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Cirque Du Solleil- Strategic Management Essay

Executive Summary

Cirque du Soleil is an entertainment firm from Montréal, Canada and was founded in 1984. The company started as a small business and gradually grew into a successful organisation with an established presence in the entertainment industry. This report deals with the ways in which the organisation became successful. Therefore, it is necessary to analyse different factors. The first part enumerates the stakeholders which contribute profits for Cirque du Soleil. Conversely, this section will cover the considerations the organisation must take into account for the welfare of its stakeholders. The second part illustrates the organisation’s uniqueness and how they differ from their competitors, which is a result of several innovations and business strategy. In the last part, the mission statement will be illustrated and discussed. Analysis of the mission statement will show the principles, philosophy, and beliefs that take high priority for their business. Furthermore, suggestions for the future will be listed.

1.Stakeholders & the success of Cirque du Soleil

A stakeholder is a person or a group who has an input in an organisation. It can affect the achievement of company’s objectives, activities and the behaviour of its member. (Mullins, 2005:163)

1.1.Cirque du Soleil’s stakeholders

Cirque du Soleil, like all other organisations, has many stakeholders which include managers, employees, customers, government, etc. Every stakeholder has its particular interests to support an organisation.

1.1.1.Managers

Managers have particular interests in an organisation e.g. in job security, size and growth of the organisation or prestige. (Mullins, 2005: 164) Additionally, the managers achieve a self fulfilment because they have career prospects due to the variety of jobs e.g. in environment issues. (Cirque du Soleil, 2012) Hence, the managers are able to learn different stages of work and also have job possibilities in non-circus work.

1.1.2.Employees

Like managers, employees have interests in job security and in learning because the shows are always differentiated. Therefore, employees can also experience a self fulfilment. It is believed that employee’s salary is above the average circus industry salary because the shows are upscale and successful. Thus, employees can build up a reputation and also expand career options e.g. by retraining for a second career or by changing the industry like transitioning to musical theatre for example. (Cirque du Soleil, 2012)

1.1.3.Customers

The customers of Cirque du Soleil are the audiences and they are of prime importance for the organisation. The benefit that Cirque du Soleil gives to the audience is an escape from the stress of their daily lives. In other words, they can get away from it all for a short while. The audience gets a unique experience from the spectacular performance. Due to the multiple shows, customers may come frequently which brings travel possibilities because the organization is touring around the world. An adult experience can be fulfilled due to the fact that the show is more elegant and rich than loud like in a traditional circus. (Pawar, 2007: 8-10)

1.1.4.Government

The government’s purpose in helping the organisation might be to enhance their image. Especially for tourism, the organisation enlarge government’s cultural offering. Therefore, a new target group can be achieved e.g. those who are not interested in historical sights. As a result, this benefit supports the local industry due to taxes. Hence, the city can pursue other projects like the construction of parks as public service. Cirque du Soleil has an agreement with the Government of Canada to serve 25 years with entertainment to support the cultural program in Canada. (Canadian Heritage, 2010)

1.1.5.Suppliers & Distributors

Suppliers and distributors are committed in long term relationships with Cirque du Soleil and bring prestige to the stakeholders due to frequent orders and demand. It may also be possible that the stakeholder gets new customer groups due to references.

1.1.6.Investors & Sponsors

For these groups, cooperating with Cirque du Soleil brings a prestige to the locals. In the case of Arab investors, the cooperation brings business in tourism, regional development and support for the local industry. Dubai firms bought 20% of Cirque du Soleil which brought profit. Last year 10000 visitors watched Cirque du Soleil’s performances and the company owns a stake in casinos where Cirque’s shows are shown. (The star, 2008) Sponsors want to enhance their image and in addition, get new target groups. Besides, return on investment is a benefit for sponsors. Nevertheless, sponsors are a low key stakeholder because they also use the event for fundraising opportunities. (De Wit, 2004: 931)

1.1.7.Community

The province of Quebec and its community share almost the same interests as the government. Quebec wants to enhance their image and enlarge their cultural offering and in doing so, hope to achieve new target markets. The global community looks for funding and developing e.g. for projects like charity. Cirque du Mond is a special project for youth who have HIV or victims of sexual violence. Cirque offer them workshops to express themselves. (Cirque du Soleil, 2012)

1.2.Stakeholders & financial performance

The aforementioned stakeholders bring their expectations to the organisation and the organisation tries to fulfil their expectations which may simultaneously lead to the organisation accomplishing its own goals. If the requirements and expectations are reached, high performance can be achieved. (Manowong, 2010: 131) 1.2.1.Superior financial performance through serving stakeholders’ interests In the interests of the stakeholder, managers will be rewarded for their performance. When expectations are met, managers build commitment and loyalty and thus, cause a positive contribution from each member of the organisation. This in turn, lowers the cost for recruitment and training.

Satisfied employees provide inputs for creativity for new shows. If they perform excellently they can bring more possibilities in creating new and spectacular acts. Hence, better shows can be offered. As a result more tickets can be sold for high prices which lead to high turnover and profits. Furthermore, new target groups can be tapped into by attracting those who are watching the shows for the first time out of curiosity.

By giving the audience unique experiences of its shows, Cirque may receive frequent and repeated business. As a result, and similar to the effect that employees have on the organisation, the audience brings the organisation turnover and profit due to high ticket sales. (Kim, 2005: 15)

The government supports the organisation. One example can be given from 1985 where Cirque du Soleil was in debt. The Quebec government granted funds to the organisation to sustain their business which brought the organisation slowly back into a stable condition. (Pawar, 2007: 4)

Due to long-term relationships to suppliers, the stakeholders build trust after a long collaboration. As a result, the stakeholder supports the organisation with lower and better prices.

Concerning investors, they support Cirque du Soleil with projects for example. Therefore, Cirque du Soleil has lower financing costs and has a better financial reputation and position. Cirque du Soleil attracts investors and thus, they have a financial backup. (TheStar, 2008)

Through the community, Cirque du Soleil achieves a reputation e.g. by giving tickets to charitable organisations. Having a positive impact on the greater community and society in general can help Cirque boost their ticket sales. (Pawar, 2007: 9) Corporate social responsibility became important where companies take responsibility towards community and environment and operate in social and ecological aspects. As a result, the organisation may increase customer retention, enhance relationships (customer, supplier) and differentiate from competitors. (Sims, 2003: 43-44)

1.3.Serving stakeholders’ interests through superior financial performance Good financial performance of Cirque enables the organisation to better serve the stakeholders in more ways than simply revenues and profit. As a consequence of superior financial performance, a further aspect is important to how Cirque du Soleil satisfies their stakeholders. Due to the high turnover and profit in business, better shows are offered where the expenditure is spent on modern technology or venues. Suppliers are charged with new tasks and build trust. Besides, the bigger the company size, the bigger the orders because the company may have the ability to manage the delivery.

Hence, the studios get seller’s attention. (Hollensen, 2005: 296-297) Additionally, better training can be provided for employees in circus school and career transition program support artists when they step out of the organisation. Furthermore, Cirque du Soleil offers their employees health benefits like medical plan and travel benefits due to shows in different countries. (Cirque du Soleil, 2012) Communities can be provided with new projects beside environment issues like environmental pollution. According to Cirque du Mond Cirque du Soleil can provide new projects. So besides Africa and Australia they could also operate in Asia. (Cirque du Soleil)

2.Operational innovations at Ciruqe du Soleil
Operational innovation is about creating new ways in business e.g. in new projects or providing customer service to achieve success. Consequently, success is not only based on the working performance of a company. (Hammer, 2004) 2.1.Operational innovations & the unique Cirque experience

Cirque du Soleil distinguishes themselves from traditional circuses by eliminating and adding factors. (Kim, 2005: 36)

Eliminate
Star performance
Animal shows
Aisle concession sales
Multiple show arenas
3 ringsRaise
Unique venue + Touring location

Reduce
Fun and humour
Thrill and dangerCreate
Theme + Multiple shows
Refines environment
Multiple productions
Artistic music and dance
Music first than shows
Production e.g. film, TV, retail, corporate shows
Unique combination of performing act

Table 1 Eliminate- Reduce- Raise- Create Grid (Source by Kim, 2005: supplemented by author)

Furthermore, it is said that less successful companies followed usual strategic logic and successful companies used value innovation. Value innovation differs from the basic strategy and does not focus on rivals. It focuses more on the values customers have in common and new processes. (Kim, 1998: 25-26) Moreover, by eliminating certain elements, costs can be reduced e.g. by reducing advertising because value innovation causes word-of-mouth. Thus, a part of differentiation is also value at a lower cost. (Kim, 1998: 28-30) As illustrated below (see Figure 1), the key factors for the value curve are focus, divergence and a compelling tagline to achieve and exceed the value for both buyers and the organisation which Cirque du Soleil manages to do. Evidently, it is shown in Strategy Canvas that Cirque du Soleil differs from other competitors. The Circus Ringling Bros. and Barnum & Bailey Value Curves are similar to a traditional circus and Cirque du Soleil is the total opposite of it through alternatives with new factors. (Kim, 2005: 37-41)

Proceeding on the assumption, the operational innovation leads to value innovation and as a result, those unique strategies such as new concepts and process create unique experiences. (Waltz, 2003: 86) For example they attract audiences with lighting effects, original music and new and appealing costumes. (Pawar, 2007: 4)

In general, a mature industry has a greater chance of success and rewards than industries which appear profitable because mature industries have a greater creativity in business and higher level of innovation. Customers are especially attracted by the creativity of industries which can cause unique experiences. These industries are also difficult to compete because of the market niche they create. (Baden- Fuller, 1992: 18) These criteria fit Cirque du Soleil’s business model and is carried out by its Blue Ocean strategy in which the organisation builds a new and uncontested market which made the competition irrelevant due to creative innovations. (Kim, 2005: 4&18)

2.2.The influence of operational innovations on the financial dynamics of Cirque du Soleil Financial dynamics reflect results of an organisation’s decisions which are important for the cash flow. Increasing the productivity means not reducing costs. Nevertheless, it creates options which may lead to turnovers. The effect of increasing output or input may enhance profit for the business. (Yu- Lee, 2002: 136&138) In general the circus industry comprises high costs and most of the circuses incur increasing costs without rising revenues. (Kim, 2005: 13)

Based on the innovation in 2.1 the author identifies the reducing cost and the turnover due to the organisation’s elimination and addition of elements which lead to profit.

2.2.1.Turnover

Cirque du Soleil has various factors which attract customers and leads to turnover. For example, they have unique venues with comfortable seats instead of hard benches like in traditional circus. (Kim, 2005: 15) Cirque du Soleil started to perform in different continents like Asia and Europe and people all over the world have the chance to take part in the events. Moreover, the organisation creates themes which have impressive storylines and multiple shows with new acts. Additionally, artistic dance and music make it more unique. A special feature of the shows is how they create music first and then adapt the acts to the music. All in all, the unique entertainment created a new form of entertainment and combined circus art with theatre and ballet. (Pawar, 2007: 3-6)

This generates turnover because creativity causes a great ambience and introduces an intellectual element into the shows which impress audiences and increase demand. (Kim, 2005: 15) In general, Cirque’s shows are sold out or well frequented with occupancy of 85-95%. (Williamson, 2004: 931) By other ventures like audio, videos, t-shirts and masks Cirque can increase their revenue. (Pawar, 2007: 3) In addition, less than 10% of revenues come from concessions at shows. Nothing is sold inside the tent and also not during performances. Therefore, Cirque du Soleil offers VIP packages which include food in a separate tent. Hence, the customer can get better beverages for a higher price. (Williamson, 2004: 931)

2.2.2.Reducing Cost

Reducing costs are achieved by significantly eliminating elements. By eliminating circus animals reduce one of the most expensive expenditures. This consists of training, insurance, medical care and transportation, and transportation expenses are especially costly because Cirque du Soleil tours around the world. Moreover, star performances in traditional circuses are expensive and Cirque does not include these performers in its programs. Instead of three-ring venues Cirque reduces it into one which reduces e.g. the effort of decoration costs. (Kim, 2005: 14) Besides touring shows they have permanent shows which take place in Las Vegas, Orlando and Walt Disney World. (Pawar, 2007: 3)

2.2.3.Profit

In terms of profit, operational innovations develop improvement for better market performance. It enables Strategic, Marketplace and Operational benefits. (Hammer, 2004) The results of Cirque du Soleil’s innovations can be gathered from “A Powerful Weapon” (see appendix: table 2). Applicable to Cirque du Soleil, they achieved strategic benefits which lead to higher customer retention, ability to execute strategies and to enter new markets due to their new entertainment business. Their marketplace benefits are based on greater customer satisfaction, differentiated offerings and stronger relationships due to offering unique experiences. Operational benefits are acquired with lower direct costs and more added values.

3.Cirque du Soleil’s corporate mission

The corporate mission is an element of the organisation’s business plan. It is a function for the strategic planning which gives a specific direction to the business process. Therefore, the organisation has a purpose and business principles to form the firm’s identity. (Bierce, 2004: 592)

3.1.Components of the corporate mission

The corporate mission consists of three elements. First of all, in organisational beliefs the members have the same strategic beliefs and share a common understanding which makes decision making easier in business processes. It results in a more confident and driven group. (Bierce, 2004: 592) Secondly, the organisational values guide the actions in a business and are an integral part of the company but each person has her own value in what they believe to be good. Therefore, by sharing common values e.g. in ethical behaviour or worthwhile activities, reaching aims can be supported. Lastly, an organisation has a specific business definition which creates a direction for the organisation to follow and thereby attain success. Through this guideline, members focus on opportunities and efforts to expand their business. (Bierce, 2004: 593)

3.1.1.Business definition

According to the mission, Cirque du Soleil places high importance on artistic performances and creative productions. (Cirque du Soleil, 2012) Based on the research of the author, their mission is not a precise business definition of Cirque du Soleil because there is no clear direction how they want to develop. For example, they do not define themselves as a traditional circus. Not having a business definition points to a weakness in the organisation. On the other hand, not having a definition is a strength because there is no other organisation which is similar with Cirque du Soleil’s business (exemplified in 2.1.).

3.1.2.Organisational purpose

Cirque du Soleil’s purpose “[..] is to invoke the imagination, to provoke the senses and to evoke the emotions of people around the world.” (Cirque du Soleil, 2012) The organisation is trying to do everything to impress their customers but to fulfil their needs they do not use market research for their shows. By following trends the organisation will lose their unique presence. Instead, the organisation’s culture is to create new shows to update previous shows. (Pawar, 2007:8-9)

3.1.3.Organisational beliefs

Cirque du Soleil is breaking the market boundaries of circus and theatre (Kim, 2005: 14) which points to a new form of live entertainment with a combination of circus art, ballet and theatre. (Pawar, 2007: 3) Coherent with this finding, the non-existent business definition is contradictory because it is said that Cirque du Soleil tried from the beginning to differentiate itself from the traditional circus in business perspectives. (Pawar, 2007: 6-7) Moreover, to achieve this belief by breaking market boundaries, innovations enabled steps to be taken in a specific direction.

3.1.4.Organisational values

The value of this organisation is to keep their creativity in business and try to exceed their limits. In addition, the organisation tries to empower its people and promote the youth. Furthermore, every member of the organisation respects every contribution of one person. (Cirque du Soleil, 2012)

3.2.Mission function & statement

The mission functions devote strategic measures for the future and thus, represent the purpose of a unit. Moreover, a mission statement defines customers, products and services. (Entrepreneur Media, 2012) 3.2.1.The future development of the business & mission of Cirque du Soleil For the future, Cirque du Soleil is planning to build more entertainment complexes in major cities like Sydney, London and New York. The complexes would include art galleries, nightclubs and restaurants for people to dine. In addition, Cirque wants to include hotels in which artists perform in the waiting area and clowns are doing the room services. (Pawar, 2007: 10) Based on the mission of Cirque du Soleil, the author analyses the factors of mission.

The aforementioned organisational values are definite such as the purpose has a clear understanding of what the organisation wants to offer their customer. In contrast to the business definition, there is an indistinct clarification. In particular, Cirque’s intentions for the future blur the business identity and make it even more vague than it already is. A suggestion would be to take preference and choose between the hospitality or entertainment industry and commit resources accordingly. Thus, they can also assure stakeholders of what specific business they are partaking in and the stakeholders have a clear understanding what purpose the organisation is.

3.2.2.Renewed mission statement

To modify the mission statement the author extracts parts of the exciting mission of Cirque du Soleil (see appendix: Figure 2) and adds purposes: “Cirque du Soleil is an international organization and puts a high value on creation, production and performance of artistic work which will impress the audience to evoke the emotions. The organisation will torch people over the world with unique experiences of their performance which differentiate from other entertainment. “ In the modified mission, value on creativity like production will be retained because it highlights the features of Cirque’s business.

Furthermore, members of the organisation have a clearer understanding of their aim or purpose. Moreover, Cirque du Soleil should expand in more countries so that everyone, even people in developing countries, can take part in the unique experiences. Cirque could design smaller shows because the usual tickets are expensive. The mission clearly states that they differentiate from others and still hold their accurate business in the background. In summary, audiences might show a continued curiosity with promises.

Strategic BenefitsHigher customer retention
Greater market share
Ability to execute strategies
Ability to enter new markets

Marketplace benefitsLower prices
Greater customer satisfaction
Differentiated offerings
Stronger customer relationship
Greater agility

Operational benefitsLower direct costs
Better use of assets
Faster cycle time
Increased accuracy
Greater customization or precision
More added value
Simplifies processes
Table 2 A Powerful Weapon (Source: Harvard Business School Publishing Corporation, 2004)

“Cirque du Soleil is an international organization founded in Quebec dedicated to the creation, production and performance of artistic works whose mission is to invoke the imagination, to provoke the sense and to evoke the emotions of people around the world.” Figure 2 Mission (Source: Cirque du Soleil 2012, online)

Bibliography
Baden- Fuller, C. (1992). Rejuvenating the Mature Business: The Competitive Challenge. Routledge Bierce, A. (2004). Strategy: Process, Content, Context. Cengage Learning Emea Hollensen, S. (2010). Marketing Management- A Relaitionship Approach 2nd ed. Pearson Education Limited Kim, C. (2005). Blue Ocean Strategy. Harvard Business School Publishing Corporation Kim, C. (1998). Harvard Business Review on Strategies for Growth. Harvard Business School Publishing Corportation Manowong, E. ( 2010). Construction Stakeholder Management. Blackwell Publishing Ltd Mullins, L. (2007). Management and organisational behaviour 7th ed. Prentice Hall Pawar, M. (2007). Innovation at Cirque du Soleil. ICMR Center for Management Research Sims, R. (2003). Ethics and Corporate Social Responsibility: Why Giants Fall Waltz, E. (2003). Knowledge Management in the Intelligence Enterprise. Artech House Inc. Williamson, M. (2004). Strategy: Process, Content, Context. Cengage Learning Emea Yu- Lee, R. (2002). Essentials of Capacity Management. John Wiley & Sons

Online Resource
Hammer, M. (2004): Deep Change: How Operational Innovation Can Transform Your Company. Online: URL: http://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1 [25th June 2012] Cirque due Soleil (2012): Mission, Goal and Values. Online: URL: http://www.cirquedusoleil.com/en/about/global-citizenship/introduction/mission.aspx [26th June 2012] Cirque du Soleil (2012): Career Transition.Online: URL:
http://www.cirquedusoleil.com/en/jobs/casting/work/career-transition.aspx [26th June 2012] Cirque du Soleil (2012): Social Circus. Online : URL :

http://www.cirquedusoleil.com/en/about/global-citizenship/default.aspx [26th June 2012] Canadian Heritage (2010): Government of Canada and Cirque du Soleil Announce Canada’s Cultural Program for Expo 2010 in Shanghai. Online: URL: http://www.marketwire.com/press-release/Government-Canada-Cirque-du-Soleil-Announce-Canadas-Cultural-Program-Expo-2010-Shanghai-1100427.htm [26th June 2012] Entrepreneur Media (2012). Online: URL:

http://www.entrepreneur.com/encyclopedia/term/82494.html [1st July 2012] The Star (2008). Dubai firms buy 20% of Cirque du Soleil. Online : URL : http://www.thestar.com/entertainment/article/473172–dubai-firms-buy-20-of-cirque-du-soleil [4th July 2012]


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