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CIRQUE DU SOLEIL

CASE ANALYSIS

Cotrugli Business School MBA


Team 6:
Nino Beneta
Sreko Butorac
Sven Stjepan Novak
Jadranka ari
Sanja ijanec
Margarita Zlatkova
CIRQUE DU SOLEIL FACTSHEET

PAST PRESENT (2001)


o 100% owned by Laliberte (bought
Gautiers half in 1987)
o Founding Year 1984
o Lalibert refusing to go public,
o Founded by group of street performers reasoning that it would constrain
Cirques creative freedom
o Montreal based
o Montreal based (had tried with
o Managed equally by two owners: three regional divisions, NA, Europe,
Guy Lalibert (Creative) Asia)
Daniel Gautier (business and finance)
o 2.100 employees, over 500 artists,
over 40 nationalities and over 25
o 73 employees spoken languages
o Touring 1 show at a time, initial 3 years o 8 simultaneous Cirque productions
only in Canada running on 4 continents

o On average 270.000 spectators per year o 6 million spectators in 2001


PRODUCT

Were not a product company, were an artistic works company


Mario DAmico Executive VP Marketing
o Circus combining street performers, clowns, acrobats and gymnasts (no animals).
Latin sounding music that transcends cultural boundaries and top scale
production and lighting.

o Price targeting upper middle class families (Avg. North American ticket price @
55 $)

o Diversified commercial activity towards multimedia, publishing and


merchandising.

o 1998 Cirque opened its 1st merchandise store in Wald Disney Resort in Florida

o 1999 Cirque du Soleil Images released its 1st film Alegria

o 2003 planning to open entertainment complex in Montreal


SWOT

STRENGTH WEAKNESSES

o innovative, unique show o high overheads and management costs


o diversified product portfolio movies, o sole owner and decision maker
TV shows, merchandise o a business model that could be easily
o flexible working force, devoted artists copied
o established brand name o a lot injuries that need to be prevented
o well organized logistic o high staff turnover

OPPORTUNITIES THREATS

o expand to larger number of cities o real competition that could enter the
o diversification of the product portfolio market
which could fit to different audiences o to become too commercial and loose its
o increase number of impermanent spirit
location based shows o overdependence on the existing owner
o economic downturn will lead to customers
choosing lower cost substitutes
PORTERS FIVE ANALYSIS

Threat of substitute products-HIGH Barriers to Entry LOW


Conventional circus-animals,clowns,etc
Low cost substitutes-movies,TV, internet Low to moderate entry barriers
Other substitutes-theatres,concerts, cinema Low to moderate costs of equipment
In economic downturn customers-choose low Moderate initial employee costs
cost entertainment

Bargaining Power of Customers VERY Bargaining Power of Suppliers LOW


HIGH
High number of suppliers for technical
Product is highly differentiated/unique
equipment and logistics
The service of Cirque du Soleil is difficult to
Limited number of suppliers for tents and
be directly replaced
scenes
Not a product satisfying basic needs;
Relatively low supplier switching costs
luxury good

Competitive Rivalry MODERATE

Few competitors like Cirque Oz compete


locally
Lots of circuses globally
PESTEL ANALYSIS

Tax issues
POLITICAL Stability

Energy efficiency
ECONOMICAL Global crisis reduced purchasing power
Limited number of touring cities

Cultural entertainment preferences


SOCIAL Religios views
Demographic chart

Influence of web based free contents


TECHNOLOGICAL Automatization of production leading to lower costs
Higher CAPEX due to short lifecycles of new technologies

ENVIRONMENTAL
Strict local logistics regulation (eg CO2 emmision)

LEGISLATION Working permits


Visa policy
VALUE CHAIN

Support activities:
Logistics and infrastructure
Artist recruitment (HR)
Procurement (own and outsourced)

SHOW LOGISTIC ON
MARKETING
SITE
SALES SHOW
PRODUCTION

Primary activities:
ISSUE

They re-invented circus. Everybody has seen it.


Now what?
NEGATIVE CONSEQUENCE

o Cirque du Soleil saturated the market they will stagnate or


lower the business

o If Mr. Lalibert doesnt decrease his influence (autochratic


leadership) it will not be possible to sustain growth level CDS
has shown in the past
ALTERNATIVES

Expand geographically
Find new audiences go to new places
Find places with high inflow of tourists for fixed location shows

Continue diversifying commercial activities


Movies, amusement parks, music, commercial goods

Regional approach market adjustment


To fit to diverse conditions in current markets
DECISION MAKING CRITERIA

Alternative 1 Alternative 2 Alternative 3

CRITERIA Weight Strength Weighted Strength Weighted Strength Weighted


(1-10) Rating Score Rating Score Rating Score

Growth 10 4 40 4 40 3 30
opportunity
Cost influence 8 1 8 2 16 4 32

Ease of 6 3 18 1 6 2 12
implementation
Opportunity of 4 1 4 4 16 3 12
innovation
TOTAL 70 78 86
RECOMMENDATION

Regional approach market adjustment

To fit to diverse conditions in current markets


ACTION PLAN

decentralize the decision making (by CEO/owner)

set up regional divisions with separate marketing and


market research (economical, demographical, etc.) by
regional management/consultancy

define diverse strategic approaches (e.g. pricing policy,


level of show production)
Blue ocean strategy doesnt last forever.

Be prepared for Red ocean!


Thank you for your attention !
QUESTIONS ???