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Pixar Case Analysis: Group 1

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Hannah Anderson

on 17 March 2015

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Transcript of Pixar Case Analysis: Group 1

Analysis
Pixar Changes the Rules of the Game:
A Case Analysis
Point of View
Analysis
Statement of the Problem
Why has Pixar been succesful?
How can they continue that trend
What should be its corporate strategy to achieve sustainable growth?
Pixar Timeline
1986
1988
1991
1995
1997-99
2005-2011
Steve Jobs purchased the Computer Graphics Division from George Lucas and established an independent company to be christened "Pixar."
The first commercial version of
RenderMan®
is released
Pixar begins making
commercials
Disney and Pixar announced an agreement to make and
distribute
three computer-generated animated movie
.
Toy Story, the world’s
first computer animated feature film
, was released.
Disney announces its agreement to purchase Pixar.
Analysis
MOVIES RELEASED FROM
Dreamworks V.S Pixar
SWOT Analysis
Egalitarian
leadership
Emphasis on
human capital
Extensive
technical expertise
Creative & free-spirited
culture
Promotes
risk taking
Promotion of
Pixar University
Owner of animation
software systems
Whole production process is done
internally
Strong
brand image
High level of expertise in
marketing and distribution
Has vast
network and connections
Has a very
deep pocket
Has different
revenue streams
Low resources and expertise for
film distribution
Limited
manpower
Low expertise in
digital animation
Top-down
type of leadership
Low emphasis on
internal development
and reverts to outsourcing
Shift of animation industry
to computer-generated films
Growing
need for animation studios
Rapid development of
advance technology
Emergence of the
internet
Possible
end to disney alliance
Presence of
competitors
with established partnerships
Strengths
Weaknesses
Threats
Opportunities
Alternative Courses of Action
ACA
Stand-alone as a film production and distribution company
Pros:
Creative freedom
Proprietary rights of its patented technologies (Renderman, Marionette, Ringmaster) and the movies that they will be producing
Maximization of Profits
Alternative Courses of Action
ACA
Stand-alone as a film production and distribution company
Cons:
Inability to focus on core business
Financially risky
No experience in distribution business
Lack of other avenues for enhancing popularity of characters and movies
ACA

Alternative Courses of Action
ACA
Be open to alliances with various distributions companies
Pros:
Possibility of negotiating more favorable deals with other companies
Not limited to films that meet Disney criteria
Alternative Courses of Action
ACA
Be open to alliances with various distributions companies
Cons:
Difficulty to find a partner and enter into mutually beneficial agreements
Focus may be derailed with time dedicated to negotiationss
Value might diminish if another innovative product/tech surpasses their technology (Renderman, Ringmaster, Marionette)
Disney will become a competitor
ACA

Alternative Courses of Action
ACA
Continue strategic alliance with Disney and re-negotiate its agreement terms
Pros:
Existing partnership since 1991
Power to leverage might be higher due to box-office success
Share in risks
Pixar’s stock price growth can be sustained
Alternative Courses of Action
ACA
Continue strategic alliance with Disney and re-negotiate its agreement terms
Cons:
Shared profits
Disney can still exercise control
Continuous re-negotiation with Disney
Sustainability upon end of contract in question
ACA

Alternative Courses of Action
ACA
Sell to Disney
Pros:
Strategic fit and strengthen competitive position
Access to critical complementary assets
Pixar can focus on creative innovation
Increase in value -- 7.4 Billion vs book value (overvalued/overpriced)
Alternative Courses of Action
Cons:
Stuck with Disney with possible restrictions
Differences in culture and leadership style that can stifle Pixar’s creativity
Potential mass exodus of Pixar’s creative talent

ACA
Sell to Disney
ACA

RECOMMENDATIONS
ACA

Sell to Disney

Provide synergy through their complementing strengths
Disney: Financial Resources, Production and Distribution
Pixar: Creative Talent and Technical Expertise
Reduce uncertainty for Pixar (eliminate need to always re-negotiate)
RECOMMENDATIONS
Pixar will remain as a separate entity from Disney - continue with its open and creative culture
Pixar will retain its creative talents
Reinforce competitive position in the animation film industry
RECOMMENDATIONS
Train key creative officers (continuity)
Brain Trust group will now be composed of creative leaders of Pixar and Disney
Leadership
Disney – Pixar University
 Facilitate knowledge transfer
Sharing of best practices
Creation of cross-company teams composed of director, writer, artists, storyboard people from Pixar and Disney (collaboration)
Bridge the gap between Disney and Pixar to create a sustainable creative organization
Structure and Culture
Located in Emeryville, California,
$10 million
Disney would fund production and promotion costs of $26 Million
Pixar's share was 10% -15% of the film's profits
Pixar was to provide funding for the animation tools and technology to be used to complete the film
Disney maintained sole licensing rights to the film and characters
highest grossing
film of 1995
$192 million
domestically
$362 million
worldwide
Pixar renegotiated its contract with Disney
Pixar agree to produce
5 original CGI theatrical films
for distribution by Disney
Pixar and Disney to
cofinance production, co-own, cobrand, and share equally
the profits from each picture 50/50
1998
2001-2004
Steve Jobs and his team went to Disney for
renegotiation of their agreement
.
Bob Iger
, appointed new CEO of Disney (2005).
$7.4 Billion
all stock deal
Pixar shareholders: 2.3 shares of Disney common stock for each share of Pixar common stock
Presentation Outline
Case Context
Analysis
Competitor Analysis
SWOT Analysis/Porters 5 Forces
Corporate Strategy: Alliance and Acquisition
Recommendations
Thank
You
By Hannah, Andrew,
& James
1.3 Billion
Wall-E 4th Oscar for Pixar
Bargaining Power of Suppliers
High
Bargaining Power of Buyers
High
Intensity of Rivalry
High
Threat of New Entrants
Low
Threats of Subsitutes
Low
Porters 5 Forces
Competitors Analysis
Disneys 14.1 % Markets Share out of major players
Dreamworks (Viacom) 9.5%

21st Century Fox 16.3%
Movie Industry has gone down as a whole

Exporting Internationally has increased

Bringing in more sales from foreign picture sales
Movie Industry
2005 Exports = 4.7 Million
2014 = 4.3 Mil

Projected in 2019= 5.1Mil
1995-2012
Recomendations Cont'd
Venture into TV Production

Less people are willing to spend money on DVD's
Streaming Services
Like Hulu, Netflix, Etc...
Citations
However,
Pixar in Blue
Dreamworks in red

13 top movies from 95-2012
Seven top movies from 95-2012
Pixar History
Alternative course of action
(2015, January 02). Bisworld. Movie Industry . Retrieved March 2, 2015, from http://
clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1245
Gregory, D., Lumpkin, G., Eisner, A., & McNamara, G. (2014). Strategic Management (7th ed.). New
York: McGraw Hill Education.
(2012, ). Pixar. Pixar. Retrieved March 2, 2015, from http://www.pixar.com/
(2015, ). DreamWorks Animation. DreamWorks Animation. Retrieved March 2, 2015, from
http://www.dreamworksanimation.com/
Petrill0, N. (2014, November ). Market Research Reports | Procurement Research Reports | IBISWorld US. Movie & video
Production . Retrieved March 2, 2015, from http://clients1.ibisworld.com/reports/us/industry/

default.aspx?entid=1245
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