Free Cirque du Soleil in China: A Wake-Up Call or a Day of Reckoning? Case Study Solution | Assignment Help

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Written by Gary F. Smith
Publish Date: 2024-10-03

Harvard Case - Cirque du Soleil in China: A Wake-Up Call or a Day of Reckoning?

"Cirque du Soleil in China: A Wake-Up Call or a Day of Reckoning?" Harvard business case study is written by Katherine GIMON-VALENCIA, Taieb Hafsi. It deals with the challenges in the field of International Business. The case study is 32 page(s) long and it was first published on : Jan 18, 2023

At Fern Fort University, we recommend that Cirque du Soleil implement a comprehensive strategy to revitalize its presence in China, focusing on a multi-pronged approach that addresses the company's operational inefficiencies, cultural misunderstandings, and evolving market dynamics. This strategy should prioritize adapting its business model, strengthening its brand, cultivating local partnerships, and embracing digital innovation to regain market share and secure long-term success in the Chinese market.

2. Background

Cirque du Soleil, a Canadian entertainment company renowned for its unique blend of circus arts, music, and theatricality, entered the Chinese market in 2004 with great fanfare. However, despite initial success, the company faced significant challenges in recent years, leading to a decline in audience attendance and financial performance.

The case study highlights the key protagonists: Daniel Lamarre, CEO of Cirque du Soleil, and Guy Lalibert', the company's founder, who are grappling with the company's struggles in China. The case study explores the factors contributing to Cirque du Soleil's difficulties, including:

  • Cultural Misunderstandings: The company's initial focus on Western-style performances did not resonate with Chinese audiences who preferred more traditional and culturally relevant entertainment.
  • Operational Inefficiencies: The company's reliance on a centralized model and lack of local expertise resulted in logistical challenges, high costs, and difficulties in adapting to the Chinese market's unique demands.
  • Competitive Landscape: The rise of local entertainment options, including acrobatic shows and traditional Chinese performances, posed a significant challenge to Cirque du Soleil's market position.
  • Economic Downturn: China's economic slowdown impacted consumer spending, making luxury entertainment options like Cirque du Soleil less appealing to a broader audience.

3. Analysis of the Case Study

To analyze Cirque du Soleil's situation, we can utilize the Porter's Five Forces Framework to understand the competitive landscape and identify key strategic considerations:

  • Threat of New Entrants: The Chinese entertainment industry is dynamic, with new players emerging regularly. This poses a threat to Cirque du Soleil's market share, as new entrants can quickly gain traction with innovative offerings.
  • Bargaining Power of Buyers: Chinese consumers are increasingly discerning and price-sensitive. This gives them significant bargaining power, potentially impacting Cirque du Soleil's pricing strategies and revenue generation.
  • Bargaining Power of Suppliers: The company's reliance on specialized performers and technical equipment could give suppliers considerable bargaining power, potentially impacting costs and operational efficiency.
  • Threat of Substitute Products: The availability of alternative entertainment options, including local acrobatic shows and traditional Chinese performances, poses a significant threat to Cirque du Soleil's market position.
  • Competitive Rivalry: The Chinese entertainment market is highly competitive, with established players and new entrants vying for audience attention. This necessitates a strong competitive strategy to differentiate Cirque du Soleil and maintain market share.

4. Recommendations

To address the challenges and revitalize its presence in China, Cirque du Soleil should implement the following recommendations:

1. Adapt the Business Model:

  • Localization: Develop performances that incorporate Chinese cultural elements, stories, and themes, appealing to local tastes and preferences. This could involve collaborating with Chinese artists, incorporating traditional Chinese music and dance, and tailoring the narrative to resonate with Chinese audiences.
  • Decentralization: Establish a more decentralized structure with greater local autonomy, empowering regional teams to make decisions, manage operations, and adapt to local market conditions. This will enhance responsiveness and efficiency.
  • Pricing Strategies: Offer tiered pricing options to cater to a wider range of consumers, including affordable tickets for families and lower-income segments. This will increase accessibility and broaden the audience base.

2. Strengthen the Brand:

  • Rebranding: Develop a new brand identity that resonates with Chinese audiences, emphasizing the unique aspects of Cirque du Soleil's performances while incorporating elements of Chinese culture and aesthetics.
  • Marketing and Communication: Implement targeted marketing campaigns that leverage local media channels, social media platforms, and influencer marketing to reach Chinese consumers effectively.
  • Public Relations: Engage in proactive public relations efforts to build positive relationships with Chinese media, government officials, and cultural institutions, fostering a favorable public image.

3. Cultivate Local Partnerships:

  • Strategic Alliances: Form strategic partnerships with Chinese entertainment companies, cultural institutions, and government agencies to leverage local expertise, access distribution channels, and gain market insights.
  • Joint Ventures: Consider joint ventures with local partners to share resources, expertise, and risks, facilitating market entry and expansion.
  • Community Engagement: Engage in community outreach programs, supporting local arts initiatives and fostering positive relationships with communities, enhancing brand perception and creating goodwill.

4. Embrace Digital Innovation:

  • Digital Marketing: Leverage digital marketing channels, including social media, online advertising, and mobile applications, to reach Chinese consumers effectively and build a strong online presence.
  • E-commerce: Develop an e-commerce platform to sell tickets, merchandise, and other products online, enhancing convenience and accessibility for Chinese consumers.
  • Virtual Reality (VR) and Augmented Reality (AR): Explore the use of VR and AR technologies to create immersive experiences and enhance audience engagement, offering unique and innovative entertainment options.

5. Basis of Recommendations

These recommendations are based on a thorough analysis of Cirque du Soleil's current challenges and the evolving Chinese market landscape. They consider the following key factors:

  • Core Competencies and Consistency with Mission: The recommendations align with Cirque du Soleil's core competencies in artistic performance and innovation while adapting to the specific needs and preferences of the Chinese market.
  • External Customers and Internal Clients: The recommendations prioritize the needs of Chinese consumers, enhancing their experience and offering value while empowering local teams to drive operational efficiency and responsiveness.
  • Competitors: The recommendations aim to differentiate Cirque du Soleil from its competitors by leveraging cultural relevance, innovative technology, and strategic partnerships.
  • Attractiveness ' Quantitative Measures: The recommendations are expected to enhance revenue generation through increased audience attendance, expanded product offerings, and strategic partnerships. While precise financial projections are difficult to estimate, the focus on localization, digital innovation, and strategic alliances is likely to drive positive financial outcomes.
  • Assumptions: The recommendations assume a continued growth in the Chinese entertainment market, a willingness of Cirque du Soleil to adapt its business model, and the availability of skilled personnel and resources to execute the proposed strategies.

6. Conclusion

Cirque du Soleil's challenges in China present a critical juncture for the company. By embracing a proactive and strategic approach that focuses on localization, brand strengthening, local partnerships, and digital innovation, Cirque du Soleil can overcome its current difficulties and establish a sustainable presence in the Chinese market. This will require a commitment to cultural sensitivity, operational efficiency, and strategic partnerships, ensuring the company's long-term success in this dynamic and evolving market.

7. Discussion

Alternative strategies include:

  • Exiting the Chinese Market: While a drastic measure, this option could be considered if the company is unable to achieve a turnaround. However, this would result in significant financial losses and damage to the company's global brand reputation.
  • Maintaining the Status Quo: This approach would likely lead to continued decline in market share and financial performance, ultimately jeopardizing the company's future in China.
  • Focusing Solely on Western-Style Performances: This strategy would ignore the cultural preferences of Chinese audiences and limit the company's growth potential in the market.

The recommendations presented are based on the assumption that Cirque du Soleil is committed to its long-term presence in China and is willing to invest in the necessary resources and efforts to achieve a turnaround. However, the company faces several risks, including:

  • Cultural Misunderstandings: Despite efforts to localize, the company may still encounter cultural barriers and challenges in understanding Chinese consumer preferences.
  • Economic Volatility: China's economic fluctuations could impact consumer spending and affect Cirque du Soleil's revenue generation.
  • Competitive Pressure: The Chinese entertainment market is highly competitive, and the company may face challenges in differentiating itself from its rivals.

8. Next Steps

To implement the recommendations effectively, Cirque du Soleil should follow these key milestones:

  • Year 1: Develop a comprehensive localization strategy, establish a dedicated team for the Chinese market, and launch pilot performances incorporating Chinese cultural elements.
  • Year 2: Refine the localization strategy based on market feedback, expand operations to additional cities, and develop a digital marketing strategy.
  • Year 3: Form strategic partnerships with Chinese entertainment companies and cultural institutions, launch an e-commerce platform, and explore the use of VR and AR technologies.

By implementing these recommendations and adhering to the outlined milestones, Cirque du Soleil can overcome its current challenges and achieve sustainable success in the Chinese market. This will require a commitment to cultural understanding, operational efficiency, and strategic partnerships, ensuring the company's long-term growth and prosperity in this dynamic and evolving market.

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Case Description

Established in 1984, Cirque du Soleil (CdS) reinvented the circus, creating one of the industry's most iconic creative brands. In 2015, Guy Laliberté, CdS's leader, sold the organization to a private equity consortium led by Texas-based investment group TPG, Chinese real estate developer Fosun, and Quebec financial investor Caisse de Dépôt. This ownership change introduced a strategic shift and a renewed focus on the Chinese market - a market in which CdS had attempted to establish permanent operations with limited commercial success since 2007. The case, which is set in June 2020, focuses on the period between 2015, when the ownership change took place, and June 30, 2020, when Cirque filed for protection from its creditors under the Companies' Creditors Arrangement Act ("CCAA") in Canada and Chapter 15 in the United States so that it could restructure its capital. It explores the company's decisions regarding market entry and product selection and the challenges it encountered.

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