Posted on 3rd October 20105 Responses
Cirque-de-Soleil

The Cirque’s product is the show. Film productions based on the shows such as “Alegria” and “Cirque du Soleil Presents Quidam” and other supplementary products such as souvenirs can be considered as marketing and advertisement products for support of the main product. The show’s uniqueness lies in the management’s ability to use known entities and produce a show unlike any ever seen.

Cirque also developed cutting edge marketing strategy by creating Internet fan clubs.

By its nature, the show is a mobile product that knows no boundaries. This, together with its multinational employee base, positioned Cirque for global expansion.  The high quality of the shows is achieved by the outstanding training strategy, when where artists are encouraged to freely explore their potential and creativity.

The compensation that Cirque provides its artists plus the creative freedom, the world wide recognition, organizational culture and the work load make these jobs desirable.

A centralized organizational structure has both weak and strong sides. Separations can exist between show participants and administrative employees. An even bigger understanding gap could occur between for performances in different geographical markets.

The mentality of the private versus the public company works well in supporting the organizational culture and the employees’ feel of a “big family”.

The strategies employed by Cirque in various areas are very effective. One of the most important is the recruitment strategy which involves getting new people on board, continuous training and mentoring of new employees. Included here is the talent search which allows for selection of the best talent available world-wide. Another key strategy is team building. This is particularly important for people who spend a lot of time together, especially on the road, since they have to trust their lives to each other several times a day and depend on each other in other health threatening situations. Overall, the Cirque’s strategy is very people oriented, focusing on its artists.

As an organization, Cirque is structured to support its casts to deliver superior performances. As previously mentioned, Cirque created an atmosphere of a “big family”. This is especially important because of the huge diversity among the employees. Finding talent becomes an art in itself, especially when selecting artists from over 20 countries for a new production. During the selection process, each artist is evaluated as to what level of support that person requires to perform well and provide value to the other team members. Real teamwork is required in this business because everyone depends on each other. If something goes wrong during the show, other team members should be able to “cover it up”.

Since people spend so much time together on the road, away far from their families, Cirque facilitates team interaction. This includes food catering for all its employees. These “small” things build friendships among team members and make feel them at home. Another important factor is mentoring. New team members are always assigned dedicated mentors to help them blend in and become accustomed to their new surroundings.

The directive for the team is pretty clear: to deliver the best show in the world. To accomplish this, Cirque creates an absolutely free atmosphere for creativity, perfectionism and challenges. It is very supportive of its employees doing everything possible to improve their performances. This includes having state of the art training facilities and the best coaches available for talent development. The organization doesn’t work from any handbooks.

As for future expansion, Cirque faces both new and old challenges. Some of the old challenges are the possible saturation of the market, shortage of high caliber talent and diversity of the employees making teamwork harder.

The training program developed by Cirque involves the preparation of 40 athletes in 4 months, 120 athletes a year, with a 15% turnover of 500 acrobats (75 people); this leaves a surplus of 45 people (120-75).  Since each show requires about 57 acrobats, Cirque could launch an additional show almost every year.

It is obvious that Cirque has good growth potential. The question is which what direction to choose for future expansion. Let’s review three possibilities of future expansion of the company.

Firstly, if Cirque pulls out of the Asian market, this would allow it to cut the losses accrued there. The company could then focus on continued delivery of outstanding shows in North America and Europe. The greatest risk in this case is to lose the ability to entertain spectators, and the complete saturation of the market.

The second option could be diversification. From a business perspective, the second option is riskier then the first. Cirque already has an outstanding but very specific product. If it could produce a similar product, but in another medium, for example, creating a show on ice, then it may be successful.  With the level of creativity expressed by Cirque’s artists, these shows could surpass Disney’s shows on ice.

The third option for expansion, which is my recommended option, is expansion into other countries. The main problem with the current strategy is that the Asian market is not profitable (see Cost structure analysis in Appendix). This type of expansion cannot continue without significant alterations. In an attempt to lower the variable costs, I would suggest starting shows in Asia and not in North America, since the artist’s compensations would be lower. Another option could be to alter the show to reduce costs and to make an extra effort to fill more than 70% of the seating capacity. I would also suggest creating a separate Asian department with full authority and creative control. They should be able to create an Asian-type Cirque, using the experience and financial support of the head office, and dealing with the artist’s compensations by independently creating new types of contracts.

Appendix

Time line

Cirque-du-Soleil historical time line

Cost structure analysis

Show Average ticket price
People capacity 2,549
Sales per show $ 140,195.00 $   55.00
Break-even point 70% $  98,136.50 => Expenses per Show = Fixed Expenses + Variable Expenses
Income from North American Show
90% capacity $   28,039.00
Loss from Asian Show
65% capacity $   (7,009.75)
Staff for show 150
Income per employee
North America $       186.93
Asia $        (46.73)
Comments
comment by badmash
Posted on October 23, 2010 at 03:43

I just signed up to your blogs rss feed. Will you post more on this subject?

comment by WillSmith
Posted on February 18, 2011 at 15:08

cENbBo Hi! I’m just wondering if i can get in touch with you, since you have amazing content, and i’m thinking of running a couple co- projects! email me pls

comment by admin
Posted on February 18, 2011 at 20:46

On this subject, probably not.

comment by goldfishka
Posted on May 8, 2011 at 05:44

Good post, but much too much.

comment by Mattie
Posted on May 10, 2011 at 20:52

AFAIC that’s the best asnwer so far!

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