Vertical Integration within Carnival Cruise Line

     Carnival Cruise Line sits within the ideal spot for cruise companies in terms of the priorities and operations they own versus the ones they outsource. When looking at forward vertical and backwards integration, Carnival has done a great job diversifying its operations to maximize the profits. When looking at backwards vertical integration, we can see where Carnival Cruise Line has gone back into their supply chain to take up more of the operations. The perfect overall example starts with how they were founded. Carnival completely owns their ships. Therefore, a majority of their costs that could be saved through backwards vertical integration are handled on the front end. Unlike any other cruise line, Carnival pays for their ships up front, saving them money in the long run. The only way they could continue to integrate in a backward manner is to start building the ships themselves, which is nearly impossible. All ships are manufactured in Italy (for all cruise lines) and have to go through very specific guidelines before setting sail. Once they are ready to set sail, they have a christening and medal installation on the ship by the Italian navy (pictured below).

Christening of the Carnival Vista

     When looking at other ways Carnival has backward vertically integrated their operations, they have chosen wisely. Certain stores, like the ice cream and candy shop on board or the souvenir shops, are all items and operations Carnival owns. They make all of the candy, ice cream, and souvenirs in their own shops in Miami that then are shipped out to be on board and sold. This was due to their ability to figure out the quickest, most cost effective way for certain products. Other products, especially those that come with shorter shelf life, Carnival has allowed to be outsourced. All restaurants such a Guy Fieri's Burger Bar or the specialty shops are usually outsourced to a different vendor that brings the uniqueness that consumers want. Carnival has created a special mix of their production integration to allow for both the best consumer experience and cost ratio.

     When looking at forward vertical integration, Carnival has excelled in ensuring they achieve maximum cost in their experiences. When we think about cruises, we think about landing at a port or taking excursions or all of the pictures. Carnival has maximized and vertically integrated on all of those. In previous years, Carnival used to outsource the people who take pictures of you everywhere throughout the ship as well as the printing. Now that is done in house so that Carnival not only saves money but has more flexibility in the pictures they take.

     Port landing is the prime way that Carnival has vertically integrated. Years ago, Carnival would land at port, but a cruiser would go on their own adventures or shop at their own stores. Carnival has changed that. Now when you land at a port, you go to shops and experiences that are owned by Carnival. Carnival owns a majority of the direct port you land at from the shopping to the restaurants to the bars. They now also own a majority of excursions. Instead of outsourcing deep sea diving or a banana boat cruise, they own the property and pay the people to do it in Carnival's name. While some of the excursions are still outsourced due to complexity, a lot of the simple ones are completely put on by Carnival staff in the area. Therefore, Carnival has completely capitalized in forward vertical integration at the ports, bringing their own company monetary values both on and off the ship.

An example of a Carnival Cruise Excursion

     The one aspect that Carnival hasn't integrated on is the ports where the cruises sail from (the home ports). Port staff in ports like Miami are usually contracted workers. The reason this occurs is due to the lack of ships in an area. A cruise may only be in the Miami port two-three days during the week. No one is going to work just three days during the week. Therefore, cruise companies work together with contracted employees to cover cruises from all different companies throughout the week. It makes sure that prices and pay stay cheap while quality labor stays to work 5-6 days a week.