The Walt Disney Company and Pixar Inc. Case Help
Introduction:
Walt Disney and Pixar both are well-known animated and movie workspaces. Initially, both of the studios target the United States Market but with time their movies are liked worldwide. Snow white and seven drafts were the first movies of Walt Disney which is a business worldwide. Pixar and Walt Disney make a co-production agreement which was about to end in 2006. (Miroudot, 2019) Both companies are the best movies producing with the high level of innovation, creativity, and different abilities in both studios. In the agreement, both studios produce the best movies in the market. After the end of the agreement, Walt Disney aims to create acquirement the Pixar or a new contract for making long-life relation with Pixar. Discussions and analysis are to be done for understanding whether Walt Disney makes acquires Pixar or makes the contract.
Problem Statement
The Walt Disney acquire or did not acquire the Pixar studio?
Situation Analysis
As a board member of Disney, I approve the bid of more than $7 bi for the studio Pixar because the Pixar technology is always helpful and profitable for Disney. And as a board member of Pixar Yes I would accept the bid of $7 bi from Disney Walt because from the past contract of Disney and Pixar Pixar generate more benefits. This decision is based on the following factors which are briefly explained:
Pros and Cons of Acquisition from both Disney and Pixar:
Mostly the acquisition between Disney and Walt has created advantages for both the studios. The advantages of synergies, the advantage of productivity, and the advantage of combined shareholders.
Pros of Acquisition
Revenue Synergies
Revenue synergy is an important advantage. Revenue increase more and more in the combined organization as compared to a separate company.
Disney has strong marketing strategies and Pixar has strong Animation Technology which attracts the customers to the products. (Shen, J., Xu, M., & Yang, S. 2021 December) .
The combination of both the studios has powerful targeting power in the same market.
Cost Synergies
When the movies of two studios produce in a single place the number of movies increases with a decrease in total production cost.
License benefit is also available in this case because on a single license more movies can come to market.
After the acquisition, the departments of finance and administration also decrease which also reduce the cost.
Financial Synergies
In the financial Synergy, Pixar is more benefited because animated ideas also require a lot of investment for raising the project.
Disney is strong in financial position so they can raise the project easily and get good output from that project. The creditworthiness also increases from the lender's perspective.
Cons of Acquisition
Cultural conflicts
The difference between the culture of Disney and Pixar is very high. Disney is a huge organization with a lot of employees so the employees of Pixar and Disney face issues by adopting new co-workers and culture.
The strategies of Disney and Pixar are different from each other.
Employee's performance can reduce
The employee's job satisfaction can be affected which directly reduces the performance of employees. With changes in the environment of culture inside the organization, the employee’s commitment towards the organization reduces.
Brand value can be effects
The brand image of Disney was also affected because after Acquisition the reputation of Pixar combined with Disney. The lacking of Pixar creates less brand value for Disney.
Alternatives for the Disney Acquisition with Pixar
Walt Disney has also some other alternatives if the acquisition with Pixar is not done.
Strategic Alliances
Walt Design has also the option of Strategic Alliances with other companies like Dream works and blue sky. It has no doubt initially that Disney faces some issues when making alliances with competitors but they cover all the things by following future growth strategies.
The new contract with Pixar
If the Acquisition with Pixar is not possible Disney can make a new contract with Pixar. It can be difficult because again coming in new contract with the same company can create excuses. Disney is thinking about the long term whereas the contract again has a limited period.........
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