Guangdong University Cirque Du Soleil A New Blue Ocean Case Questions Please read the pdf document -Cirque du Soleil.pdf – answer the questions about the c

Guangdong University Cirque Du Soleil A New Blue Ocean Case Questions Please read the pdf document -Cirque du Soleil.pdf – answer the questions about the case in this word doc- Cirque Case Questions.docx.See detail instructions in the attachment. After reading the case on Cirque du Soleil: Searching for a New Blue Ocean– please type in your
answers of around 200 words for each of the 4 questions listed below.
PLEASE HAVE THE QUESTION ON THE TOP AND LET YOUR ANSWER FLOW FROM THAT – AND
COMPLETE YOUR ANSWERS FOR THE CASE IN NOT MORE THAN 2 PAGES SINGLE SPACE!
1. Cirque du Soleil was able to gain and sustain a competitive advantage for many
years. Why was Cirque du Soleil successful in the first place (while most other circuses
barely survive)?
2. A recent report by OSHA concludes that Cirque performers suffered a high number of
injuries that required medical attention. One investigation found that Cirque’s signature
show had 56 injuries per 100 workers, which is four times the injury rate for professional
sports teams, according to the Bureau of Labor Statistics. What can Cirque’s
management do to address the safety concerns of its performers? With more safety
measures and less risky shows, do you think Cirque du Soleil will lose its differentiated
appeal to audiences? Why or why not?
3. Which factors contributed to Cirque du Soleil losing its competitive advantage, and as
a consequence led to a 50 percent drop in its valuation? Look at both external and
internal factors.
4. In the search for a new blue ocean, Cirque is now pursuing a strategy of
diversification. What kind of diversification opportunities could Cirque pursue with its
most recent acquisition of the Blue Man Group? Cirque’s CEO evaluated the Blue Man
Productions acquisition as follows: “It’s a big, big shift, and it has been supported by the
Blue Man Group. What it means is that now, we’re no longer only a circus company, but
now, we’re going to become a global leader of entertainment. That’s the goal we are
pursuing.” Do you think Cirque can become a “global leader of entertainment.” Hint:
Fosun, one of Cirque’s owners, is keen to see a stronger presence of Cirque in China.
Cirque du Soleil: Searching for a New Blue Ocean
By Frank Rothaermel
FOUNDED IN 1984 by two street performers, Guy Laliberté and Gilles Ste-Croix, in an
inner-city area of Montreal, Canada, Cirque du Soleil today is the largest theatrical
producer in the world. With its spectacularly sophisticated shows, Cirque’s mission is to
“evoke the imagination, invoke the senses, and provoke the emotions of people around
the world.”1 Employing some 5,000 people (one-third of them artists) and with annual
revenues of about $1 billion, Cirque is hugely successful. Since its founding, some 200
million people worldwide have been dazzled by its high-quality artistic shows, with some
15 million viewers per year recently. How did Cirque become so successful while most
circuses either shut down or barely survive?
Cirque’s Blue Ocean Strategy and Value Innovation
Using a blue ocean strategy based on value innovation (PLEASE LOOK AT THE PPTs
TO UNDERSTAND THE CONCEPT OF BLUE OCEAN STRATEGY!), Cirque du Soleil
created a new and thus uncontested market space in the entertainment industry. A blue
ocean strategy attempts to make the competition irrelevant by creating new,
uncontested market spaces. For a blue ocean strategy to succeed, managers must
resolve trade-offs between the two generic strategic positions—low cost and
differentiation. This is done through value innovation, aligning innovation with total
perceived consumer benefits, price, and cost. Instead of focusing to compete directly
with rivals, attempting to outcompete them by offering better features or lower costs,
successful value innovation makes competition more or less irrelevant by providing a
leap in value creation, thereby opening new and uncontested market spaces.
Successful value innovation requires that a firm’s strategic moves lower its costs and at
the same time increase the perceived value for buyers. Lowering a firm’s costs is
primarily achieved by eliminating and reducing the taken-for-granted factors that the
firm’s rivals compete on. Perceived buyer value is increased by raising existing key
success factors and by creating new elements that the industry has not offered
previously. To initiate a strategic move that allows a firm to open new and uncontested
market space through value innovation, managers must answer the four key questions
below when formulating a blue ocean business strategy. In terms of achieving
successful value innovation, note that the first two questions focus on lowering costs,
while the other two questions focus on increasing perceived consumer benefits.
Value Innovation: Lower Costs
1.Eliminate. Which of the factors that the industry takes for granted should be
eliminated?
2.Reduce. Which of the factors should be reduced well below the industry’s standard?
Value Innovation: Increase Perceived Consumer Benefits
3.Raise. Which of the factors should be raised well above the industry’s standard?
4.Create. Which factors should be created that the industry has never offered?
Let’s take a closer look at how Cirque used the eliminate-reduce-raise-create
framework to reinvent the circus and to create a blue ocean of uncontested
market space where competition is less of a concern.
ELIMINATE
In redefining the circus, Cirque du Soleil eliminated several taken-for-granted elements.
First, Cirque did away with all animal shows. In recent years, the public has grown much
more concerned about the humane treatment of animals. In addition, animals were the
most expensive items for a circus because of their needed care, transportation, medical
attention, insurance, and food consumption (a grown male lion can devour some 90
pounds of meat a day). Second, Cirque did away with star performers. They were also
expensive; moreover, their name recognition in comparison to movie or sports stars is
trivial. Third, it also abolished the standard three-ring venues. They were also expensive
since so many performers had to be on stage at the same time, and they frequently
created anxiety among circus-goers as they switched their attention rapidly from venue
to venue. Finally, it did away with aisle concession sales. They annoyed most circus
visitors not only because of the frequent interruptions and interference with the viewing
experience, but also because visitors felt taken advantage of because of the vendors’
high prices.
REDUCE
Cirque kept the clowns, but reduced their importance in the shows. Moreover, it shifted
the clown humor from slapstick and low-brow to a more sophisticated and intellectually
stimulating style.
RAISE
Cirque significantly raised the quality of the live performance with its signature acrobatic
and aerial stunts to levels never seen before. While many other circuses did away with
the luxurious circus tents of old in favor of generic low-cost venues that they rented,
Cirque, in contrast, glamorized the circus tent. Using the tent as a unique venue
capturing the magic of the circus, Cirque built tents with magnificent exteriors, which
attracted the attention of the public, combined with a much higher level of comfort and
amenities in the tent’s interiors. Given that Cirque attracted consumers who were used
to paying much higher ticket prices for live performances at the theater and ballet than
what the traveling circus charged, it raised ticket prices (starting at $75 up to $200). This
was also possible because Cirque attracted an adult audience rather than several
children coming with one adult to the circus.
CREATE
Cirque du Soleil created an entire new entertainment experience. Cirque did this by
combining the fun and thrill elements of the traditional circus with the sophistication and
high-quality choreographed performances of the theater. Cirque combined a number of
unique entertainment features in novel ways. Each show follows a storyline
characterized by intellectual, sophisticated, highly choreographed dance performances
and artistic music. In this sense, Cirque shows are more akin to theater and ballet
productions than traditional circuses, which deliver a lineup of unrelated acts. Akin to
Broadway shows, Cirque offers multiple productions, playing at all the major venues
across the world. In summary, Cirque has created much more sophisticated shows and
dramatically increased demand, even at high ticket prices. With multiple productions
and changing global venues, visitors now also go to the “circus” more frequently.
A Perfect Storm
Although Cirque du Soleil’s venues are still glamorous, the company has fallen on hard
times in recent years. A combination of external and internal factors led to a significant
decline in performance. Cirque du Soleil was hit hard by the economic downturn during
the 2008–2010 global financial crisis. Cirque’s management made the situation worse
through poor strategic decisions, including offering too many shows that were too little
differentiated (at least in the mind of the consumer). As a consequence, Cirque lost its
rarity appeal, and its payroll and costs also ballooned. Demand for its European shows
dropped as much as 40 percent.
Misfortune also struck: In 2013 Cirque du Soleil experienced its first fatality as one of its
performers fell 95 feet to her death during a live show in Las Vegas. The U.S.
Occupational Safety and Health Administration (OSHA) has issued citations and fines;
an in-depth investigation of safety practices at Cirque revealed a very high injury rate.
Some Cirque performers claim that the pressure to perform at a high level created a
culture where it is difficult to raise concerns about acrobat safety. In 2016, the Cirque
technician Olivier Rochette died during a San Francisco show after being hit in the head
with an aerial lift. He was the son of Cirque founder, Gilles Ste-Croix.
As a consequence of external threats combined with internal weaknesses, Cirque du
Soleil’s revenues dropped from $1 billion in 2012 to $850 million in 2013. Cirque du
Soleil is now in search of a new blue ocean. It is attempting to diversify away from its
trademark live shows, characterized by creating theatrical spectacles combining highsuspense acrobat stunts. Given its poor safety record, it also revamped its shows to
reduce the risk to its performers. Cirque-branded shows now deliver roughly 85 percent
of the company’s revenues; the company hopes to lower this to no more than 60
percent in five to 10 years as it continues to diversify into TV programs, special events,
and auxiliary services such as ticketing. To increase its appeal to high-growth markets
outside North America, it is infusing Russian and Chinese influences as well as improv
comedy.
In 2015, Cirque du Soleil founder Guy Laliberté sold his controlling ownership stake to
an investor group led by U.S. private-equity firm TPG. Other investors in Cirque include
Fosun, a Chinese investment firm, and a Canadian pension fund. This deal valued
Cirque at $1.5 billion, down from a onetime $3 billion valuation. Once flying high, Cirque
du Soleil’s valuation had dropped by 50 percent.
In searching for a new blue ocean, Cirque turned to acquisitions. In 2017, it bought Blue
Man Productions, the New York performance art company. Cirque CEO Daniel Lamarre
stated that with the acquisition of Blue Man Group, Cirque is able to develop new forms
of entertainment, to reach new audiences, and to expand its repertoire of creative
capabilities. The acquisition was part of broader strategy of diversification, the CEO
indicated.

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