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Disney Pixar Case Study

To Acquire or Not to Acquire

Beth Purvis

on 20 April 2013

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Transcript of Disney Pixar Case Study

Foundation Drive Phase 1 Phase 2 Results Core Disney Synergy Redundant
Resources Level of Competition Degree of Uncertainty PIXAR Large, production-centered corporate culture Small, people-centered, intimate culture Disney PIXAR Fostered competition amongst staff in pursuit of the right story Believed in their audience Focused on Creativity (at times driven by one person) and success in terms of revenue Fostered teamwork by putting the story first Hired on talent Believed in their employees Focused on Creativity, Technology and blending the two. Embraced creativity at every level Hired on fit above talent Disney PIXAR Culture Culture Disney PIXAR History of CEO’s leading through micromanagement 1997 Co Production Agreement Eisner, Katzenberg, Roth CEO's foster independence using hands off approach Management Disney PIXAR Management Coordination of Resources or Interdependencies Sequential Synergy One company completes a task then passes it along to the next. Reciprocal Synergy Working together closely and combining resources to create a unique product. Sequential Synergy between Disney and Pixar Disney sought out Pixar for its CG animation to be used in feature films. Paid Pixar for production costs in return for complete movie rights. Sequential Synergy between Disney and Pixar Dyer, Singh and Kale framework recommends: Equity Alliance Reciprocal Synergy between Disney and Pixar Combine soft and hard resources Customize resources to create specific products Reciprocal Synergy between Disney and Pixar Dyer, Singh and Kale framework recommends: Acquisition Uncertainty associated with technology, consumer and regulatory response, etc... Disney and Pixar Level of Uncertainty History of a successful, functioning relationship
Industry and markets currently exist
Expect strong, public reception Disney and Pixar Level of Uncertainty Dyer, Singh and Kale Framework Risk Level:
Low Dyer, Singh and Kale Framework Would Recommend:
Acquisition Nature of Resources Dyer, Singh and Kale Framework Factor Sequential Synergy
Reciprocal Synergy Disney/PIXAR Nature of Resources Extent of Redundant
Resources Degree of Market
Uncertainty Ratio of Hard to Soft Resources: PP&E VS. Human Capital Disney and Pixar Relationship Pixar's Computer Graphics Animators compliment Disney's marketing and merchandizing teams.
High ratio of soft-to-hard assets Disney and Pixar Relationship: Soft Resources Dyer, Singh and Kale Framework Risk Factor:
High Dyer, Singh and Kale Framework Would Recommend:
Equity Alliance Modes of Synergy Creative Brain Trust Films were led by filmmakers, not executives "Jeffrey (Katzenberg)
is the sheep dog and the wolf. He’s the sheep dog guarding us, and the wolf hunting us” – Disney Executive "If you give a good idea to a mediocre team, they will screw it up. If you give a mediocre idea to a great team, they will either fix it or throw it away and come up with something that works” – Edwin Catmull Pixar Revenues If Disney acquires Pixar and stays consistent to family friendly films - filling the huge Pixar revenue gap will be a challenge. Disney Family Friendly PIXAR “Child in Every Adult” Rivalry for Potential Partners Strategy Equity Alliance Degree of Competition To Aquire or Not to Aquire High Low - Medium Low High Acquisition Equity Alliance Equity Alliance Acquisition Acquisition Competition for Pixar Dyer, Singh and Kale framework recommends:
Aquisition Competition for Pixar Pixar's proprietary 3D CG technology. 10 year development period By 2005 Pixar won 20 academy awards Greatly reduced operations costs -Toy Story completed with only 110 staff members Proven track record of producing profit generating hit movies such as Toy Story and Finding Nemo Unparalleled success Highly coveted services increase the value of an acquisition for Disney's competitors. Competition for Pixar Highly technical and creative human capital High concentration of employees hold PhD’s. Dyer, Singh and Kale Forces of competition
High Redundant Resources between Disney and Pixar Dyer, Singh and Kale framework recommends:
Equity Alliance Dyer, Singh and Kale Level of Redundant Resources:
Low - Medium Synergizing Overlapping Resources Redundant Resources Pixar animators operate by CG
Disney animators operate by hand Overlapping resources exist with a complimentary skillset: Primarily consists of soft resource synergies:
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