Innovation at cirque du soleil - Essay Example

This Circus has differentiated itself from its fellow circuses in that it added a touch of innovation in its entertainment services. Through this it managed to shift the traditional circus attendants from children to adults. This paper seeks to evaluate the external environment of Circus du Soleil by conducting a PEST and Porter’s 5 forces analysis of its circus industry. Potter’s five forces Analysis of External Environment This analysis tool is the most powerful tool of understanding where power really lies within the organization.

A clear understanding of where power really lies in the organization enables an understanding of the current competitive position the company is in and the strength of the position it wants to move to. This approach assumes that five major forces that determine a businesses competitive power exist. In relation to the circus industry where Cirque du Soleil operates in, the following can be realized; the threat of new entry, power of suppliers, power of buyers, competitive rivalry, and the threat of substitutes. 1. Threat of entry There is a threat of new entry into the circus industry given the fact that Circus du Soleil has been performing well in the industry.

Circus du Soleil reinvented the circus industry and through this it was able to create a new market space through challenging the conventional assumption that existed. This assumption was that circuses were meant for children. This company taught the industry how to compete by adding innovation by drawing strengths from the theatre industry, the opera industry and so forth. The new companies have seen how Circus du Soleil has made huge profits and amassed large customer bases and have been attracted to this industry.

The greatest threat is that profitability and sales level for Circus du Soleil will decrease but on the other hand the industry’s competitiveness will increase. 2. Power of suppliers The suppliers to the circus industry have changed from the traditional wild animals, acrobats, and funs tuff for youngsters. The circus industry is seeing the use of more mature forms of entertainment to suit the older and high spending customers. The change in customer has called for a change in suppliers, for purposes of profitability of the industry.

In addition the customers have fragmented to reduce their bargaining power. 3. Threat of substitutes This threat comes from alternative entertainment forms offered theaters, cinemas, and operas among others. Competition becomes intense when these services are offered at generally lower prices. 4. Competitive rivalry Competitive rivalry to this industry comes from the alternative entertainment services offered by theaters, cinemas, amusement parks, kid’s fun centers, and opera’s among others. 5. Power of buyers The revolution of the circus industry by Cirque du Soleil has seen the entrance of new buyers who are the mature and high spending adults.

The traditional buyers were children and youngsters. This brood of new buyers has increased the profitability of this industry. PEST Analysis PEST refers to the analysis of the environment in terms of political, economical, sociological and technological manner. In relation to the Cirques du Soleil circus industry, the following can be realized; 1. Political aspect The current regulations do not