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The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire? An Update Case Solution

Solution Id Length Case Author Case Publisher
1297 649 Words (2 Pages) Juan Alcacer, David J. Collis, Mary Furey Harvard Business School : 709489
This solution includes: A Word File A Word File

In order to assess the value derived from either developing a relationship or not, both the situations will be assessed. If Disney acquires Pixar, their combined efforts will form a synergy, leading to greater value than they give individually. The reason is that Pixar’s creativity combined with the distribution network that Disney has will lead to a strategic fit for both companies. Also, the takeover will result in the companies not facing competition from each other. This competition would result in one gaining considerable power over the other and the other one will suffer. For Disney, Pixar brings about opportunities for further commercialization. Pixar movies come with songs, comedy, and action that can be transformed into shorter versions to be available for downloading. This will allow an increased popularity of the company and its products.

Following questions are answered in this case study solution

  1. Can Disney and Pixar create more value in an exclusive relationship, or can they create more value operating independently (and if they were allowed to enter into relationships with other companies)?

Case Analysis for The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire? An Update Case Solution

Also, in an exclusive relationship, both the companies can maintain their animation facilities separately. That will allow the companies to keep all of the employees, therefore, their assets in the organization. Also, both the companies and keep working on their key competencies. Since Pixar’s key competency is animation and that of Disney is distribution and marketing. The Pixar acquisition would allow Disney to enhance its creative capabilities, developing films that are both rich and innovative in content as well as have impeccable distribution and great marketing. If Disney does not try to dilute the competency that Pixar possesses, and instead uses this competency to increase its creative capability, forming a very powerful team that can help them in becoming the largest player in the animation movie industry. Furthermore, Disney with its theme parks required the integral feature of animations that Pixar held. Also, Disney required a company that would provide an edge to their films in animation. With the continuous hit movies that Pixar had produced, Disney had Pixar as the best option for an animation company. Also, Steve Jobs being on the Disney board would mean increased value for the shareholders of the company.

If the companies decide to work independently, one of the implications it will have for Pixar is related to its core competency. With the company being new in the industry and Disney having a much more powerful position, Pixar would have to get a lot of investment for performing better than the competition. This investment requirement can get off its focus from the primary core competency that makes the company unique; that is innovation. Also, the independent operations would not present the challenges that the companies are expected to face. One of these challenges is the cultural clash. Pixar having a very different culture had enunciated the reason for its creativity. The acquisition could cause Pixar to lose its employees, thus its culture and the core competency that it holds.

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