Disney Pixar case study


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Disney Pixar case study

  1. 1. 1155008442 Farica 1155008384 Agnes1155008485 Tony 1155008361 Briseis
  2. 2. Case reviewCompany introductionThe acquisitionCase studyAdvantageDisadvantageDiscussionAbout the future
  3. 3. Case review
  4. 4. • Founded in 1923, America• 1930s Mickey Mouse & Donald Duck
  5. 5. Snow White and the Seven Dwarves Cinderella Alice in Wonderland 51 animated 2D films in total. Not strong in 3D animation. Peter Pan The Lion King Mulan Winnie the Pooh
  6. 6. • Previously „Lucas Film‟ computer animation workshop • Offered 3D technique in Star Wars (1977)1986 Steve Jobsacquired Lucas Film &renamed it PixarAnimation Studios
  7. 7. • 1991 Disney and Pixar signed cooperative agreement for 5 movies• 2004 Broke up Jobs wanted 100% revenue, not the split cost (50-50)
  8. 8. acquire Jobs became theWalt Disney Co. Pixar largest shareholder $7.4 billion in Disney Jobs being the CEO of Pixar
  9. 9. AdvantagesOptimistic PerspectiveHow they benefit from each other
  10. 10. Optimistic PerspectiveHow they benefit from each other Disney: Consolidate its dominant position in animation industry •The new digital era •The requirement of creativity •The rivalry among organizations in the animation industry Source: FactSet: Walt Disney daily share price
  11. 11. Optimistic PerspectiveHow they benefit from each other Pixar: Improve the capacity of profitability and then create more value. •Strengthening the capability to release animated cartoons •Independent administration •Gain sufficient funds
  12. 12. Optimistic PerspectiveHow they benefit from each other Steve Jobs: Gain a much more influence in the multimedia field His roughly 50% ownership of Pixar is worth over $3.5 billion, which would be more than enough to turn him into Disneys largest individual shareholder should he accept a stock swap.
  13. 13. Optimistic PerspectiveHow they benefit from each other Apple:The one who can release and share media content based on broad band network technique win in the competition. • Bring out the new product---”Family recreation center” •Apple Media content can raising competitiveness of their products like iMac and iPod. • Disney Disseminating its entertainment programs through Apple‟s new media terminals and receiving technical support from Apple. VS.
  14. 14. Optimistic PerspectiveHow they benefit from each other Recent Development • Share price: 38% $35.85 • Market Value: $64,000,000,000 (Nov. 30th 2011) • Average returns to investment: 7.6% • Dividend: 1.1% • Robert A.Iger was intended to become the director of Apple. Source: FactSet: Walt Disney‟s monthly share price (2006-2011)
  15. 15. Disadvantagespessimistic perspectiveWhat’s the risk?
  16. 16. Financial burden• Estimated value of Pixar 6.5 billion – 7.4 billion• End of fiscal year of 2005 ,Disney had net income of 2.5billion USD
  17. 17. Financial burden 1billion USD cash 14% cash stock in exchange 86% Stock worth -6.4 billion USDPixar stock deal worth
  18. 18. Financial burden• Changed original ownership structure of the company.• The Stock-for-Stock often provoke risk
  19. 19. Disney’s CultureBig company, big bureaucracy 150,000 employee in 2008 Hierarchical structure: distant upper management Micromanagement ->low morale, “brain drain” of creative talentProfitability, not quality, rules theday Executives are the ones making creative decisions -Generic Disney formula for animated films -straight- to –video “cheapquels “ -makes films on a tight schedule
  20. 20. Pixar: Free-spirited creativityEmeryville location( the “anti-Hollywood”)Individually–decorated workspaces; huts instead of cubiclesHawaiian shirts and scootersPolicy against employment contracts
  21. 21. Pixar: Egalitarian CollaborationEnvironment invites congregationPixar universityThemes of teamworkBonus structure
  22. 22. Pixar: Perfectionism• Pixar short films• no cheapquels (錄影帶首映,低成本低品質)• Pick 1 idea, good or bad and stick it until it works
  23. 23. The three basic principles• Everyone must have the freedom to communicate with anyone• It must be safe for everyone to offer ideas• Stay close to innovations happening in the academic community
  24. 24. Risk of culture• Disney soldier Pixar artist
  25. 25. Apple and Jobs• May lost rational and independent business choice. Right or Tight?
  26. 26. Discussion
  27. 27. DiscussionQ1:For Disney, are there any other alternativeslike strategic alliance better than acquiringPixar?
  28. 28. Discussion• Internal Development human&technology asset, 3D technology, development cost&fierce competition• Strategic Alliance(not Pixar) with other studios, build new relationship, distribution channel factors• Strategic Alliance(with Pixar) CAPS, feature film agreement, co-production agreement• M&A revitalize animation department, eliminate competition, access to technology &human capital
  29. 29. DiscussionQ2:Before the death of Jobs, Disney, as entertainmentindustry, has brought Jobs enormous wealth.Then, in your opinion, what about purchasingDisney for Apple in the future?
  30. 30. It is an OPEN question!• It is a good choice for Apple. Apple has the ability and money to buy Disney. Disney can bring Apple many media channels.• It is not applicable: two different positions no spare time to afford for Apple