Case Study – Cirque du Soleil – Strategic Management Introduction Imagine a traditional circus: Laughing children, the smell of popcorn in the air, clowns amusing the audience and a diversity of exotic animals showing their trained skills. The whole spectacle takes place in a typical round circus tent. Cirque du Soleil is different in various ways. It is one of the world’s most popular attractions. Yet its history makes it special and unique. Founded in 1984 by Guy Laliberté, Cirque du Soleil started to develop from a group of street artists (quote case study) and had to face a rough start. They were challenged with financial problems causing immense depts. “From its original incarnation […] Laliberté’s Cirque du Soleil rapidly evolved from a pack of under-employed kids into one of the largest Canadian cultural exports” (p. 928, De Wit & Meyer – strategy..). The success of Cirque du Soleil wouldn’t have been possible in the company’s seat phase without the help from stakeholders, which supported it with a governmental contract of US$ 1.7 Million. But they didn’t invest the support profitably therefore they only earned a small surplus. After that it went even worse because they invested too much money in the equipment to fulfil their dreams without a focusing on the money. A risky behaviour – they went nearly bankrupt. They had to depend on support again in a short term. Three cultural interested investors like the Canadian Prime Minister for example saved the company. With an act on the Los Angeles Art Festival in 1987, “the troupe made another huge gamble in spending”([p. 928], De Wit & Meyer – strategy..). It was their first big international step. “ Without the intention to build up a Million Dollar business, but a lot of passion and great innovative ideas, the gamble paid off. Cirque du Soleil was a big success and almost immediately sold out at later shows. Today Cirque du Soleil stands for “a sophisticated and new form of entertainment” ([p. 928], De Wit & Meyer – strategy..). The company somehow created with their innovative style an island position which reinvented the circus industry. Cirque du Soleil bursts the limits of a traditional circus because there are no animals, no ringmasters, no clowns, no sweets , no snacks, they are not stuck in traditional roles at all. It is a unique show, adult entertainment, the artists create a synthesis, Cirque du Soleil is a combination of street entertainment, circus and opera ([p. 928], De Wit & Meyer – strategy..). Fred Pfening, a circus historian points out: “There’s one question that always annoys me: ‘But is this circus?’ That’s utterly irrelevant. It is what the audience thinks it is. It is Soleil.” ([p. 928], De Wit & Meyer – strategy..) More important seems the question: How can a small group of artists with many dreams, without economical experience and without holding on to traditions, develop to one of the most successful companies in their branch? Question One: [“…”] or Answer! This (rising) success wouldn’t be possible (results) without the supportive attitude towards CS and action of the stakeholders. They pushed the young artist in the early stage, rescued the almost insolvent company and brought it to enormous fame afterwards. Stakeholder in general is “anyone who has an interest in the company and the power to execute influence on the company’s achievements”(script/indirect book^^) affecting the performance of the organization. (Strategic Management BOOK p. 274 f.) Therefore every company has (a lot of different) plenty stakeholders, who are affected direct or indirect. A stakeholder can be a “person, group, or organization that has internal or external stake in an organization’s actions, objectives, and policies. Key stakeholders in a business organization include creditors, customers, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources. Although stakeholding is usually self-legitimizing (those who judge themselves to be stakeholders are stakeholder), all stakeholders are not equal and different stakeholders are entitled to different considerations. For example, a company’s customers are entitled to fair trading practices but they are not entitled to the same consideration as the company's employees. See also corporate governance.” (http://www.businessdictionary.com/definition/stakeholder.html) Different branches and groups profit from the business Cirque du Soleil. These stakeholders are at the one hand the shareholders, which support Cirque du Soleil with their money and have demands on the distributions. They invest and have therefore high interest in the success of the company. Also people like the Prime Minister which support Cirque do Soleil with subventions are stakeholders. They also care about the company’s well being and growth. Additionally artist themselves that work for the business can be called stakeholders, too. They are very interested in keeping their employment and also passionate. Also celebrities like Madonna, David Bowie, Elton John, Steve Martin and Francis Ford Coppala were important stakeholders and helped the company developing throughout his history. One very important stakeholder for Cirque du Soleil are the financial supporters (Kapitalgeber googln). They benefit from the rising image and growing publicity and network of Cirque du Soleil. Of course they risk a lot buy investing in a innovative start-up like Cirque du Soleil. Taking that risk was worth fit/ paid off for those investors, because they can [get a piece of the cake]... the most profit of this synergetic exchange of needs and offers is on the side of Cirque du Soleil, BECAUSE.... Furthermore one of the most direct stakeholders are of course the employees, which can fall into two main groups. One consist of those, who can more easily be replaced, such as accountants, audio- and sound engineers…. Although working in the background they are essential for the company to run and perform its shows on one hand and on the other they profit from the cirque by getting a short or sometimes even long term job offer. However, the key holding group are especially the artists, who profit from the reputation and image of Cirque du Soleil, earn money and are enabled to show their talents on stage in front of a great audience. One extraordinary example for a performer is Tokmak, who is very talented and skilled, bounded to crunches. The Cirque made it possible for him to live from his talents, grow his own community and became famous, so it also gave him the opportunity to get invited to several TV-shows. Temporarily he even became the main act during various performances. Creating such a great sensation and interest about their artists helps both sides. The reverse effect for Cirque du Soleil is that it drums up interest for their shows going on around the world. (http://derginflies.org/reviews.html // http://www.ndr.de/kultur/literatur/stix101.html) (essential stakeholders are employees like make-up artist visa.. and especially the artist, who profit from the reputation and image of Cirque du Soleil, ears money and can increase their popularity in general… a good example is Tokmak on crutches, who has gained fames after his career at Cirque du Soleil, that he now can live and earn money, but showing his astonishing skills… Cirque du Soleil benefits a lot from this particular artist, because main act… everybody profits from the cooperation with all employees and artist! -> Nowadays stakeholder management is a very important issue, which should not be neglected… isn’t to think away.. Furthermore one of the most direct stakeholders are of course the employees, which can fall into two main groups. One consist of those, who can more easily be replaced, such as accountants, audio- and sound engineers…. Although working in the background they are essential for the company to run and perform its shows on one hand and on the other they profit from the cirque by getting a short or sometimes even long term job offer. However, the key holding group are especially the artists, who profit from the reputation and image of Cirque du Soleil, earn money and are enabled to show their talents on stage in front of a great audience. One extraordinary example for a performer is Tokmak, who is very talented and skilled, bounded to crunches. The Cirque made it possible for him to live from his talents, grow his own community and became famous, so it also gave him the opportunity to get invited to several TV-shows. Temporarily he even became the main act during various performances. Creating such a great sensation and interest about their artists helps both sides. The reverse effect for CS is that it drums up interest for their shows going on around the world. (http://derginflies.org/reviews.html // http://www.ndr.de/kultur/literatur/stix101.html) (essential stakeholders are employees like make-up artist visa.. and especially the artist, who profit from the reputation and image of Cirque du Soleil, ears money and can increase their popularity in general… a good example is Tokmak on crutches, who has gained fames after his career at SC, that he now can live and earn money, but showing his astonishing skills… Cirque du Soleil benefits a lot from this particular artist, because main act… everybody profits from the cooperation with all employees and artist! “A study of market models demonstrates the important role played by competitors and by the government as a restraining force…” (??) B “serving the interests of stakeholders reinforce the financial performance of the business…” and inverse [/reverse]… “the financial performance reinforce serving the interests of the stakeholders”. Cirque du Soleil benefits from the growing demand on the show and the increasing interest in merchandizing articles acquirable online over the fan-shop. [memorabilia = Fanartikel]’ How does the success of serving the interests of stakeholders reinforce the financial performance of the business? How does the financial performance reinforce serving the interests of the stakeholders? The major differentiator between Cirque do Soleil and any other form of circus across the world is its theme based shows and unique approach of developing those shows. The company aims at increasing the entertainment quotient of its customers, thus providing them with a unique experience. The differentiating factor of Cirque do Soleil is the complete package offered to the customers, which makes Cirque a true mixture of performance arts (circus, opera, and theater). Creativity and innovations at Cirque relies heavily on expenditure on elements that aid in developing a thematic element. Being a complete entertainer, the tickets of Cirque are generally higher compared to other shows (circus, or theater or opera). If the company is able to serve the interests of its stakeholders, and provide them with an unforgettable experience (with each time they watch the show), people will not resist in paying the extra dollars for a quality entertainment show. This clearly shows in the growth in Cirque’s revenue since inception. Owing to the quality of entertainment and innovations at Cirque, the company’s gross revenue increased to ~USD 350 million by 2001. Higher revenues would definitely go a long way in increasing the quality of the Cirque’s shows i.e. innovative themes, performers from across the globe, vibrant environment, eye-pleasing performance and unmatched service to customers. Increased revenue will also help the company in rewarding its employees for their determination and skills (which helped the company is carving a niche for self in the entertainment and circus industry). This will increase employee satisfaction and would motivate them to improve their performance and commitment. This will in turn help the company in further improving the level of their shows, which would eventually have a positive impact on the company’s top and bottom line. Question 2: [“…”] or Answer! Cirque du Soleil offers very unique operational innovations, which differ from the traditional circus. It does not just compete in the known and common market space but creates it's own and unknown branch. Therefore competition is irrelevant. Cirque du Soleil follows the Blue Ocean strategy where "demand is created rather than fought over" (wiki). For example the show takes place on a stage and not in a traditional circus tent. Also it has a completely different target group. A circus normally tries to catch anyone, especially families and children, where Cirque du Soleil at the other side can be called adult entertainment. Tickets are sold very expensive (jgfwregftoweth) aiming for a premium class. The show tells a complete story with erotic elements but no animals at all. The artist stay unknown and in the background, no names are mentioned. There is no popcorn sold. a) What did these operational innovations do to the financial dynamics of the business? (15 marks) These operational innovations mentioned earlier in the text of course affected the financial dynamics of Cirque du Soleil positively. With their own style and spirit they reinvented the entertainment branch. Through choosing the premium class as their target group for example, Cirque du Soleil already earns more money than a regular circus with its high priced tickets. Because of their innovative entertainment program, they distinguish from the competitors and have an island position. Cirque du Soleil isolates from the regular market because they do not try to improve the typical way of circus entertainment, they manage to create a new kind of entertainment. They also earn much money through their merchandising available in shops and online. Question: 2 : [“…”] or Answer! A). Cirque du Soleil strongly believes in offering a cut above the rest entertainment to the audiences. The company takes few extracts from traditional art and heavily relies on the innovative modern arts. The arts are designed keeping in mind the tastes and preferences of the current edge audiences. Unlike the traditional circus, Cirque du Soleil has no performance that involves animals which is a great deviation from traditional circus. In traditional circus, the use of rings is rampant while Cirque du Soleil has stage in place of that. Also, it does not use curtains like in traditional circus. Cirque fu Soleil has multiple production units and they all have distinctive themes to work on which is not the case with traditional circus as they have only single production unit. (Clarkson, M.B.E. 1995) Cirque du Soleil relies on traveling shows and permanent location both. They have a mature target audience while the traditional circus does not focus on any particular audience. The company has dynamic creative department for costumes and make ups. The company has around 3000 employees from across the world. The traditional circus involves mostly the people from home country. The company does not heavily rely on sponsorship. No traditional circus was able to become an international brand but Cirque du Soleil did it. Cirque du Soleil deployed the current edge technologies to make itself a cut above the rest. (Donaldson, T. & Preston, L. 1995) b). The innovation has a great role to play in maintaining relevance for an organization. It checks an organization to become obsolete. There are a number of instances that where an organization used to be quite successful at a given point of time but failed miserably as it could not innovate it and it could not compete with the competitors. On the other hand, there are instances where an organization rose to sky from ashes just because of the innovation. The innovation has a great role to play in the very survival of the firm. The level of positive innovation being carried out in an organization decides how far an organization can go and how competitive it can be. (Evans, W.M. & Freeman, R.E., 1988). For Cirque du Soleil operations and service are the primary activities which have a great impact over its relevance, profitability and effectiveness. Sales and marketing activities also have a great role to play to increase the profitability of the company. Apart from these, there are some important support activities for the company which are human resource management, infrastructure of the firm, technology development and procurement. Figure 4: Porter’s Generic Value Chain Cirque du Soleil wants to excel its primary activities by bringing about innovation. The idea to not include animals in the show is focused upon artistry of the show and gives the audience the real aesthetic pleasure. The animals would have taken away that experience. There is no use of curtains at the stage as the company wants audience to be connected to the show. This way they would feel themselves as part of the show. The moment audience feels connected to the show, they enjoy the most and they will revisit the show. The concessions stands were separate as they did not want to have any disruption during the show as this will bring about negative impression in the minds of the audiences. Cirque du Soleil relies on permanent locations as they wanted to capitalize upon the high traffic of the place or entertainment centers. The people who visit those centers will come across the show and a large number of people will come to watch the show and have the unique experience of the show. Question Three: : [“…”] • Develop a corporate mission for Cirque. Critically examine the organisational beliefs, purpose and values of the organisation and show your mission statement provides the direction, legitimacy and motivation for the business going forward. [or ANSWER] Mission Statement – Definition and introduction: “Mission statement is a sentence describing a company's function, markets and competitive advantages; a short written statement of the business goals and philosophies” (Source: http://www.entrepreneur.com/encyclopedia/term/82494.html) A mission statement defines what an organization is, why it exists, its reason for being. At a minimum, the mission statement should define who the primary customers are, identify the products and services you produce, and describe the geographical location in which you operate. A mission statement needs to be periodically reviewed and possibly revised to make sure it accurately reflects the goals as the company, the business and economic climates evolve. The mission statement should reflect every facet of the business: the range and nature of the products you offer, pricing, quality, service, marketplace position, growth potential, use of technology, and your relationships with your customers, employees, suppliers, competitors and the community. As found in the corporate press material of Cirque du Soleil on its homepage the actual mission statement is: “The mission of Cirque du Soleil is to invoke the imagination, provoke the senses and evoke the emotions of people around the world.” (Source: http://www.cirquedusoleil.com/en/press/kits/corporate/cirque-du-soleil.aspx) On the internet Cirque du Soleil also provides it’s current beliefs and values of the company: “Mission ? Cirque du Soleil is an international organization founded in Quebec and dedicated to the creation, production and performance of artistic works whose mission is to invoke the imagination, provoke the senses and evoke the emotions of people around the world. Goal?? In the pursuit of its dreams and in its business practices, Cirque du Soleil strives to position itself in the community as a responsible proponent of change. Values • To uphold the integrity of our creative process • To recognize and respect each individual's contribution to our body of work • To extend the limits of the possible • To draw our inspiration from artistic and cultural diversities • To encourage and promote the potential of youth” Unfortunately the sources of the Cirque du Soleil mission and values could not be found regarding the timing and beginning. Looking back on the history of the company it can be assumed that this mission statement has been developed in the mid 80ies. The success of the company in the last 30 years demonstrates clearly that Cirque du Soleil is a success story. Nevertheless there are always ways to make things better. The values of Cirque du Soleil respect diversity and demographic aspects as well as the spirit of “the American dream”. Looking closer at the mission statement words “invoke, provoke, evoke” there is no direct connection to Cirque du Soleil at all. The mission could easily be adapted by any other company, no matter whether producing shoes or ice cream. Looking at the diversity plans of Cirque du Soleil like licensing and merchandising the combination of the wording with a figurative mark could be a sustainable development of the current mission statement. CONCLUSION After getting an impression how extraordinary Cirque du Soleil is, it is comprehensible how annoying the question: Is this Circus? for enthusiastic fans is. Cirque du Soleil is unique in various/ in many ways ..(with their passionate entertainment mix they lead through a “dream world”).. What really matters is that strategy can be analysed and planned, but there is more to it. There exists no formula with is the best-case strategy. Sometimes you have to try things, risk something and be flexible about your long-term decision-making. A good planned and “save” strategy isn’t always the best way to access a market. It is always influenced by timing, intention, external and internal support, networking and of course luck. There exist no preferred strategy that guaranties a company maximum outcome/profit and sustainable existence on the long term. To aim for a unique way, cut off the old birds and be individual, difference your action from the competitors to create an island position and to be flexible (is the best way to go for)… [...to think outside the box... leaving deep-rooted traditions beyond leads to new challenges and goals] References Clarkson, M.B.E. 1995. A stakeholder framework for analyzing and evaluating corporate social. Donaldson, T. & Preston, L. 1995. The stakeholder theory of the modern corporation: Concepts, Evans, W.M. & Freeman, R.E. 1988. A stakeholder theory of the modern corporation: Kantian [Question 2/TWO upon] Lee e. Preston. 1995. The stakeholder theory of the corporation: concepts, evidence, and implication. [ONLINE] Available at: http://zonecours.hec.ca/documents/A2010-1-2410481.stakeholdertheoryofthecorporation,concepts,....pdf. [Accessed 08 July 12]. Robert G. Boutilier, Ph.D Robert M. Abbott, M.A. David Wheeler, Ph.D. 2001. Measuring the Business Value of Stakeholder Relationships. [ONLINE] Available at: http://www.cim.sfu.ca/folders/currentprojects/2-stakerholder-brochure.pdf. [Accessed 08 July 12].