Michael Porter’s Five Forces Analysis of Market Competition
Michael Porter has stated five main entire forces which are used in the ascertaining of the level to which there is competition in the market and within the industry. Hence, the main five forces which were mentioned by Porter include but are not finite to rivalry among existing firm, potential entrants, substitutes, buyers and other shareholders.
| Customer Power:high. Number of customers is high. Many profits are brought by travel agents, who have travel agents having more purchasing power. Quantity of purchase is low and there is a high price tenderness. They have power over their recommendations, which results to higher brokerage. |
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Supplier Power: high. |
Rivalry: high. number of competitors is high. This is because there are many cruise lines in the market such as Disney and Royal Caribbean Carnival has a large market in the United States of America and the Royal Caribbean has 27%, while the closest is Norwegian that has 10% Industry growth is high. The company is also leading in international markets, followed by Royal Caribbean and MSC cruise |
Threat of Substitutes: high. • Availability of substitutes is low. This is because of the high number of suppliers which makes differentiation difficult. • Prices sensitivity is high. This is because carnival cruise is the best alternative in considering food and lodging. |
| Threat of New Entrants: high. Capital requirement and the distribution channel are high because there are many formalities needed to enter into the industry. |
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