Case-2

Strategic Management

Submitted to: Bobby Hajjaj (Bhj), Lecturer, SBE, NSU

Submitted by

Jannatul Nayeem
NSU ID:1611482030
MGT 489.9
Date of Submission: 16th August, 2020

Solution to the case:

Contents
Vision Framework........................................................................................................................................2
Key Issues....................................................................................................................................................3
Goals............................................................................................................................................................3
Porter’s Five Forces.....................................................................................................................................3
Key Success Factors.....................................................................................................................................5
Value Chain..................................................................................................................................................6
Value Net.....................................................................................................................................................7
PARTS..........................................................................................................................................................8
Game Theory:..............................................................................................................................................8
The Resource Based View............................................................................................................................8
Value Innovation.........................................................................................................................................9
X-Factors......................................................................................................................................................9
3 Generic strategies...................................................................................................................................10

Vision Framework
For who: The strategies prepared for Cirque Du Soleli.

Intention

Strategic Intent

 Cirque Du Soleli is a live entertainment show that encompasses music, dance, and
acrobatics.
  It is a multi-dollar company that won the ‘WORKFORCE Magazine Award’, ‘Orange
Prize’, prestigious Emmy, Drama Desk, Rose d'Or de Montreux and National Arts Centre
Awards.

Mission

 Cirque Du Soleli will connect peoples’ emotion to nostalgia to feel more attached and
happy.
 Cirque Du Soleli will remain the best (Market leader in the industry) source of dynamic,
universal and animated entertainment.

Ideology

Core Value

 Creating plots that connects emotion dating back to past life in a unanimous language.
 Animal free live circus; Diversity
 Social responsibility; Bringing human together and grooming children to potential artists.

Core Purpose

 To entertain people globally.

 Eliminate ugliness of life, bring happiness and make people laugh.
 Bringing universalism (No race, No politics, No religion, No boundaries and differences)

Key Issues
1. The challenge of market rivals
2. The challenge of reinvention of offerings. (13 one hour wordless television episodes)

Goals
Bringing the best strategy to reinvent the company (variants-the 13 episodes of television show)
with competence and resources to retain the market leader while combating the rivals.

Porter’s Five Forces

Cirque du soleli is a leading actor in entertainment industry-live global performance.

1. Barriers to Entry

Variables:

Cost of Capital: High (+ve): requires large investment (HR, Training, Networking,
Instruments).
Cost of entry: High (+ve): No small entry for similar service.
Experience curve: High (+ve): Due to competitors, it requires a minimum standard experience
Minimum Efficient Scale: High (+ve): Supply chain and management efficiency is crucial
Access to inputs: High (+ve) very selective group of artists for differentiation.
Access to distribution channel: High (+ve) challenging and rare with unique qualifications.
Status: High (+ve): Attractive to Cirque du soleli

2. Competitive Rivalry

Industry growth: High (+ve): With increasing population, there is increasing demand.
Brand Loylity: High (+ve): Customers value quality and emotion.
Switching Cost: Low (-ve): Customers don’t have much to lose while switching.
Exit Barrier: High (+ve): Mostly intellectual and heavy investment property.
Status: High (+ve): Attractive to Cirque du soleli.
 3. Power of Buyers:

Services: High (+ve): Differentiated.

Essential: Low (-ve): Not essential to customers.
Sources of supply: Low (-ve): Buyers have multiple sources of supply.
Switching Cost: Low (-ve): Customers don’t have much to lose while switching.
Substitutes: Low (-ve): Customers have alternate source of entertainment
Integrate Forward: High (+ve): Company can deliver the service to end customer.
Customer’s choice: Low (-ve): Customers are larger than the company-totally customer
oriented.
Status: Low (-ve): Unattractive to Cirque du soleli

4. Power of Suppliers

Supplier’s input: Low (-ve): Differentiated and essential

Supplier’s competition: High (+ve): Unique qualifications of suppliers.
Supplier’s choice: High (-ve): Many options for suppliers to join.
Substitute product: Low (-ve): Due to unique qualifications substitute won’t serve the purpose.
Integrate backward: Low (-ve): Different talents are found at different geolocations.
Supplier’s size: High (+ve): The company is larger than its suppliers.
Status: Low (-ve): Unattractive to Cirque de soleli.

5. Threat of Substitutes:

Aletrnatives: Low (-ve). Comparable benefits with lower price from competitors.
Switching cost: Low (-ve): Customers don’t have much to lose while switching.
Status: Low (-ve): Unattractive to Circus de soleli.
Complementors (The 6th Factor)
1. Promoting celebrity artists
2. Merchandising, and CD Sales
3. Montreal Textile Centre
Status of Cirque du soleli (Based on Porter’s five forces): Unattractive to Cirque de soleli.

Strategy (Based on Porter’s five forces): Reinvent the company through installing new
differentiated value (wordless universal non-verbal language) with new variants (e.g. wordless
Ventriloquist) by Research and Development (Market Research on trend of entertainment
source)

Key Success Factors

Who are the customers?

Global Market (For TV episodes- Canada, USA, Germany, France, Britain, and Japan)
What do customers want?

1. Laugh and be happy (Existing)

2. Creative and innovative source of entertainment (Non-existing)
3. Differentiated and Unique-Since laughing stock wears out (Existing)
4. Attachment (Existing)- Connects to emotion and lifestyle; Some seeks fantasy Partially
existent)
5. Engagement and personalization (Non-existing)- Customers want to be the part of the
service. They seeks for entertainment by own preference for genres.

How does the firm survive competition?

1. Differentiation and creativity drive the competition (Animal less circus and universal
language)
2. Main dimension of competition: Novelty, Creativity, Performance, Fun
3. Competition: Moderate

How can it obtain superior competitive advantage?

Strategy: Reinventing the company with interactive variants (e.g.universal non-verbal language
in interactive show-like the best critics among the audience will be a hot seat special performer
in the next show.- sharing experience non verbally )

Value Chain
Step-1: Define SBUs

a. Live Physical shows (9 Units)

Variants:

1. Opera
2. Dance
3. Theater
4. Circus with live music
 5. Choreography
6. Art Photography

b. Solstrom

Variants:

1. Part variety show

2. Part comedy show
3. Part drama show

Step-2: Critical value creating activities

1. Connection to emotion and Universalism through the show

2. Global top rated artists
Step-3: Internal Cost Analysis:

 High Cost (Employee incentives and salaries- $40k- $250k per annum; 25% turnover for
500 performing artists). High maintenance of HR
 For the TV Show-
 270 artists (unique show: non-verbal): Much costly for the training and broadcasting in
selected countries

Step-4: Internal Differentiation

Universalism (Communicable to everyone ignoring differences that connects emotion)

Step-5: Industry Profit Pool

Profitable (80% from tickets-choke point and 20% from sales). $500m sales/annum
For the TV Show: Advertising, Sponsorship
Step-6: Vertical Linkage analysis

Firm’s inbound HR and capital to hunt outbound talents to put them on the show that generates
profit. The company put their service to endconsumers.

Step-7: Iteration
Repeat
Strategy: Making creative, market oriented and trendy content by cutting down cost by focusing
on employees and HR cost.
 Value Net

Suppliers: Global
artists.

Cirque
Competitors: Cirque Complementors:
Éloize du Soleli
Global with access to
Cirque Éos TV
Feld Entertainment
Other TV shows

Buyers: End
consumers

PARTS
Players: Suppliers – Hunting young talents, groom, and make them artist to cut down employee
turnover.
Added Value: New genre of emotion (Family in addition to nostalgia) since most of the time
family watch TV together (considering general ground).
Rules: Be ubiquitous (extensive marketing; virtual and physical)
Tactics: Trendy and customer oriented entertainment engineering (conduct a market research)
and build the contents aligning the NWDs of customers.
Scopes: Targeting new market (kids and teenagers) and develop suitable product (e.g. non-
verbal comedy show like Mr. Bean)

The Resource Based View

1. Identify Firm’s Resource: ➡️Resource
a. Universalism- Slow cycle : Complete non-verbal (TV), yet globally
communicable(All) show
Filtration of the Resource:
Valuable: Valuable to the firm
Scarce: Communicable to everyone
Inimitable: Patented (Intellectual property)
Non-substitutable: Not for same market and same service
Sustainable: Long term unique advantage

2. Explore the linkage between resource and capabilities➡️Capabilities

a. Creating new customer segment.
b. Brand extension- virtual (e.g. Own channel)
c. More profitable revenue model (ticket sales to advertisements, sponsorship etc)

3. Appraise ➡️Potential for sustainable competitive advantage

a. Strategic Importance: Potentials to explore to reinvent through new added values to
attract new customers.
b. Relative Strength: Universalism, emotion, experience, image

4. Develop strategy implication ➡️Strategy

a. In relation to strength: Installation of idea incubating simulators For inventing
dynamic and radical entertainment variants to get global mass market.
b. In relation to weakness: Since the core value is transforming into small screen,
therefore, the challenge of show schedule, advertisement placement, contents
(acceptable and understandable genre) are crucial and must be taken care of.

X-Factors
Plot-emotional connection to nostalgia

PoP:
Categorical: Entertainment
Competitive:

1. Plot-connects emotions to nostalgia

2. Top artist-High performance
PoD:

Functional: Integrating diversified sources of entertainment to communicate globally.

Emotional: Universalism-The bondage ignoring difference

X-Actions: Finding more diversified artist from different genres, bringing CSR issues in the
content, Idea generation-for trendy concepts to create content

3 Generic strategies

Uniqueness perceived by
Low cost Position
customers
 Industrywide

Particular segment only

Cost leader Differentiator

(Cirque Du Soleil)

Focus

Cost Leadership vs Differentiation Cirque Du Soleil

Cost leader
Differentiator
Stuck in the middle
 Cirque Du Soleil
Market Scope
Heterogeneous
Homogeneous market with
Niche Mixed market positive synergies
Broad
between segments

Heterogeneous
market with
Heterogeneous
Generic Competitive Positioning negative synergies
market with
between groups of
negative synergies
segments and
between segments
positive synergies
within groups
Cost
Leadershi Cost/ Cost/
Niche Broad

Cirque Du Soleil
Competitive
advantage

Diff/ Diff/
Niche Broad

Generic Competitive
Positioning
Niche Cirque Du Soleil
Broad

Differentiation
 Broad

Strategy

Focused

One Several
 Identifying Differentiation Potentials

Product: Happiness,
Makes people happy
Entertainment- Eliminating ugliness
and feel good
diverified show of life, enjoying time

Offer innovative contents

Emotion+Happiness that connect emotion,
Fun, Emotion, Plot
engage customers and bring
happiness and bonding.
(Example: Innovative
comedy like Mr. Bean)
Higher price
Customer: Global
Connection and
engagement Demographic: All age, sex,
Middle class
Psychographic: Pleasant seeking

Behavioral: Party animal,

Introvert

The Big Strategy:

Offer innovative variants (interactive-non-verbal; and new genre of emotion to grab new market-kids,
teenagers) that connect emotion, engage customers which will bring personal happiness and universal
bonding and go for Exhaustive Integrated marketing campaign(Example: Innovative comedy like Mr.
Bean)