Carnival Cruise - Case 16 Study Example | Topics and Well Written Essays - 1000 words

Carnival Cruise - 16 - Case Study Example These forces include threats from new entrants in to the market, bargaining powers of the customers or the buyers, threats emanating from substitutes that could be products or services, bargaining power of the suppliers, the level of rivalry among the competing companies, and the relative power of unions. The competitive forces vary from country to country in the same way that industries vary. For instance, threats of entrants into an industry are not the same in different countries and are mostly dependent on the development of the host country or the market in question. Here, there would be a higher threat from new entrants for an organization operating in the U.K than one operating in a developing country. The competitive forces have a high rating while others have low rating. First, threat of new entrants is a high rate risk for businesses especially those operating in highly profitable markets. This is because these markets have the potential to attract new firms that lead to erosion of profit making capabilities for the existing organizations. To respond to these threats, the incumbents should have pre-established entry barriers such as economies of scale failure to which profitability suffers. Second, the bargaining power of the buyers is a high rate risk. It is the idea of the buyers driving the prices down. It is a high risk especially in the areas where there are few powerful buyers. These buyers have the capacity to dictate terms that determine the prices of the goods offered. In addition, when the cost for switching to another buyer is low, then the power of the buyers is significantly low with respect to determining the prices offered. Therefore, the number of powerful indiv idual buyers in a specified market determines the prices of the products. Third, substitute threats can also be rated as high risks. This is because the existence of substitutes increases the likelihood of the customers switching to them leading to loss and loss of