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Cirque du soleil

Reinventing Circus

1212057 : Sreeharsha Rangarajan 1212058 : Sridhar R 1212059 : Sriharsha Chunduru 1212060 : Sudheer Dhurjati 1212061 : Sudhir T S
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Circus Industry in 80s

Major part of circus was dominated by Ringling Bros. and Barnum & Bailey Three-ring circus Shows were only tweaked versions of previous acts with little/no new content Slow and declining industry growth

Decreasing interest among audiences Emergence of TV, movies as substitutes

Rising cost of production

Rising labor costs (cost of hiring performers & animal trainers) Shortage of open spaces (open spaces taken up for sports/civic events)

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Increased concerns from animal rights activists Aisle concession sales

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Circus Industry in 80s

North American market was dominated by Ringling Bros, Bernum and Bailey Product Differentiation Low Switching cost

Threat of New comers

Competition for popular acts increased supplier (animal trainers, famous performers) power, costs

Supplier Power

Competitive Rivalry
Two Big American families had more than a century of circus tradition (Cost of exit, Equal size, similar strategies) Most of the circuses offered more or less the same content with little innovation and competed in a red ocean

Buyer Power
Audience had a wide range of entertainment to choose from. Audience faced little switching cost.

Audience had a variety of substitutes to choose from like: 1. Movies 2. Theatre 3. Opera 4. Video games etc

Substitutes

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Factors of Differentiation in Traditional Circus

Tweaking the existing acts Hiring famous clowns

Thrilling and dangerous stunts Equestrian/Animal acts Some moved from tents to permanent arenas to cut costs and so that show can run in winter Dislikes
Likes

Family Event Less focus on commercialization

More emphasis on artistry Fun and Thrill

No innovation 3-Ring Circus Unethical use of animals Death defying stunts that people did not really appreciate Lack of theme Ordinary venues

Distinctive Features of Cirque

Reduce

Dangerous stunts Concession sales

Increased value

Star performers Animal shows Three ring circus Free tickets

Eliminate

Reduced costs by eliminating unwanted elements Higher customer satisfaction leading to greater revenue Delivery of creativity/innovation through a scalable model

Theme Multiple productions Original Score and dance Permanent/Resident shows

Create

Unique Venue Intellectual component Refined environment

Raise

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Value Curve

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Strategy : Products

Touring shows (traditional business)

Colorful big tops & arena shows Lifecycle strategy with tours in various continents for many years

Resident shows (Partnering with organizations to share production costs)

Shows at Vegas, Orlando

88 revenue)

Other products

Merchandise sales (10% 3/10/13 Team 2 - Synergy

Strategy : Products (cont..)

Pursue dual goals of artistry and profit Exclusivity (Clowns, yes. Clones, no) Organization as the heart of Cirques creative process - not a particular group of individuals.

Rotation of stage directors

None of the activities outsourced (unwilling to compromise on quality or artistic integrity)

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Strategy : Performance & Profitability Eliminating high cost elements

Animals Star performers

Increase buyer value by offering Theme Based shows More importance on innovation and creativity Blue ocean strategy of creating new market by partnering with resorts and 3/10/13 theme parksSynergy Team 2 1010

Strategy : Performance & Profitability (Cont..)

Sharing production costs with partners Rotation of stage directors Re-investing in business to support innovation Organization Structure based on independent creative cells ensuring increased accountability and scalability

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Challenges to Growth and Diversification

Cannibalization of its shows due to increased no. of shows (e.g. 8 shows at Vegas) Brand dilution by moving away from big tops to arenas and theatres Risks in choosing the right partner Diversification beyond gambling or existing destination cities
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Saturation in US- market that still Team 2 Synergy 1212

Factors Influencing Structure of Industry Innovation & creativity

Ability to garner larger market share (Blue Ocean strategy) Advent of newer technologies could act as formidable substitutes. E.g. 3D movies usage of materials used for the shows
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Advent of newer technologies

Environment policies

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Team Diversification2 - Synergy

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References

The Evolution of circus industry, INSEAD, W. Chan Kim Even a clown can do it: Cirque du Soleil recreates live entertainment, INSEAD, W. Chan Kim Cirque du Soleil The high-wire act of building sustainable partnerships, Harvard business school, Ramon & Maxime From the Streets to the Stars, Da Yi and Ebube Anizor The big top that wasnt big enough, JournalOfInternationalManagement.com www.cirquedusoleil.com Blue Ocean Strategy, The Wharton School, Roch Parayre

Thank You!

Indian Institute of Management Bangalore Bannerghatta Road, Bangalore 560 076, INDIA

www.iimb.ernet.in