devastating.

The threats from regulations seem to have two key components. First there is the possibility that the international cruisers could fall under more tax regulations. Either directly, by being taxed on income from the port authorities in which they operate. Currently, they enjoy some amount of freedom from taxation due to the fact of their international status. Another, very real likelihood is that the industry could be taxed on fuel in which they are heavily reliant upon. However, there are really no clear strategies available to minimize the exposure of such regulations.

Finally, the industry and consequently Carnival Cruise Lines only has limited control over the threat of substitute vacations. However, the due have control over their status within their own industry. If they can create innovative solutions to keep patronage high in regards to their competitors then they can maintain market share within their own industry. This market share also buffers them somewhat from pressure from substitutes outside the industry as well.

2. Discuss the ethics of cruise lines regarding the avoidance of taxes while buying ships built with governmental subsidies.