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
o Founding Year 1984
o Founded by group of street performers
o Montreal based
o Managed equally by two owners:
Guy Lalibert (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
PRESENT (2001)
o 100% owned by Laliberte (bought
Gautiers half in 1987)
o Lalibert refusing to go public,
reasoning that it would constrain
Cirques 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
 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


STRENGTH
o innovative, unique show
o diversified product portfolio movies,
TV shows, merchandise
o flexible working force, devoted artists
o established brand name
o well organized logistic
OPPORTUNITIES
o expand to larger number of cities
o diversification of the product portfolio
which could fit to different audiences
o increase number of impermanent
location based shows
SWOT
WEAKNESSES
o high overheads and management costs
o sole owner and decision maker
o a business model that could be easily
copied
o a lot injuries that need to be prevented
o high staff turnover
THREATS
o real competition that could enter the
market
o to become too commercial and loose its
spirit
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
Other substitutes-theatres,concerts, cinema
In economic downturn customers-choose low
cost entertainment
Low to moderate entry barriers
Low to moderate costs of equipment
Moderate initial employee costs

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 ???