Cirque Du Soleil Essay

2092 Words Nov 24th, 2011 9 Pages
a) Background and Motivation
The Cirque du Soleil, the arguably most famous circus in the world, has been founded in 1984, in Quebec, Canada. The two initiators of this company, Guy Laliberté and Daniel Gauthier, have always seen circus with a modern eye. Effectively, their power of creativity and their visionary ideas have been the key ingredients to make this circus a global empire. The comparative advantage which makes the Cirque du Soleil so unassailable is its creative inspiration and the perfection of its shows.
The particularity of the business model of Cirque du Soleil is to create demand all around the world on the circus market. The strength of this circus is to develop shows which are different than the ordinary; for example
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The risk of an internal hold up is low from both the employees and the Cirque.
One can notice with great astonishment that so far no sign of opportunism has occurred between Cirque du Soleil and its main collaborators MGM Mirage and Disney. The reason why both, MGM and Disney, committed themselves to invest in such a risky endeavor, was rather simple and of a psychological nature. It was the sheer trust and confidence they had in Guy Laliberté and his team of innovative minds. Despite having doubts about the reception of the productions by the audience, both partners never questioned Lalibertés expertise and creativity. It was thus never a subject of discussion, whether Cirque du Soleil should participate in the production costs. These long lasting relationships were rooted on fundamental human attitudes, such as due diligence and honesty. Especially MGM Mirage and Cirque du Soleil shared a common open-book policy whereas each party had unlimited access to the balance sheets of the other. Certainly this approach is unusual, but in this particular case it formed a strong bond. It appears as if gambling and cabaret shows are positively correlated. A hold-up would thus be dangerous for Cirques great reputation.
Contemplating the relationship between MGM and Cirque from a Property Rights perspective, it appears as if both parties had a loose contract but remained independent from one another. Ex-ante, a clear distinction

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