The Walt Disney Company and Pixar Harvard Case Solution & Analysis

The Walt Disney Company and Pixar Case Study Solution

Introduction:

Starting from the history of Walt Disney, the company was established in 1923, one of the largest media industry having huge spam of business, starting from television and radio extended to provide attractions to the tourists by theme parks. The first film that has gained hype was “snow white and the seven dwarfs.” The success story continues, and by the use of 3D computer animated techniques with the Pixar, they have captured asignificant portion of the market when the popularity of animated movies was taking hype. They have targeted people for the theme movies and animated sequels, especially children for making their place concrete in the market. Due, to the intensified growth in themedia industry and especially the animated features of the movies, the market has increased potentials, and new companies entered the market. It is because there was no barrier to entry. Due to the vast market and new competitors, the Disney-Pixar partnership has to reconsider their positions and make strategies to stay on top and compete with the new companies well.

What is their business model?

They are the people with creative minds and thoughts, the combination of Disney-Pixar has brought valuable success to them.Together they have achieved many milestones, and Disney also has technical superiority and earn reasonable revenue from animated commercial ads as well. Thewell-established infrastructure and the technological expertise has triggered their growth patterns. The maximum revenue fetching of the company is from animated movies. However, Disney is also actively involved in other businesses such as toy sale, video games sale, television movies andbooks,etc. The partnership has provided both the companies additional benefits, and they are eager to work together in future as well.

What is the prime issue in the case?

This case study specifically revolves around the strategic decision that should be taken by the companies to move forward, with the new terms or with the new strategies. What should be the model of the business as they continued the partnership?Furthermore, Igerthe CEO of the company has to make a decision whether Disney should acquire Pixar.In order to establish their empowerment, as the strongest children media production house.

What are some other issues that need your consideration?

The other issues that are there in the case study are:

The pressure is increased on DISNEY to make an appropriate decision regarding the contractual relationship with Pixar, as the competition in the industry increases with several new companies wanting to break the trend and capture the significant market share such as Paramount.

Pixar employees are of the view that they are enjoying their independence under the patent name of Pixar and if they are merged with Disney, there are some cultural differences and employees might lose their identification over there.

The Walt Disney Company and Pixar Harvard Case Solution & Analysis

 

 

They deal can also need strategic analysis, in terms of thefinancial condition of both the companies.The additional premium that Disney must have to pay, in order to acquire Pixarwould be so costly for them. The acquisition might also dilute the P/E ratio of Disney, as the P/E ratio of Pixar is 46.This might affects the shareholders worth and investors are not willing to invest at that point.

There is not any doubt that Disney-Pixar partnership has brought many wonderful hits to the audience, during 1995-1998, the successive hits are the result of their co-production. Due, to the successful partnership, Disney has acquired 15% of the stake in Pixar after their initial IPO. When the relationship between Steve jobs and Eisner got affected, Disney replaced Eisner with Iger, in order to maintain the relationship and attain the success paths together.

What strategic alternatives does Disney have?

The Disney-Pixar partnership has brought enormous successes for them, as both the companies have managed to deal with each other effectively, in terms of resources ideas and talentas well.

Robert Iger has to take a strategic decision, in order to get the most benefit from thecontinuation of the deal, the strategic alternatives that are present with Iger are:

  • Disney would make a contract with another studio, after the completion of the terms of contracts with It means Disney has to abandon the long relationship with Pixar and the after effects would make them their biggest competitors. There would be anew composition of the teams, and there would be a risk and uncertainty that deal might not work in their way.
  • Another option is that Disney could acquire Pixar and work as a single organizational unit.
  • The third option is Disney would extend their contract with Pixar incorporating new terms and conditions in the contract.By this,they have to agree with the Steve job’s negotiation deal of lowering the distribution fee for Disney................

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