Carnival's Firm Performance and Competitive Advantage
Carnival Cruise Line was established in 1972 by Ted Arison. Ted's family were avid travelers, but they discovered that more often than not that cruising was not affordable for large families. Therefore, he started Carnival Cruise Line. His mission was to make cruising available to everyone, something that still holds true today. Carnival is an affordable, family-friendly cruise line leading the industry in fun cruises for entire families. Carnival Cruise Line is now under the umbrella of Carnival Corporation, who has a portfolio of 9 different cruise lines, and is run by chairman Micky Arison, Ted's son. CCL's stock sits at $62.06 on the market, and the company had $17.5 billion in revenue in 2017. One of the most unique things about Carnival is they are the only cruise company to own their own ships. This creates huge value for their ships when they need to either sell ships to other companies or build new ones.
Carnival's competitive advantage is good in comparison to other cruise companies, especially in the United States. While Carnival has competitors such as Royal Caribbean or Norwegian Cruise Lines, Carnival continues to be the leader for family cruising due to affordable pricing. Carnival's Gross Profit Margin is sitting at 38.47%, slightly behind it's competitors of Norwegian and Royal who both sit slightly above 43%. A reason for the lower margin is the current state of Carnival. They are building 6 ships over the next 6 years (2017, May 2018, December 2019, 2020, 2022, and 2023). Because Carnival is the only company that builds their own ships and fully owns, versus renting, the expenses are higher with the more ships being built. Carnival's Quick Ratio sits at .14, which is equal to or in the range of other competitors.
In terms of ROA, Carnival sits at 6.88%, which is directly in-between Norwegian and Royal. For the ROE, Carnival is sitting at 11%, which is also slightly less than both competitors (15%). Carnival is also in-between both competitors on EPS with a value of $2.29.
Carnival's position in competitive advantage varies from statistic to statistic due to the way Carnival runs it's business. As stated before, expenses are higher up front due to the total ownership of their ships across a 29 ship fleet. Carnival is also aware that their costs are cheaper than other cruise lines. It is what they target - they want families to be able to bring everyone to cruise, so Carnival keeps their prices low. One way Carnival is also trying to distinguish itself from others is through sustainability. Carnival has taken a huge step in improving sustainability through the cruise industry. They have reduced their carbon output in the oceans by 26.5% since starting this movement in 2005. They have become a company that is subsiding by the United Nations Sustainability Development Goals and working to abide by the standards by 2030. This includes standards related to world poverty, ocean life, responsible consumption, and others.
Overall, Carnival Cruise Line has competitive advantage within the cruising industry, but they are also close in competition with the other top two cruising companies. All three companies are trying to provide experiences for a very targeted guest, so they have different demographics that cruise on their ships. Therefore, the competitive advantage often changes depending on the economy.
Carnival's competitive advantage is good in comparison to other cruise companies, especially in the United States. While Carnival has competitors such as Royal Caribbean or Norwegian Cruise Lines, Carnival continues to be the leader for family cruising due to affordable pricing. Carnival's Gross Profit Margin is sitting at 38.47%, slightly behind it's competitors of Norwegian and Royal who both sit slightly above 43%. A reason for the lower margin is the current state of Carnival. They are building 6 ships over the next 6 years (2017, May 2018, December 2019, 2020, 2022, and 2023). Because Carnival is the only company that builds their own ships and fully owns, versus renting, the expenses are higher with the more ships being built. Carnival's Quick Ratio sits at .14, which is equal to or in the range of other competitors.
In terms of ROA, Carnival sits at 6.88%, which is directly in-between Norwegian and Royal. For the ROE, Carnival is sitting at 11%, which is also slightly less than both competitors (15%). Carnival is also in-between both competitors on EPS with a value of $2.29.
Carnival's position in competitive advantage varies from statistic to statistic due to the way Carnival runs it's business. As stated before, expenses are higher up front due to the total ownership of their ships across a 29 ship fleet. Carnival is also aware that their costs are cheaper than other cruise lines. It is what they target - they want families to be able to bring everyone to cruise, so Carnival keeps their prices low. One way Carnival is also trying to distinguish itself from others is through sustainability. Carnival has taken a huge step in improving sustainability through the cruise industry. They have reduced their carbon output in the oceans by 26.5% since starting this movement in 2005. They have become a company that is subsiding by the United Nations Sustainability Development Goals and working to abide by the standards by 2030. This includes standards related to world poverty, ocean life, responsible consumption, and others.
Overall, Carnival Cruise Line has competitive advantage within the cruising industry, but they are also close in competition with the other top two cruising companies. All three companies are trying to provide experiences for a very targeted guest, so they have different demographics that cruise on their ships. Therefore, the competitive advantage often changes depending on the economy.
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