Industry Analysis Essay

Industry Analysis
Franchesca Hicks- Fall Wheel
Hodges University

MNA4325
Professor Harbour
Due: September 4, 2014
Submitted: September 4, 2014

Introduction The purpose of this study will be to examine the passenger cruise industry in terms of trends within the industry that will impact the company, what the factors are that drive change in the industry that impacts the company, and what does the industry offer for growth and probability? This researcher will not only focus on the trends, focus will also be the competitors, and the overall strengths and weaknesses of the cruise industry. According to Kamery (2004), cruise lines are differentiated according to the market niche that they fill. The cruise industry is divided into three parts: the luxury, premium, and contemporary segments. The luxury segment caters to the wealthy and is priced at more than $500 a day for each day of the cruise. The premium segment is designed for the businessperson who wants upscale quality for a lower price, ranging from $250-$299 a day. The contemporary segment is marketed toward families and couples, offering activities at an even lower cost of up to $249 a day. The lower berths, which are the number of passenger beds on a cruise ship calculated in accordance with the industry practice, are found by multiplying the number of passenger beds by two per cabin. Lower berth accommodations are increasing as the industry grows. There are two different geographic segments of the cruise industry: the North American cruise industry and the European cruise industry. Although the European cruise industry is smaller (in operating cruise lines) than the North American industry, the number of cruise passengers has been growing faster in Europe than in North America.
Industry’s Dominant Economic Characteristics The global cruise industry offers a combination of local destinations accessible through the cruise port and on-board amenities offered by the cruise ship. It carried about 20.1 million passengers in 2012, up from 7.2 million in 2000. The global growth rate of the cruise industry has been enduring and stable, at around 7% per year in spite of economic cycles of growth and recession. For instance, the financial crisis of 2008-2009 has not impacted the demand for cruises. Three major trends have particularly shaped the cruise market since its emergence: amenities, massification, and concentration (Rodrigue & Notteboom, 2013). The principle of economies of scale and the development of a wider customer base has incited the deployment of larger cruise ships. While in the 1990s, cruise ships rarely exceeded 2,000 passengers, by the 2010 ships of 6,000 passengers were being deployed. Also, larger ships are able to support a wider range of amenities. Each year the cruise industry growth rate will increase.
SWOT
A SWOT analysis includes a careful assessment of strengths, weaknesses, opportunities, and threats that affect organizational performance (Daft & Marcic, 2013, 99.190-191). The SWOT analysis creates an inventory of internal strengths and weaknesses in the organization. Strengths are positive internal characteristics threat the organization can exploit to achieve its strategic performance goals. Weaknesses are internal characteristic that might inhibit or restrict the organization’s performance. Threats are characteristics of the external environment that may prevent the organization from achieving its strategic goals.
Strengths
The cruise industry is growing
Variety of thematic products – exciting destinations, more choices and activities compared to Alaska and Caribbean
Sufficient number of ports and itineraries
Nearly all year round
Political and Economic Stability
Profitable
Weaknesses
Low awareness and existing stereotypes
Too many people onboard – too many contacts
Stereotype that only elderly people choose cruising as type of vacation
Social impact of so called “people

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