Case – The Walt Disney and Pixar Inc. Harvard Case Solution & Analysis

Case – The Walt Disney and Pixar Inc. Case Solution

Which is greater: the value of Pixar and Disney in an exclusive relationship, or the sum of the value that each could create if they operated independently of one another (but were allowed to form relationships with other companies)? Why? 

  • Combined value of both companies will be higher than independent values as the combined company can operate better in capturing the value.
  • Both companies have different ideas for the production of new and innovative animated movies.
  • The core objectives of the two business are the same and the target market is also same, which is why different and new animation will provide better value towards the entity through which combined shareholders can get various benefits.
  • The main reason for acquisition or merger is the synergistic benefits, which will be generated solely by the merger and some of them are as follows:

Revenue Synergies:

  • This is very important synergy as this determines that the revenue of combined company is higher than the individual companies. (Carillo, 2012)
  • Pixar has good animation and innovation capabilities, which attract the consumers and Walt Disney has good marketing strategies to market and promote new films, which are to be released.By the combination of these two, the combined company will provide better products with better advertisement to the customers.

Cost Synergies:

  • Cost synergy is related to the overall costing of the combined company, which indicates that through the combination of two companies, the scale of production will increase, which will decrease the fixed cost per movie.
  • For example, independent film distributor and makers have the license to make a film and the cost of license is fixed, therefore the maker intends to make additional movies on a single license to reduce the cost of license per film.
  • The reduction of duplication of function also reduces the overall cost of the combined company, which indicates that both companies have finance departments and the cost of operating is high. Therefore,by reducing less performing department, the company can reduce its cost.

Financial Synergies:

  • This synergy is related to the core finances that are required in the operations of the company.
  • Pixar has new animated and innovative ideas of movies however,the company is facing difficulty in raising finance for the project. (LELAND, 2007)
  • By combining with Disney, the financial problem will be resolved as Walt Disney has good cash reserve which can be transferred internally within the group.
  • The combined group can also attract external financing easily as the lender has the confidence over the size of the company and creditworthiness...........................                                                               This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

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Case – The Walt Disney and Pixar Inc.

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