CIRQUE DU SOLEILCASE ANALYSIS

Cotrugli Business School – MBA

Team 6:

Nino Beneta

Srećko Butorac

Sven Stjepan Novak

Jadranka Šarić

Sanja Šijanec

Margarita Zlatkova

CIRQUE DU SOLEIL FACTSHEET

PAST PRESENT (2001)o 100% owned by Laliberte (bought

Gautier’s half in 1987)

o Lalibertè refusing to go public, reasoning that it would constrain Cirque’s creative freedom

o Montreal based (had tried with three regional divisions, NA, Europe, Asia)

o 2.100 employees, over 500 artists, over 40 nationalities and over 25 spoken languages

o 8 simultaneous Cirque productions running on 4 continents

o 6 million spectators in 2001

o Founding Year 1984

o Founded by group of street performers

o Montreal based

o Managed equally by two owners: Guy Lalibertè (Creative) Daniel Gautier (business and finance) o 73 employees

o Touring 1 show at a time, initial 3 years only in Canada

o On average 270.000 spectators per year

PRODUCT

“We’re not a product company, we’re an artistic works company” – Mario D’Amico – 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 it’s 1st merchandise store in Wald Disney Resort in

Florida

o 1999 Cirque du Soleil Images released it’s 1st film “Alegria”

o 2003 planning to open entertainment complex in Montreal

SWOT

o innovative, unique showo diversified product portfolio –

movies, TV shows, merchandiseo flexible working force, devoted

artistso established brand nameo well organized logistic

STRENGTH

o high overheads and management costs

o sole owner and decision makero a business model that could be

easily copiedo a lot injuries that need to be

preventedo high staff turnover

WEAKNESSES

o expand to larger number of cities

o diversification of the product portfolio

which could fit to different audienceso increase number of impermanent location based shows

OPPORTUNITIES

o real competition that could enter the

marketo to become too commercial and loose

its spirito overdependence on the existing

ownero economic downturn will lead to

customers choosing lower cost substitutes

THREATS

PORTER’S FIVE ANALYSIS

Threat of substitute products-HIGHConventional circus-animals,clowns,etcLow cost substitutes-movies,TV, internetOther substitutes-theatres,concerts, cinemaIn economic downturn customers-choose low cost entertainment

Bargaining Power of Customers – VERY HIGH

Product is highly differentiated/unique

The service of Cirque du Soleil is difficult

to be directly replaced

Not a product satisfying basic needs;

“luxury good”

Competitive Rivalry – MODERATE

Few competitors like Cirque Oz

compete locally

Lots of circuses globally

Barriers to Entry – LOW

Low to moderate entry barriers

Low to moderate costs of equipment

Moderate initial employee costs

Bargaining Power of Suppliers – LOW

High number of suppliers for technical

equipment and logistics

Limited number of suppliers for tents and

scenes

Relatively low supplier switching costs

PESTEL ANALYSIS

•Tax issues

•Stability

POLITICAL

•Energy efficiency

•Global crisis – reduced purchasing power

•Limited number of touring cities

ECONOMICAL

•Cultural entertainment preferences

•Religios views

•Demographic chart

SOCIAL

•Influence of web based free contents

•Automatization of production leading to lower costs

•Higher CAPEX due to short lifecycles of new technologies

TECHNOLOGICAL

•Strict local logistics regulation (eg CO2 emmision)

ENVIRONMENTAL

•Working permits

•Visa policy

LEGISLATION

VALUE CHAIN

SHOW PRODUCTION

MARKETING LOGISTIC ON SITE SALES SHOW

Support activities:

Logistics and infrastructure

Artist recruitment (HR)

Procurement (own and outsourced)

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. Lalibertè doesn’t 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

CRITERIA Weight(1-10)

StrengthRating

WeightedScore

StrengthRating

WeightedScore

StrengthRating

WeightedScore

Growth opportunity

10 4 40 4 40 3 30

Cost influence 8 1 8 2 16 4 32

Ease of implementation

6 3 18 1 6 2 12

Opportunity of innovation

4 1 4 4 16 3 12

TOTAL 70 78 86

Alternative 1 Alternative 2 Alternative 3

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 doesn’t last forever.

Be prepared for Red ocean!

Thank you for your attention !

QUESTIONS ???