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July 9

Strategic
Manageme
nt
Bui Thanh Hong
119111620

201
2
Cirque du Soleil

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Table of Contents
I.

Executive Summary...............................................................................................2

I.

Introduction.............................................................................................................3

II.

Detail......................................................................................................................4
1.

Stakeholders of Cirque du Soleil and the relationship between the interests

of stakeholders and the financial performance..........................................................4


1.1.

Stakeholders of Cirque du Soleil and the reasons why they are so

supportive of Cirque to exist..................................................................................4


1.2.

Relationship between the interests of stakeholders and the financial

performance...........................................................................................................6
2.

Cirque du Soleil and their operational innovations..........................................8


2.1.

Identify a number of operational innovations to the traditional circus and

show how they contribute to the unique Soleil experience....................................8


2.2.

The impact of the operational innovations to the financial dynamics of

the business.........................................................................................................10
3.

Develop a corporate mission for Cirque........................................................12

III.

Conclusion.........................................................................................................14

IV.

References........................................................................................................15

V.

Appendices..........................................................................................................18
Word count: 3094 words
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I.

Executive Summary

Since 1984, Cirque du Soleils performances have inspired and amazed millions
of people around the world. Cirque scrambled the existing traditions of the circus and
the performing arts and reinvented the wheel.
In order to achieve a successful business, the support of stakeholders is one of
the vital elements for Cirque. In the first part of the report, the issues relating to
understanding different stakeholder consideration and the synthesis between
responsibility and profitability are analyzed. In the second part of this report, the
operational innovations of Cirque du Soleil and their contribution to the financial
dynamics of the business are defined. Based on these operational innovations,
Cirque can create a new form of entertainment which brings audiences the dream
world of artistic performances. Last but not least, part three included the corporate
mission for Cirque and the mission statement which provides the direction, legitimacy
and motivation for the business going forward

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I.

Introduction

Cirque du Soleil was created in 1984 by Guy Laliberte. His concept was to create
the performances with a mix of operatic, choreographed and acrobatic to produce
high class arena entertainment. At the same time, he rewrote the rules of the industry
during the process. This strategic management report contains three main parts
which focus on the issues related to Cirques stakeholders, the Cirques operational
innovations and the contribution to organizational financial dynamics as well as the
corporate mission for Cirque

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II.

Detail

1. Stakeholders of Cirque du Soleil and the relationship between the


interests of stakeholders and the financial performance
1.1.

Stakeholders of Cirque du Soleil and the reasons why they are so


supportive of Cirque to exist

In order to achieve a successful business, every company needs the supports of


stakeholders. Stakeholders are those individuals or group who depend on the
organization to fulfill their own goals and on whom, in turn, the organization depends
(Johnson, Scholes and Whittington, 2005, p179). There are three broad types of
stakeholder in Cirque du Soleil which are: internal stakeholders, connected
stakeholders and external stakeholders.
The internal stakeholders include managers of Cirque and approximately 5,000
employees that work on stage (circus performers, dancers, musicians) as well as
undertake the job of supporting the shows (technicians, artistic director, show
managers) and corporate services. The connected stakeholders of Cirque are the
strategic partners such as Istithmar World and Nakheel who own 20% stocks of
Cirque (Forbes, 2009); the suppliers; the sponsors include Infiniti, CGI, Xerox, SAP,
M.A.C, SGP (Cirque du Soleil Official website, 2012) and the customers. On the
other hand, Cirque du Soleil is based in Montreal, Quebec and runs shows around
the world. Besides, the majority of its performances take place in the United States
(De Wit and Meyer, 2004, p928). Therefore, it can be seen that the Cirques external
stakeholders include the governments and local communities of the countries and
places which Cirque runs shows and locates their grand tents.
The three broad types of stakeholders play an important role in contributing to the
success of Cirque. There are many reasons explain why the stakeholders are so
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supportive of Cirque to exist. Firstly, the internal stakeholders such as the employees
that work on stage as well as undertake the job of supporting the shows have
invested their human capital and contributed their talents to build up the unique and
artistic performances of Cirque. The existence of Cirque will not only help these
internal stakeholder satisfy their passion for artistry but also provide them a good
return or rewards for their contribution (Jones and George, 2009, p115). With the
estimated revenues in 2009 reach more than 800 million dollars (Forbes, 2009),
these internal stakeholders could receive equitably salary and rewards. As for
connected stakeholders, based on the stable and high revenues of Cirque annually,
the strategic partners will have the high return on their investment and the suppliers
will be paid fairly. On the other hand, customers are an important stakeholder group
that contributes a lot to the profit of Cirque with 85 percent of Cirque's revenues
comes from the sale of show tickets (IBS Center, 2007). The customers are willing to
pay for the Cirques tickets because Cirque always focuses on providing the
customers an exciting line of shows with the optimum in quality and constantly
coming up with innovations. In the case of sponsors, they will have a commitment of
Cirque to make their names synonymous with the things that make Cirque great
(Cirque du Soleil Official Website, 2012). For example, Infiniti is the global luxury
automotive brand from Japan. By becoming a sponsor for Cirque, their cars will be
appeared in Cirques shows and attract the attention of customers which will help
Infinity to promote their brand and increase their sales. Last but not least, from the
beginning, the external stakeholder such as governments and local communities play
an important role in supporting and providing Cirque funds and lands to help them
expand their business. The reason for external stakeholder to continue support the
business of Cirque is because of not only their respect for environmental and labor
protection but also their strong involvement in the community it serves by creating
thousands of new jobs. Moreover, because of its entertainment value, Cirque

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contributes to both the standard of living through the taxes it pays and the quality of
life through the fun it provides for citizens of all ages (McGraw-Hill Higher Education,
2007).
In general, the stakeholders are vital for Cirque to continue success. With the help
of stakeholders from investing their human capital to delivering necessary product
and services, Cirque can inspire as well as amaze millions of people and leave their
footprint in local communities around the world.
1.2.

Relationship between the interests of stakeholders and the financial


performance

After identify the stakeholders of Cirque du Soleil and the reason why they are so
supportive of Cirque to exist, it is important to understand the relationship between
the interests of stakeholder and the financial performance as well as the way they
reinforce each other.
The success of serving the interests of stakeholders plays an essential role in
reinforcing the financial performance of the business. When these internal
stakeholders are satisfied with the fairly rewards include salaries and benefits as well
as the prospect of promotion and a career, they will bring to Cirque their skills,
expertise and experience in order develop the performances that amazed millions of
fans and thus increase Cirques profit (Jones and George, 2009, p115). Besides, the
connected stakeholders such as strategic partners are interested in the way
company operates because they want to maximize the return on their investment.
When the interests of strategic partners are satisfied, they will continue supporting
Cirque to increase the revenues by providing Cirque opportunities to extend its brand
beyond the stage as well as help the company find potentially lucrative intellectual
property to buy (Forbes, 2009). As for customers, by listening to their feedback and

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identify their needs and wants, Cirque can improve the performance and provide the
customers an exciting line of shows with the optimum in quality then increase the
sales of tickets as well as company's profit. Last but not least, the success of
satisfying the interest of external stakeholders also brings many benefits for Cirque.
For instant, from the beginning, with a US$ 1.7 million contract from the provincial
government of Quebec, the show could travel province and attract a huge number of
fans. Therefore, by serving the interest of the external stakeholders through the
respect for the law as well as the strong involvement in the community it serves,
Cirque can have a permission and support of these external stakeholders to expand
their business in more than 80 communities and increase their profit annually. It can
be seen that by serving their stakeholders interests, Cirque took in revenue of
around 800 million dollars in 2009 (Forbes, 2009).
On the other hand, the financial performance also reinforces serving the interests
of the stakeholders. If the financial performance is strong and stable, Cirque can pay
internal stakeholders good salaries and benefits. Besides, Cirque can provide the
managers and the employees a better working condition thus will encourage them to
produce better performances and ideals for improvement (Edexcel, 2004, p38).
Similar to the internal stakeholders, the strategic partners have a legitimate interest in
the firms profitability (De Wit and Meyer, 2004, p604). When the management is
working diligently to increase the companys profit, the partners will have a high
return on their investment (Jones and George, 2009, p119). Furthermore, the good
financial performance will reinforce serving the interests of external stakeholders by
the taxes it pays and the quality of life through the fun it provides for citizens of all
ages. Besides, with the strong financial capital, Cirque can also contribute charities to
the communities as well as create over 5,000 jobs around the world (McGraw-Hill
Higher Education, 2007).

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In summary, it is necessary for Cirque to understand the relationship between the


interest of stakeholders and the financial performance. Based on the understanding
of these relationships, the main duty of Cirque is to balance the interests between
various kinds of stakeholders and keep maximizing profit within the boundaries of
what is legally permissible (De Wit and Meyer, 2004, p602).

2. Cirque du Soleil and their operational innovations


2.1.

Identify a number of operational innovations to the traditional circus


and show how they contribute to the unique Soleil experience

Operational innovation is the invention and deployment of new ways of doing


work (Hammer, 2004). The company has an interesting and innovative philosophy:
Its all about not being afraid of leaving the old stuff and just trying to experience a
new field, said Guy Laliberte.
The very core of the circus was delivering spectacles and surprise on a daily
basis. The traditional circus has its share of white elephants and dogs. It was rife with
promoters, hustlers and fire-breathers of all sorts (De Wit and Meyer, 2004, p928).
However, nowadays, the increasing of various kinds of home entertainment made
circus become a declining industry (Kim and Maulborgne, 2005, p3). In order to
offering a better solution to the given problem, from the beginning, Guy Laliberte set
out to reinvent the circus industry. Cirque has a number of operational innovations to
the traditional circus by eliminating some factors such as animal shows, star
performers, three-ring stage; besides, Cirque apply some non-circus factor to their
performances such as themes, refined watching environment, multiple productions,
artistic music and dance (see figure 1)

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Figure 1: The strategy canvas of Cirque du Soleil (Kim and Maulborgne, 2005, p40)

Based on the value chain analysis which was created by Porter (1985) (see
appendix 1), it can be seen that the innovative activities that Cirque performs can
contribute to the core competencies of Cirque, thus keep Cirque unique and apart
from other traditional circuses in some elements such as operation, marketing and
sales. Firstly, in terms of operation, a striking detail of the Cirque experience is the
complete absence of performing animals and star performers. By eliminating these
factors, Cirque can satisfy the public because there is an increasing public discomfort
with the use of animals. Besides, star performer is not an important factor which
contributes to the success of the shows because in the mind of the public, the socalled stars of the circus were trivial next to movie stars (Kim and Maulborgne, 2005,
p37). On the other hand, Cirque has redesigned the stage and removed the form of
three-ring. Laliberte realized that the arrangement in the form of three-ring create
angst among spectators by switching their gaze from one ring to the other (Kim and
Maulborgne, 2005, p14). Furthermore, Cirque du Soleil has a unique approach to
developing its show which was based on a totally new concept: a mix of the circus
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arts and street entertainment, featuring wild costumes, staged under magical lighting
and set to original music (De Wit and Meyer, 2004, p928). The performances of
Cirque are populated by operatic, choreographed and acrobatic sprites. Hence, in
terms of marketing and sales, it can be seen that by injecting the concept of multiple
productions as well as breaking the market boundaries of theater and circus, Cirque
du Soleil can increase the sales by attracting not only circus customers but also
theater customers to come to the circus frequently.
In general, these operational innovations are not only contribute to the unique
Soleil experience and gives customers a much higher value but also help Cirque du
Soleil to create a new form of entertainment.

2.2.

The impact of the operational innovations to the financial dynamics of


the business

In the case of Cirque, by adding operational innovations to some primary activities


as well as support activities in the value chain, besides the core competencies,
Cirque can realize a profit margin. On the other hand, the application of the Balance
Scorecard which was created by Kaplan and Norton (1990) (see appendix 2)
demonstrate that the other non-financial elements such as customers, internal
business process and learning and growth have a close link with the financial
perspective and thus contribute to the financial dynamics of company.
Based on a number of operational innovations in internal business process,
Cirque can eliminate many factors which increase the cost of circus performances
such as animal shows and hiring star performers. Firstly, animals shows were one of
the most expensive elements including the fees for training, housing, medical care
and transportation. In addition, star performers were a high-cost component but were
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not the main reason for spectators to come to the circus because the so-called stars
of circus are trivial compare with the movie stars. With this elimination, Cirque can
reduce the costs for unattractive elements and focus on developing the themes and
other factors which contribute to the success of Cirques performances. In addition,
with the redesigning of the stage by removing the three-ring venues, Cirque can not
only avoid the angst among spectators by switching their gaze from one ring to other
but also decrease the cost for performers needed (Kim and Maulborgne, 2005, p37).
Last but not least, by offering the best of both circus and theater, Cirque has invented
a new form of entertainment which attract the interest of millions people thus make
the revenue of Cirque reached 800 million dollars in 2009 (Forbes, 2009). It can be
seen that by continuously developing and improving the internal business process
through the operational innovations which was gained from the process of learning
and growth, Cirque can satisfy the wants and needs of customers and attract them to
come to their shows and thus increase the sales as well as improve Cirques financial
performance.
In summary, with a number of operational innovations to the traditional circus,
Cirque can get over the industry which had become stagnant, generating new acts by
dressing up what already existed (De Wit and Meyer, 2004, p931). At the same time,
the operational innovation has a significant contribution to the financial dynamics of
Cirque.

3. Develop a corporate mission for Cirque


The corporate mission is a clear statement of why the company exists and states
an overarching goal and purpose, based on the values that guide decision making at
every level of the company (Thompson and Tracy, 2011, p30). In order to develop a

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corporate mission for Cirque, the organizational belief, purpose and value must be
examined critically (see appendix 3).
Firstly, the organizational purpose can be defined as the reason for which an
organization exists. Cirques core purpose is to create unique performances and
produce high class arena entertainment that invoke the imagination, provoke the
senses and evoke the emotion of spectators around the world (Cirque du Soleil
Official Website, 2012). This purpose is effective for the managers to give direction to
the strategy process and influence the strategy content. On the other hand,
organizational beliefs are the important assumptions about the nature of the
environment and what the firm needs to do to be successful in its business (De Wit
and Meyer, 2004, p592). Cirque believes that its competitive advantage is developed
from continue innovation, being prepared to take risk and learn from all its
stakeholders. With the strong belief, based on the innovativeness and creativity,
Cirque has created a phenomenon that has inspired and amazed millions fans. Last
but not least, the Cirques values are 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
and to encourage and promote the potential of youth (Cirque du Soleil Official
website, 2012). The Cirques values have identified the organizational fundamental
importance and contributed to a clear sense of organization identity. The strength of a
corporate mission will depend on whether the organizational purpose, values and
belief fit together and mutually reinforcing (De Wit and Meyer, 2004, p593).
The corporate mission can be articulated by means of a mission statement and
provide the direction, legitimacy and motivation. Based on the organizational
purpose, values and beliefs, the corporate mission of Cirque is developed as below:

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Cirque du Soleils mission is to create unique performances and produce high


class arena entertainment that invoke the imagination, provoke the senses and
evoke the emotion of spectators around the world. We believe our business success
and competitive advantages depend on our effort to continue innovation, be prepared
to take risk, respect each individual's contribution to our body of work and learn from
all stakeholders. We commit to execute the law of every jurisdiction we work in and
create career opportunities and financial reward for our employees as well as
contribute our best to improve the quality of life of a broad community.
In this corporate mission, the direction, legitimacy and motivation are provided. In
terms of direction, the corporate mission has defined the boundaries within which
strategic choices and actions must take place. It limits the scope of strategic options
and set the organization on a particular heading which focus on creating different
performance genres and producing high class arena entertainment that invoke the
imagination, provoke the senses and evoke the emotion of spectators. On the other
hand, as for legitimacy, this mission statement has showed the Cirques commitment
to execute the law of every jurisdiction we work as well as the willingness to learn
from all stakeholders and contribute our best to improve the quality of life of a broad
community. It can be seen that this corporate mission has conveyed to all
stakeholders inside and outside the company that the organization is pursing
valuable activities in a proper way. Besides, by the commitment of respect each
individual's contribution to our body of work and creating career opportunities and
financial reward for Cirques employees, this mission statement is actually inspiring
individuals to work (De Wit and Meyer, 2004, p594).
In summary, after identifying the Cirques beliefs, purpose and values, the
corporate mission for Cirque is developed. Hopefully this cooperate mission provides
the clear direction, legitimacy and motivation for the business going forward.

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III. Conclusion
This strategic management report provided the understanding of different
stakeholder considerations and the synthesis between responsibility and profitability.
Based on this report, Cirque du Soleil can find out the mission statement which
provides the direction, legitimacy and motivation for the business going forward.
Hopefully the company can develop their strategies in order to keep generating
revenues and providing exciting line of shows that has attracted millions of people.

IV. References
1. Book sources

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De Wit, B. and Meyer, R. (2004) Strategy Process, Content and Context: An


International Perspective, 3rd Edition, Thomson Learning. Page 591-931
Edexcel HNC & HND Business (2004). Business Environment, London: BPP
Professional Education. Page 38
Gareth R. Jones and Jennifer M. George (2009). Contemporary Management.
6th ed. Irwin: McGraw-Hill. Page 115-119
Johnson, G., Scholes, K. and Whittington, R. (2005) Exploring Corporate
Strategy: Text and Cases, 7th Edition, Financial Times, Prentice Hall. Page
179-182.
Mark Thompson, Brian Tracy (2011). Now, Build a Great Business!: 7 Ways to
Maximize Your Profits in Any Market. New York: American Management
Association. Page 30-31.
University of Sunderland (2004), Strategic Management. The University of
Sunderland. Page 76
W. Chan Kim, Renee Mauborgne (2005). Blue Ocean Strategy. Boston:
Harvard Business School Publishing Corporation. Page 3-40
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V.

Appendices
Appendix 1: Value chain, Porter (1985)1

The Cirques innovations to the traditional circuses can add value and contribute to
those activities that drive competitive advantage for Cirque:
Operations Eliminate animal shows, star performers, three-ring stage. Apply some
non-circus factors to their performances such as themes, refined watching
environment, multiple productions, artistic music and dance.
Marketing and Sales By breaking the market boundaries of theater and circus,
Cirque du Soleil can increase the sales as well as attracting not only circus
customers but also theater customers to come to the circus

Appendix 2: Balanced Scorecard Framework2

Available at: http://www.provenmodels.com/26/value-chain-analysis/porter,-michael-e.

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Appendix 3: Elements of a corporate mission (De Wit and Meyer, 2004, p592)

Available at: http://www.maaw.info/BalScoreSum.htm

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