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INNOVATION AT

:The CASE ANALYSIS:


IBS Business School PGPM Team 12
Siddharth Gupta Sipak Mohanta Tapan Mehta Ansuman Dash Suraj Chaturvedi Honey Goyal

Case Study Flow:


Brief Introduction Developments Innovations Marketing Road Ahead Issues Recommendations

About Cirque du Soleil


Acclaimed by an audience of over 18 million worldwide, with numerous prizes and distinctions to its credit, Cirque du Soleil is a unique organization which has

reinvented and revolutionized the circus arts.

Since its beginnings in 1983, Cirque du Soleil has been pleasing the public with a novel show concept that is as original as it is non-traditional: an astonishing, theatrical blend of circus arts and street performance, wrapped up in

spectacular costumes and fairyland sets and staged to spellbinding music and magical lighting.
It was among the first companies to adopt Blue Ocean Strategy, by generating

demand, by developing a new market space, where competition was non existent

It managed to excel in a declining industry by fusing art and entertainment. Later on it also introduced its line of apparel and accessories.

It also produced a number of movies and television shows.

Inception
In the early eighties, a group of young street performers pooled their talent and dreams and founded the Club des Talons Hauts or High-Heels Club, aptly named because most of them were stiltwalkers. At that time, Quebec did not have a circus tradition as did several European countries. So the Club members decided to organize a festival, where street performers could come together to exchange ideas and techniques. They called it the Fte Foraine de Baie St-Paul (the Baie Saint-Paul Fair). That was all a few visionaries needed to hatch the idea of bringing all this talent together under one roof, or why not? a big top! Cirque du Soleil was born.

CIRQUE DU SOLEIL FACTSHEET


PAST
o o Founding Year 1984 o Founded by group of street performers

PRESENT (2013)
100% owned by Laliberte (bought Gautiers half in 1987)

o Montreal based
o Managed equally by two owners: Guy Lalibert (Creative) Daniel Gautier (business and finance) o

Lalibert refusing to go public, reasoning that it would constrain Cirques creative freedom
Montreal based (had tried with three regional divisions, NA, Europe, Asia) 5,020 employees, from over 40 countries and over 25 spoken languages and generate an estimated annual revenue exceeding US$810 million. 8 simultaneous Cirque productions running on 4 continents Over 90 million spectators. ()

o 73 employees
o Touring 1 show at a time, initial 3 years only in Canada o On average 270.000 spectators per year o o

Timeline
1984:Cirque du Soleil is born with the financial assistance of the Quebec government, as part of the celebrations surrounding the 450th anniversary of Jacques Cartiers arrival in Canada. 1985:After performing in Montreal, Sherbrook and Quebec City, Cirque du Soleil leaves its home province for the first time to take its show to neighboring Ontario. It performs in Ottawa, Toronto and Niagara Falls. 1987: Status of Cirque changes from non-profit to a for profit entity. Mid 1991: Cirque convinced Fuji Television Network to sponsor Cirques tour of Asia. Fuji gave US $40 Million 1992: Entered into a year long agreement with Mirage, a Las Vegas hotel perform Nouvelle Experience. This was Cirque s first engagement of the kind. 1994: Steve Wynn owner f Mirage, built a permanent facility for Cirque at the cost US $20 million at its new resort

Timeline contd.
1995: Cirque established its first European headquarters at Amsterdam. 1996: By this time its sales had increased form $30 million in 1994 to $110 million in 1996. 1997: Walt Disney constructed a permanent theater near Orlando, California. Creation Studio was setup. 1998: Cirques new production O debuted at Bellagio. It was performed around an Olympic-sized 1.5 million gallon Swimming pool 2004: Cirque entered into an agreement with the Beatles stars to create a production to be staged at Mirage. This production was called love and it recreated the life of Beatles before they became famous. 2007: The oldest active touring show of Cirque du Soleil, Saltimbanco is converted from a Big Top show to an Arena show. This will allow the show to visit new places where it could not go before.

Recent Developments
Nov 2010: The Estate of Michael Jackson and Cirque du Soleil announced the official international launch of Michael Jackson THE IMMORTAL World Tour written and directed by Jamie King. Dec 2010: Cirque Du Soleil entered into partnership with James Cameron and Andrew Adamson in association with Reel FX Entertainment to develop and produce immersive 3D projects. Diversification: In October 2011, the Cirque du Soleil was reported to be interested in purchasing Maison Alcan, as part of a diversification strategy.

Future productions
2013 Cirque du Soleil is developing a residency show based on the music of Michael Jackson, an offshoot of touring Michael Jackson: The Immortal World Tour; previews scheduled to begin May 23, 2013 with the gala premiere date set for June 21 at the Mandalay Bay Resort and Casino in Las Vegas. 2014 A new touring show, Cirque 2014 (working title) is currently in the early stages of creation in Montreal, possibly in time for the company's 30th anniversary in 2014. The concept is unannounced; however, Michel Laprise will be its creator and director. Casting is set to start in early 2013. 2015 Depending on the success of Zarkana's run, Cirque du Soleil has plans to develop a new permanent residency production in Moscow by 2015 and could invest an additional $1 million to $50 million

FEW FACTS AND FIGURES


Cirque's assets are worth an estimated $1 billion, its annual ticket sales have climbed above $450 million, and more than 40 million people worldwide have attended at least one Cirque show. The Cirque crew gathers diverse talent from all over the world and brings all the performers together into a cohesive whole. Whether it's a touring show like Alegria or Varekai or a resident show like "O" or "Love" in Las Vegas, all Cirque shows are built around the same two core elements: a unique theme and a unique soundtrack. The Cirque team avoids straight narrative in order to allow room for the audience to interpret the show any way they want.

A full-fledged creation, innovation and training laboratory.

The Studio

Established in 1997 to instill creativity in acts of circus. Artists training: Performers come from a variety of backgrounds, including artistic gymnastics, tumbling, acrosport, swimming, diving, dance, singing, music and, of course, circus arts. Some fifty nationalities are represented among Cirque du Soleil artists. In 2010, over 600 performers will receive customized training in the Creation Studio.

Physiotherapists and fitness specialists work on site in the Studio to keep performers in good health, help maximize their physical potential, and ensure an optimal environment for their development. The Centre for Research and Innovation of Performance Research and development have always played a key role at Cirque du Soleil in each and every one of its activities. The Centre for Research and Innovation of Performance (CRIP) at Cirque du Soleil is an office of specialized studies in the development of equipment, environment and physical and acrobatic performance at Cirque du Soleil. Cirque did not employ star performers or animals in its shows, it was able to keep the costs low and to provide customers with a value for money experience.

Audience, Innovation and Strategy.


The company created niche market of live entertainment within the entertainment industry. The company started targeting adult audience who visited the theater and opera. Shows highlight artistry rather than the thrills that the traditional circus presented.

Concept
Innovation

Customer centric strategy


Organizational culture

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 o 1998 Cirque opened its 1st merchandise store in Wald Disney Resort in Florida 1999 Cirque du Soleil Images released its 1st film Alegria

2003 planning to open entertainment complex in Montreal

Innovative Strategy
Compete in existing market space Beat the competition Exploit existing demand Make the value-cost trade-off Align the whole system of a firms activities with its strategic choice of differentiation or low cost

Red Ocean Vs. Blue Ocean


Create uncontested market space Make the competition irrelevant Create and capture new demand Break the value-cost tradeoff Align the whole system of a firms activities in pursuit of differentiation and low cost

Value + Innovation
Value without innovation focuses on value creation but does not make you stand out in the marketplace. Innovation without value tends to be futuristic and go beyond what buyers are ready for. Value innovation must align innovation
with utility, price, and cost position.

Value Innovation: The Cornerstone of Blue Ocean Strategy Value-Cost Trade Off
Red Ocean companies tend to choose between low cost and differentiation. Blue Ocean companies aim for both simultaneously.

SWOT

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

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

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

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

MARKETING OF CRIQUE DU SOLEIL

PORTERS FIVE ANALYSIS


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

Bargaining Power of Customers VERY HIGH Product is highly differentiated/unique

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

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

PESTEL ANALYSIS
POLITICAL
Tax issues Stability Energy efficiency Global crisis reduced purchasing power Limited number of touring cities Cultural entertainment preferences Religios views Demographic chart
Influence of web based free contents Automatization of production leading to lower costs Higher CAPEX due to short lifecycles of new technologies

ECONOMICAL

SOCIAL

TECHNOLOGICAL

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 PRODUCTION

MARKETING

LOGISTIC ON SITE

SALES

SHOW

Primary activities:

Road Ahead
Entertainment Complexes in major cities. Inspired restaurants,hotels,art galleries, spas & Movie theatre. Restaurant would have artist performing while guest were dining. Build an experience around the customer. Montreal into a world centre for circus arts. Centre of a hub of training, creating and performing the circus arts.(cite des arts du cirque) Build cirque the entertainment capital of the world. Build an experience around the customer. Transform Montreal into a world centre for circus arts. Using different production method for every show.

Eliminate-Reduce-Raise-Create
Eliminate Star Performers Animal shows Aisle concession sales Multiple show arenas Reduce Fun and humor Thrill and danger Raise Unique venues

Create Theme Refined environment Multiple productions Artistic music and dance

The Strategy Canvas of Cirque du Soleil


hi
Ringling Brothers

Cirque du Soleil offering level

Smaller Regional Circus

lo
Price Animal Shows Star Performers Multiple Show Arenas Thrills & Danger Fun & Humor Theme Multiple Productions Refined Viewing Environment Artistic Music & Dance
Kim & Mauborgne 2006

Aisle Concessions

Unique Venue

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

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 !

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