MMICC 2010 - CBS

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  • Initial costs: equally high for all residential shows (touring Cirque excluded on previous slide!)Easiest to ecpand on current partnerships, Cruises is an area not fully exploited by similar arrangements!Cruising industry has been growing strongly despite financial crisis (casinos have been affected strongly)Scope of Partnership: Disney is already implemented, only very few parks left. Same true for Casinos, plus: industry distress. Tivoli: only one place. Cruises provide good potential.Revenue: Limited for Disney and Tivoli due to limited scope. Casino is limited due to crisis and the best locations already exploited. Cruises: revenue not full since locations can only host about 1200 visitors (opposed to Vegas).
  • http://mgm409.wikispaces.com/file/view/17393.pdf Datamonitor SWOT
  • Check out our new shows on the following ships:Explorer of the Seas - "Invitation to Dance" (Choreographed by Louis van Amstel from ABC's Dancing with the Stars) and New Ice ShowAdventure of the Seas - "Jackpot" - A Tribute to Las VegasMonarch of the Seas - "Signed Sealed Delivered" and "You Can't Stop the Beat"Liberty of the Seas - "In the Air" (our first flying show)Navigator of the Seas - New Ice ShowIndependence of the Seas - 4 new shows produced for ship's inaugural seasonOasis and Allure of the Seas - dazzling new shows in the first-ever AquaTheater
  • Remember to say:
  • Mediterranean has great potential:Northern part of Africa, Turkey, israel etc.  something they can look into in the future
  • (Cirque du Solei at Carnival)
  • EBIT from Scandlines
  • Nice is the france capital at the French RivieraCanada has GDP pr. Capita at 39,217 (ranked 18)Denmark is ranked 5th with 56,000
  • Barcelona 1 portMontecarlo 2 portLivorno 1 portRome 2 portNaples 1 portMessina 1 portFun day 2 seaBarcelona 0
  • Venice 1 portFun 2 seaDubrovnik 1 portFun 2 seaMessina 1 portNaples 1 portRome 2 portLivorno 1 portMontecarlo 1 portBarcelona0
  • Barcelona 0 port (ONE DAY OFF DUE TO ONLY possible of 4 shows not 6)Montecarlo 2 portLivorno 1 portRome 2 portNaples 1 portFun 2 seaDubrovnik 2 portVenice 2 portVenice 1 portFun day 2 seaMessina 1 portFun day 2 sea
  • MMICC 2010 - CBS

    1. 1. Team 4 – Copenhagen Business School: A. Bruntse, L. Lawaetz, L. Pedersen, S. Troll<br />
    2. 2. Cirque du Soleil needs to ANALYZE, NEGOTIATE, EXPAND<br />
    3. 3. AGENDA<br />Industry Analysis<br />New Sustainable Partnership<br /><ul><li>Analyze
    4. 4. Negotiate
    5. 5. Expand</li></ul>Timeline<br />Risks<br />Financial Impact<br />
    6. 6. Cirque du Soleil differentiates through uniqueness and brand<br />High<br />Uniqueness<br />High<br />Low<br />Brand Awareness<br />
    7. 7. Unexploited potential for residence shows in Europe <br />1 NY show<br />1 Tokyo show<br />1 FL show<br />2 Macau show<br />7 Vegas shows<br />1 Dubai show<br />Resident show<br />Touring show<br />
    8. 8. Three pronged strategy: Analyze, Negotiate, Expand<br />
    9. 9. Cruising industry has high revenue and sustainable partnership potential<br />Best<br />Worst<br />Slide 7<br />Team McGill<br />
    10. 10. Cruise industry is booming despite financial crisis<br />Source: http://www.cruisemarketwatch.com<br />
    11. 11. Cirque du Soleil @ Sea merges resident and touring <br />Touring<br />Resident<br />Cirque du Soleil @ Sea<br />
    12. 12. Royal Caribbean is the best partner<br />
    13. 13. Three pronged strategy: Analyze, Negotiate, Expand<br />
    14. 14. Partnership fits both partners<br /><ul><li>Creative challenge
    15. 15. Sustainable in long run
    16. 16. Good potential return
    17. 17. Socially responsible partner
    18. 18. Competitive advantage
    19. 19. Revenue growth
    20. 20. Increased brand value</li></li></ul><li>European cruise ships have large theatres and visit large cities<br />Average European cruise ships<br />
    21. 21. Cirque Du Soleil customers can enter the theatre without getting access to the whole ship<br />In Port<br />Physical conditions on the ship<br /><ul><li> Targeting the people in the city
    22. 22. The ship will be arena for night entertainment</li></ul>At sea<br /><ul><li> Targeting cruise passengers
    23. 23. Package deals (Cruise + Show)</li></ul>Security check<br />Security check<br />Source: Royal Caribbean<br />
    24. 24. Introduction of Cruises to the Mediterranean sea<br />2011<br />2013<br />
    25. 25. Three pronged strategy: Analyze, Negotiate, Expand<br />
    26. 26. Promising platform for future expansion<br />Industry development<br />Financial criteria per ship added<br />Total cruise industry growth (2009-2013): 17%<br />Royal Caribbean fleet growth:<br /> Four ships launched by 2012<br /> Capacity increase of 13,950 (approx. 3500 passengers/ship)<br />Source: Royal Caribbean 10K<br />
    27. 27. By 2014, Cirque du Soleil will have two ships operating<br />Analyze<br />Negotiate<br />Expand<br />Negotiate RC deal<br />Expand deal agreement<br />Analyze partner opportunities<br />Negotiate target routes <br />Develop more shows <br />Get in touch with Royal Caribbean <br />Develop content for 2h show<br />2010<br />2011<br />2012<br />2013<br />2014<br />Analyze<br />Negotiate<br />Expand<br />
    28. 28. Reduction of operating risks with new strategy<br />Risks<br />How to meet the risks<br />Set up new sustainable partnerships<br />Expand to new markets<br />Loose creative control<br />Las Vegas deal structure<br />Good offer to Royal Caribbean<br />Cannibalism<br />Go to other markets than North America<br />Overall risk<br />Dillusion of brand value<br />High end partner<br />High class show<br />Keeping price scheme<br />
    29. 29. Win-win partnership for both partners<br />Proposal to Royal Caribbean<br />NY-NY<br />Grand<br />Mirage<br />Total<br />Benefits<br /><ul><li> 30$ per spend pr. customer
    30. 30. Promotion of the Royal Caribbean
    31. 31. High-end people coming to the ship
    32. 32. Royal Caribbean will get a competitive advantage
    33. 33. NPV positive project</li></ul>Source: MGM in material<br />
    34. 34. Revenue increases by 12% with new alliance<br /><ul><li> New Cirque Du Solei platform
    35. 35. Significant growth potential
    36. 36. Adapable structure
    37. 37. Higher presence in Europe
    38. 38. Sustainable partnership
    39. 39. Production of 2 new shows
    40. 40. Marketing
    41. 41. Operational cost
    42. 42. Royalty</li></ul>Costs<br />Benefits<br />
    43. 43. 37% profit growth by 2015 with expansion into cruises<br /><ul><li> Cost based on break even
    44. 44. WACC=12%
    45. 45. Cases derived from growth rate
    46. 46. Avg. ticket price of 120$
    47. 47. 9.3 Shows a week
    48. 48. 48 running weeks a year
    49. 49. Show runs for 10 years
    50. 50. Increased merchandise sales
    51. 51. Yearly profit growth by 9%
    52. 52. 37% growth by 2015</li></ul>Assumptions<br />Benefits<br />
    53. 53. Attractive offer to Royal Caribbean<br />Benefits<br /><ul><li> Cost of Refurbish theater: 24.6 million $
    54. 54. Avg. Spending 30$ per customer
    55. 55. 25% EBIT margin on additional sales</li></ul>Assumptions<br />
    56. 56. Cirque du Soleil needs to ANALYZE, NEGOTIATE, EXPAND<br />
    57. 57. Q&A<br />
    58. 58. Growth rates<br />Source: MGM<br /><ul><li> Initial occupancy rate of 63%
    59. 59. Growth rate of 12% a year
    60. 60. Growth ends at occupancy rate of 88%
    61. 61. Initial occupancy rate of 60%
    62. 62. Growth rate of 8% a year
    63. 63. Growth ends at occupancy rate of 82%
    64. 64. Initial occupancy rate of 63%
    65. 65. Hereafter an occupancy rate of 90%</li></ul>Most likely<br />Worst case<br />Best case<br />
    66. 66. Weighted NPV, derived from the three scenarios<br />
    67. 67. European destinations are attractive due to high GDP and tourists<br />Barcelona<br />Rome<br />Monaco (including Nice)<br />Source: Royal Caribbean and International Monetary Fund<br />
    68. 68. 7 day cruise<br />8 shows in port<br />2 shows at sea<br />10 shows in total<br />
    69. 69. 9 day cruise<br />8 shows in port<br />4 shows at sea<br />12 shows in total<br />
    70. 70. 12 day cruise<br />4 shows at sea<br />12 shows at Port<br />16 Shows in total<br />
    71. 71. Wrap up on estimates on Shows<br />Why 9.3 Shows per week<br />Why 48 shows a year<br />Benchmark: Indecency of the sea<br />In the 2011 schedule it has 48 weeks in Europe<br />
    72. 72. Alliance with theme parks<br />Tivoli<br /><ul><li> One park only
    73. 73. 3rd largest in Europe
    74. 74. Located in city center of Copenhagen</li></ul>Financial criteria<br />Financial criteria<br /><ul><li>Several parks around the world
    75. 75. Main presence in North America
    76. 76. Current partner</li></ul>Source: Tivoli, Disney World<br />
    77. 77. Sensitivity analysis<br />
    78. 78. Possible partners<br />Source: Carnival, Royal Caribbean, Star Cruises <br />

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