This site addresses six questions regarding two case studies on the circus industry. The first case study examined the traditional circus industry and the second looked at Cirque du Soleil.
Our Ringleader section answers Questions One and Two through a “Choose Your Own Adventure” story. In Cirque du Soleil’s Success, we answer questions Three, Four, and Five in a traditional format. Question Six is answered through a second story: A New Circus.
To ensure clarity, here are the six questions and brief answers.
Thanks for reading.
Question 1 Conduct an industry analysis of the circus industry in the early 1980s and state your conclusion regarding the attractiveness of the circus industry in the early 1980s.
Basically, circuses compete on price and new spectacles that, at best, add small marginal returns. They’re dependent on some big name stars and new circuses can enter the market relatively easily. Some positives exist—like limited competition due to the market being segmented by region—but overall the traditional circus industry is not attractive.
Question 2 What were the factors (key elements of product, service and delivery) the traditional circus companies competed on? What do you like and dislike about the traditional circus?
Traditional circus companies usually rely on performers and animals with superior competitive skills. Therefore, casting and fostering star power is a key element of their business. In doing business, they also focus on lowering the logistical and operation costs. Traditional circuses seem satisfied with the present situation and all companies have the same value curve. These points became a barrier of traditional circus to develop and to innovate.
Question 3 Using Kim and Mauborgne’s Value curve concept, draw the value curves for the traditional circus (little and big league circus companies) and that of Cirque du Soleil. What are the distinct differences you notice in comparing the value curves?
The traditional circus industry occupies a red ocean where companies can’t distinguish themselves. Cirque du Soleil moves into a blue ocean of no competition. They do this by changing their value curve. They get rid of some trappings of the traditional circus like animals and star performers. They add new operatic elements. They shift their focus from children to adults and charge more money.
Question 4 Is Cirque du Soleil a disruptive innovation? If so why? If not why not?
Cirque du Soleil is a new market disruptive innovator in the circus industry. Cirque du Soleil penetrates the high-end adult market in place of children. By including elements of circus, opera, ballet, and theater; they changed the concept of a traditional circus.
Question 5 How does Cirque du Soleil create competitive advantage? Be specific! Do you think Cirque du Soleil can sustain its competitive advantage in the future? What specific strategies (actions) would you recommend to Guy to sustain their competitive advantage in the future?
They created competitive advantages by reinventing the circus industry in a very different way from a traditional circus. Their core competence was a true mixture of different performing arts and a thematic line to harmonize them. With high quality performance, they can keep their ticket prices high and gain most revenues from ticket sales. Also, they effectively diminish the power of suppliers by eliminating some product elements such as star performers and exotic animals.
When a company’s value curve is fundamentally different from competitors, it can keep the value curve and start achieving maximum economies of scale and market coverage. As the value curve of Cirque du Soleil is still unique, we recommend that they should focus on geographical expansion with additional permanent theaters in major cities around the world. In addition, they should use sustaining innovations (such as reducing cost or making their performance better) to improve operations.
Question 6 If you were thinking about entering the circus industry in the year 2011, how would you go about it?
We would focus on the Korean market and generally follow Cirque du Soleil’s value curve. By hosting an audition program with a broadcasting company, we could find competitive performers from all over the world. In Korea, the impression of a circus is old-fashioned, so with this TV program, we can boom up the circus industry and change the public’s prejudice. We will give winning contestants contracts according to the results of the TV auditions. Contracted performers who develop a reputation with proven talent will join our circus show on one-year contracts.