Carnival and Diversification

     Carnival Cruise Line and business diversification is difficult to speak about as Carnival has such a wide-array of options but truly hold a majority of their revenue in one aspect, travel. Carnival's travel sales could be seen as a dominant business within a limited diversification portfolio due to the way their business works. Cruising is paid for all up front. It can cost anywhere from $250-$1000 to cruise, and you must pay that in one lump some. While you can have add-ons such as drink packages or excursions, a majority is covered in that one lump sum cost, including food, non-alcoholic beverages, experiences on-board, and so much more. Therefore, 70-95% of Carnival's revenue comes from shipboard sales. The other remaining amount comes from offshore experiences at ports and excursions. However, a majority of people stay on ship when landing at port due to finances.

    Where we can talk about diversification strategies with Carnival Cruise Line is the strategy Mickey Arison, the founder, took once growing Carnival to the size and reputation of his liking. Since opening Carnival Cruise Line, the formation of Carnival Corporation has occurred. Carnival Corporation has 10 cruise lines under its name with over 100 vessels in the fleet. The top cruise lines under the Carnival Corporation umbrella are Carnival Cruise Line, Princess Cruises, and Holland America. With the existence of multiple cruise lines under one umbrella, there are a lot of shared activities. Not only are all shipboard experiences somewhat similar but under a different brand, a lot of the technical logistics operate under the same headquarter staff, creating a large amount of consistencies across values, operations, and systems. 

     The two major aspects of shared activities that benefit Carnival are the cost reduction and abilities for hierarchical governance and outside investors. First, the shared activities allow the staff, infrastructure, and other things to be shared. There are many examples in which Carnival retires one of their ships to a different cruise line under the same umbrella. This not only adds sales to the other line but reduces costs for buying new ships. Also, some teams are similar under the same headquarter roof. While Carnival Cruise Line has their own staff, others share in some instances of aspects like payment processing, call centers, and marketing. All of these combined roles allow for cost reduction.

     Shared activities also bring hierarchical governance and outside investors. With the entire cruise brand lineup under one umbrella, it allowed Arison to take the company public in 1993. This allowed him to establish a board, consisting of all of the presidents of each cruise line and a few other advisers. This board helps manage not only the top lines, but it also allows them to take from others and help the lower performing lines. Because of the shared activities, Carnival Corporation has been able to diversify their portfolio and continue to perform the highest competitors in the industry.