Cirque du soleil : case study debriefing

Cirque du Soleil : Case Study Debriefing

Blue ocean permet d’etre dans un developpement durable

Critical analysis: No storytelling

Challenge/ critical analysis of an article for blue ocean strategy

Because they believe that cirque is one of the best example

Article on Fb

• Pay attention on date / when it was written
• Why it’s an excellent exemple
• Think about thing happened before the date

DONNER NOTRE OPINION + OPINION INVERSE

BLUE OCEAN:

Value proposition

Employees motivation

Create a debate = critical analysis

You cannot be on one side →Keep it on balance

Different opinion we could have = 2 perspectives

Underline dimension of the case

1. Economics of MACAU Project

If cirque had choosen similar position as VEGAS?

We will loose 8,5M$ per year

But if they decided to reduce the price to (ligne bleu) they will loose less money

Changing the price is not changing the level of position

The pressure will be to sell more show to break even

One issue: PRICES

Revenue = Occupancy rate * Size of the theatre * the price ticket * number of show

Fixed cost + variable costs → will be equal to revenues

The occupancy rate that I need is 43% to break even

(cost 120 LOST 24M EVERY YEAR)

49% occupancy rate if you sell ticket: 107

1. Economics of TOKYO

OR: 52% → 123$ to break even

Price 68$ : OR=95% to reduce values of losses

Japan can’t be a solution

Break-even point is note making profit it is just recovered your charges/investment

1. Economics of Dubai

123$ → 31m$ losses per year

they could try to reduce it to 111 but they still loose 25M$

Occupancy Rate to break even = 90%

Corporate information strategy and management

Lynda Applegate

Measure weakness: having a operational approach

• Strategic approach to planning: segmentation – targeting – market penetration rate to determine the size of the theatre
• What the size of my market $what the size of the targeting I want to do
• Start of the show: 600 seats → before deciding to take more risk
• You can go bac to testing before taking the risk of a more important structure

Entrepreneurship : Opportunity thinking/searching

How do I manage?

How do you start to think big?

→ CIRQUE HAS A PROBLEM TO GOING BACK TO “LITTLE” NOT TO THINK BIG

Adapt the demand to the market

Review the way they build theatre

Opportunity see → entrepreneur

Opportunities is everywhere you have to be flexible → it’s about keep on searching opportunities

Reviewing Seating capacity

Market size = NB 27 449 984

MARKET PENETRATION RATE = 0,01

TARGET = NB (274 500)

TARGET = 0,9(OCCUPANCY RATE IN VEGAS)*SEATS*380

SEATS= 803

Economics of Macau Project with LVS

Macau

Forgot about MGM

Price 80$

Fill more seat to break it

Occupancy rate: 0,66

Tokyo

68$

Fill 95

Fixed costs + variable coasts

47 270 000 + 0,11 * (OR*2170*

Dubai

Stopped negociation with Dubai but investors stopped (Sheikh Al Maktoum) them to know how much money they need

Ethicals issues with the city

100 090m$

→ He proposed 700M$

Question: 

What do you want for me in return? (share the benefit)

What kind of show do you want?

Does he want by shares of the company?

Exclusive show in Dubai?

Who has found the goose that lays the golden egg?

What is worth 700M$?

Is it a fair deal?

What are the expected returns?

Are there hidden motivation?

What is the cost of equity?

→He wants: 

20% of the shares of the company

The goose that lays the golden egg:

Cirque’s key financial information in M

Net Earnings: 149,6

Net cash Flow:

Evaluate cirque’s plans worth $1 314M

Cirque investments:

S. Al Maktoum:

His ambition is to transforming Dubai as the first place for tourism

He wants to be number one in the one in high education, housing (everything) he wants to offer to his people the highest way of living

Why not? it can not be the biggest, the first

Urgency? why he wants all now?

He wants to keep them in the country so he need to offer them the best services

Brand equity = value of the share

Kotler, define brand equity as : 

Product innovation

Mission statement and governance

Financial performance

Employees relations

Positive emotional links with all stakeholders

Corporate social responsibility

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