BLUE OCEAN STRATEGY

Evolution of the Circus IndustryEven clown Can Do it

Presented by Goup No.-Aditi KapoorPrashant SharmaSeena AlexShifali BhutaniGaurav Dabas

RED OCEAN

Red oceans are all the industries in existence today – the known market space, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of the existing market. Cutthroat competition turns the ocean bloody red. Hence, the term 'red' oceans.

BLUE OCEAN Blue ocean denote all the industries not in existence today- the

unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.

There are two ways to create blue oceans- Companies can give rise to completely new industries, as ebay did

with the online auction industry. A blue ocean is created from within a red ocean when a company

alters the boundaries of an existing industry. As will become evident later, this is what Cirque did.

Red Ocean v/s Blue Ocean Strategy

Red Ocean Compete in existing market

space Beat the competition Exploit existing demand Make the value/cost trade-off Align the whole system of a

company’s activities with its strategic choice of differentiation or low cost.

Blue Ocean Create uncontested market

space Make the competition irrelevant Create and capture new

demand Break the value/cost trade-off Align the whole system of a

company’s activities in pursuit of differentiation and low cost.

PESTEL ANALYSIS POLITICAL

Tax issues Stability

ECONOMICAL Energy efficiency Global crisis – reduced purchasing power Limited number of touring cities

SOCIAL Cultural entertainment preferences Religios views Demographic chart

PESTEL ANALYSIS TECHNOLOGICAL

Influence of web based free contents Automatization of production leading to lower costs Higher CAPEX due to short lifecycles of new technologies

ENVIRONMENTAL Strict local logistics regulation (eg CO2 emmision)

LEGISLATION Working permits Visa policy

SWOT

-innovative, unique show-diversified product portfolio – movies, TV shows, merchandise-flexible working force, devoted artists-established brand name-well organized logistic

-high overheads and management costs-sole owner and decision maker-a business model that could be easily copied-a lot injuries that need to be prevented-high staff turnover

-expand to larger number of cities-diversification of the product portfolio which could fit to different audiences-increase number of impermanent location based shows

-real competition that could enter the market-to become too commercial and loose its spirit-overdependence on the existing owner-economic downturn will lead to customers choosing lower cost substitutes

SWOT

STRENGHTS WEAKNESS

OPPORTUNITIESTHREATS

PORTER’S FIVE ANALYSIS

Threat of substitute products-HIGH Conventional circus-animals,clowns,etc Low cost substitutes-movies,TV, internet Other substitutes-theatres,concerts, cinema In economic downturn customers-choose low cost entertainment

Barriers to Entry – LOW Low to moderate entry barriers Low to moderate costs of equipment Moderate initial employee costs

PORTER’S FIVE ANALYSIS

Bargaining Power of Customers – VERY HIGH Product is highly differentiated/unique The service of Cirque du Soleil is difficult to be directly replaced Not a product satisfying basic needs; “luxury good”

Bargaining Power of Suppliers – LOW High number of suppliers for technical equipment and logistics Limited number of suppliers for tents and scenes Relatively low supplier switching costs

PORTER’S FIVE ANALYSIS

Competitive Rivalry – MODERATE

Few competitors like Cirque Oz compete locally Lots of circuses globally

Instead of “five forces”, Mr. Kim and Ms. Mauborgne talk about “four actions” that can help you create a blue ocean strategy. The actions are found by answering these questions: Which of the factors that the industry takes for granted

should be eliminated? In the case of Cirque du Soleil that included animals, star performers,

and the three separate rings. Which factors should be reduced well below the industry’s

standard?  Cirque du Soleil reduced much of the thrill and danger associated with

conventional circuses. Which factors should be raised well above the industry’s

standard?  Cirque du Soleil increased the uniqueness of the venue by developing

its own tents, rather than performing within the confines of existing venues.

Which factors should be created that the industry has never offered?  Cirque du Soleil introduced dramatic themes, artistic music and dance,

and a more upscale, refined environment.

ISSUE

They re-invented circus. Everybody has seen it. Now what?

ALTERNATIVES

Expand geographically Find new audiences – go to new places Find places with high inflow of tourists for fixed location shows

Continue diversifying commercial activities Movies, amusement parks, music, commercial goods

Regional approach – market adjustment To fit to diverse conditions in current markets

THANK YOU