Norwegian Cruise Line (NCLH) SWOT Analysis / TOWS Matrix / MBA Resources
Recreational Activities
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Norwegian Cruise Line (United States)
Based on various researches at Oak Spring University , Norwegian Cruise Line is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, challanges to central banks by blockchain based private currencies, geopolitical disruptions, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic ,
increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Norwegian Cruise Line
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Norwegian Cruise Line can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Norwegian Cruise Line, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Norwegian Cruise Line operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Norwegian Cruise Line can be done for the following purposes –
1. Strategic planning of Norwegian Cruise Line
2. Improving business portfolio management of Norwegian Cruise Line
3. Assessing feasibility of the new initiative in United States
4. Making a Recreational Activities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Norwegian Cruise Line
Strengths of Norwegian Cruise Line | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Norwegian Cruise Line are -
Low bargaining power of suppliers
– Suppliers of Norwegian Cruise Line in the Services sector have low bargaining power. Norwegian Cruise Line has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Norwegian Cruise Line to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Recreational Activities industry
- digital transformation varies from industry to industry. For Norwegian Cruise Line digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Norwegian Cruise Line has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Recreational Activities industry
– Norwegian Cruise Line has clearly differentiated products in the market place. This has enabled Norwegian Cruise Line to fetch slight price premium compare to the competitors in the Recreational Activities industry. The sustainable margins have also helped Norwegian Cruise Line to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Norwegian Cruise Line has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Recreational Activities industry. Secondly the value chain collaborators of Norwegian Cruise Line have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Norwegian Cruise Line are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Norwegian Cruise Line is one of the leading players in the Recreational Activities industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Norwegian Cruise Line has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Norwegian Cruise Line has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Norwegian Cruise Line has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Norwegian Cruise Line to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Norwegian Cruise Line is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Norwegian Cruise Line is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Norwegian Cruise Line emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Norwegian Cruise Line in Recreational Activities industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management in the Recreational Activities industry
– Norwegian Cruise Line is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Norwegian Cruise Line
– The covid-19 pandemic has put organizational resilience at the centre of everthing Norwegian Cruise Line does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of Norwegian Cruise Line | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Norwegian Cruise Line are -
Products dominated business model
– Even though Norwegian Cruise Line has some of the most successful models in the Recreational Activities industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Norwegian Cruise Line should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of United States, Norwegian Cruise Line needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Norwegian Cruise Line ‘s star products
– The top 2 products and services of Norwegian Cruise Line still accounts for major business revenue. This dependence on star products in Recreational Activities industry has resulted into insufficient focus on developing new products, even though Norwegian Cruise Line has relatively successful track record of launching new products.
Lack of clear differentiation of Norwegian Cruise Line products
– To increase the profitability and margins on the products, Norwegian Cruise Line needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Norwegian Cruise Line has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Norwegian Cruise Line is one of the leading players in the Recreational Activities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Recreational Activities industry in last five years.
High bargaining power of channel partners in Recreational Activities industry
– because of the regulatory requirements in United States, Norwegian Cruise Line is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Recreational Activities industry.
Increasing silos among functional specialists
– The organizational structure of Norwegian Cruise Line is dominated by functional specialists. It is not different from other players in the Recreational Activities industry, but Norwegian Cruise Line needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Norwegian Cruise Line to focus more on services in the Recreational Activities industry rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative at Norwegian Cruise Line, in the dynamic environment of Recreational Activities industry it has struggled to respond to the nimble upstart competition. Norwegian Cruise Line has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Norwegian Cruise Line has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Recreational Activities industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of Norwegian Cruise Line, it seems that company is thinking out the frontier risks that can impact Recreational Activities industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Norwegian Cruise Line Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Norwegian Cruise Line are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Recreational Activities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Norwegian Cruise Line can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Norwegian Cruise Line can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Norwegian Cruise Line is facing challenges because of the dominance of functional experts in the organization. Norwegian Cruise Line can utilize new technology in the field of Recreational Activities industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Norwegian Cruise Line can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Norwegian Cruise Line to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Norwegian Cruise Line can use the latest technology developments to improve its manufacturing and designing process in Recreational Activities sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Norwegian Cruise Line can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Norwegian Cruise Line can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Norwegian Cruise Line can improve the customer journey of consumers in the Recreational Activities industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Norwegian Cruise Line has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Recreational Activities sector. This continuous investment in analytics has enabled Norwegian Cruise Line to build a competitive advantage using analytics. The analytics driven competitive advantage can help Norwegian Cruise Line to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Norwegian Cruise Line can develop new processes and procedures in Recreational Activities industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Norwegian Cruise Line has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Norwegian Cruise Line in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Recreational Activities industry, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Recreational Activities industry, but it has also influenced the consumer preferences. Norwegian Cruise Line can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Norwegian Cruise Line has opened avenues for new revenue streams for the organization in Recreational Activities industry. This can help Norwegian Cruise Line to build a more holistic ecosystem for Norwegian Cruise Line products in the Recreational Activities industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Norwegian Cruise Line External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Norwegian Cruise Line are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Norwegian Cruise Line.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Recreational Activities industry are lowering. It can presents Norwegian Cruise Line with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Recreational Activities sector.
High dependence on third party suppliers
– Norwegian Cruise Line high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Norwegian Cruise Line needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Norwegian Cruise Line can take advantage of this fund but it will also bring new competitors in the Recreational Activities industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Norwegian Cruise Line in Recreational Activities industry. The Recreational Activities industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Norwegian Cruise Line needs to understand the core reasons impacting the Recreational Activities industry. This will help it in building a better workplace.
Consumer confidence and its impact on Norwegian Cruise Line demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Recreational Activities industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Norwegian Cruise Line may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Recreational Activities sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Norwegian Cruise Line business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Norwegian Cruise Line can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate Norwegian Cruise Line prominent markets.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Norwegian Cruise Line will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Recreational Activities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Norwegian Cruise Line can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Norwegian Cruise Line Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Norwegian Cruise Line needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Norwegian Cruise Line is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Norwegian Cruise Line is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Norwegian Cruise Line to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Norwegian Cruise Line needs to make to build a sustainable competitive advantage.