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Copy of Disney & Pixar
Transcript of Copy of Disney & Pixar
To Acquire or Not to Acquire? CONTENTS 1. Intro
SWOT, Porter's Five Forces
4. Conclusion Team 4:
Daewon Kwon, Chanwoo Cho, Eunsun Cho, Bokyung Kang, Ngoc Quyen Vo, Sunjoo Choi 1. History Relationship 1. 1986: Collaboration on CAPS
2. 1991: Feature Film Agreement
3. 1996: Co-Production Agreement Walt Disney Pixar Inc Half of Production cost
Distribution fee (12.5% of revenues)
Half of box office revenues
The decision-maker about release dates, sequel Half of Production cost
Distribution fee (12.5% of revenues)
Half of “remaining” revenues
Half of other revenues ~60% of total revenues ~40% of total revenues 2. Research Porter's Five Forces SWOT Analysis 3.Questions Financial risks How to overcome these challenges? $7 Billion
loss because of wrong evaluation
ex.: AT&T acquiring NCR; Time Warners acquiring AOL Q3. If Disney does acquire Pixar, how should Bob Iger and his team organize and manage the combined entity? What challenges do you foresee, how would you meet them? Q1. Which is greater?
1. the value of Pixar and Disney in an exclusive relationship,
2. the sum of the value that each could have if they operated independently of one another
3. the sum of value if they were allowed to form relationships with other companies? Why? Q2. Assuming that Pixar and Disney are more valuable in an exclusive relationship, can that value be realized through a new contract? Or is common ownership required? Strategic Alliance Reasons:
1. Bring together Disney’s and Pixar’s complementary skills and assets
2. Share fixed costs and associated risks
3. Vehicle for firm growth Pitfalls:
1. Potential conflict over profits
2. Potential opportunism Acquisition Reasons:
1. Increased market power on animation market
2. Overcoming entry barriers due to integration of two big companies
3. Learning and developing new capabilities
4. Reshaping firm’s competitive advantage Pitfalls:
1. Integration Difficulties -> Over cultural differences/ Over integrating management activities
2. Possibility of inability to achieve synergy
3. Over-focus on acquisitions4. Bureaucratic costs 4. Conclusion Lesson Learnt - a variety of factors have to be considered
- not necessarily money needed -> exchange of stocks To Acquire or Not to Acquire? Better to acquire. THANK YOU! The Value of Pixar and Disney in an exclusive relationship has the greatest value.
1) Bring complementary skills and assets together
2) Huge synergy
3) Develop new capabilities
4) Increase market power
5) Lower risks with an exclusive relationship Cultural Differences Early years
-small, work personally with everyone By 1950’s: began nametags
2005: 133,000 employees (CNN report) Reports that “Walt often felt stymied by the bureaucracy.” Profitability, not quality, rules the day.
-Executives are the ones making decisions
-Tight schedule Connection Culture
Collaboration Culture Three basic principles
First. Everyone must have the freedom to communicate with anyone. Second. It must be safe for everyone to offer ideas. Third. Stay close to innovations happening in the academic community. DISNEY PIXAR October 16, 1923 1928 1937 1955 DISNEY PIXAR 1984 1994 2005 1979 1995 1986 Fair Agreement? CNN Jan.25 2006 1999 Cultural differences Financial risks Extra Discussion Result of Acquisition Net Income of Walt Disney Pretend that you were the CEO of Disney For acquiring Against acquiring Stock Exchange