(answered) – 1) Briefly describe Cirque du Soleil’s business model, includingDescriptionSolution downloadThe Question1) Briefly describe Cirque?du?Soleil’s business model, including how it interacts with MGM Mirage. Where does its competitive advantage stem from?2) Do?Cirque?duFor the exclusive use of J. Moran, 2016.9-709-411REV: FEBRUARY 10, 2010RAMON CASADESUS-MASANELLMAXIME AUCOINCirque du Soleil?The High-Wire Act of BuildingSustainable PartnershipsThe headline was grim: ?Fat cats at Cirque du Soleil lose their way?new Cirque show is ascreative as a Hollywood sequel.? As he glanced up from his morning newspaper, Daniel Lamarre,Cirque du Soleil?s president and CEO, noticed an e-mail on his PDA from Jim Murren, CEO of MGMMirage, Cirque?s biggest partner: ?Daniel, I?m sorry but we found a new, more creative partner forour new shows. We are closing all our Vegas shows with Cirque as of today.? Lamarre turned towardGuy Lalibert?, founder and majority owner of Cirque du Soleil, who looked at him and said, ?Daniel,nobody wants to be known as the first to have produced a bad Cirque du Soleil show.?Suddenly, Lamarre woke up at his home in Montreal. It was all a bad dream.Lamarre smiled. Although the possibility of Cirque losing its creative edge was never too faraway, he knew that the company was better positioned than ever to keep its competitive advantagein show business. Cirque du Soleil had always put creativity first. Every year, Cirque reinvested morethan 40% of its profits in its creative processes.1 In 2006, Lamarre had devised a new organizationalstructure based on independent creative cells for the development of every new show. Four executiveproducers reported directly to him, with each producer in charge of a set of creative cells. The newstructure ensured increased accountability and scalability. Lamarre would explain it by saying, ?Eachcell member eats and breathes their show 24/7. They?re not bothered by anyone else and can be fullydedicated to their show.? Finally, Lamarre had established criteria for all new developments: a) Isthere a creative challenge? b) Can the partnership be sustainable in the long run? c) Is there a goodreturn to be made? and d) Will the partner adhere to Cirque?s social responsibility parameters?2Cirque had discarded many lucrative opportunities when it could not maintain full creative controlor when a creative challenge was not met. ?In show business,? Lamarre said, ?show comes beforebusiness.?3Since Lalibert? had retired from the day-to-day operations in the early 2000s, Lamarre had beenheading the company?s operations and negotiations with potential partners. Lamarre, a journalist bytrade, had spent most of his career in public relations and television broadcasting, serving for fouryears (1997 to 2001) as CEO of the TVA Group, the largest private television broadcasting company in_____________________________________________________________________________________________________Professor Ramon Casadesus-Masanell and Maxime Aucoin (MBA 2008) prepared this case. HBS cases are developed solely as the basis for classdiscussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.Copyright ? 2009, 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not bedigitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.This document is authorized for use only by Juancarlos Moran in Competitive and Strategic Analysis taught by Timothy Gubler, University of California – Riverside from January 2016
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