BEYOND PIXAR’S GAME: A CASE STUDY

POINT OF VIEW
Analysis

STATEMENT OF THE PROBLEM

Why has Pixar been successful?
How can they continue the trend.

What should be its corporate strategy to

achieve sustainable growth?
CASE CONTENT
History of Pixar
ANALYSIS
Competitor Analysis
SWOT Analysis / Porter’s 5 Forces
Corporate Strategy: Alliance & Acquisition
Alternative Course of Action

RECOMMENDATION
Located in Emeryville, California

1986 STEVE JOBS purchased the Computer Graphics

Division from George Lucas and established an
independent company to be christened “PIXAR”

$10 million
1988 The first commercial version of
RenderMan® is released

Pixar begins making

commercials

1991 Disney and Pixar announced an

agreement to make and distribute
three computer generated
animated movie
 1997-1999
Pixar renegotiated its contract
with Disney

1998
Disney announces agreement to purchase Pixar

2005-2011
 $ 7.4 Billion all stock deal
Pixar shareholders: 2.3 shares of Disney common stock for
each Pixar share common stocks
 ANALYSIS
Bargaining Power of Bargaining Intensity of Threats of New Threats of
Suppliers Power of Buyers Rivalry Entrants Substitutes
HIGH HIGH HIGH LOW LOW
Poster’s 5 Forces
 SWOT Analysis

ANALYSI
DISNEY
Strong brand image
PIXAR
High Level of Expertise in Egalitarian Leadership
marketing & distribution Emphasis in human capital PIXAR & DISNEY
Has vast network & Creative & free-spirited Culture Shift of Animation Industry
connections
Promotes risk taking to computer generated films
Has very deep pocket
Promotion of Pixar University Growing need for animation
Has different revenue
streams Whole production process is done studios
internally Rapid dev’t of advanced tech
Owner of Animation Software Emergence of the Internet
Extensive Tech Expertise
Low resources & Possible end to Disney alliance
DISNEY expertise for film the Presence of competitors with
Low expertise in distribution
digital animation Established partnership
Limited Manpower
Top-down type of leadership PIXAR & DISNEY
Low emphasis on internal dev’t PIXAR
and reverts outsourcing
 Competitor’s
ANALYSIS
Disney’s 14.1% Market Share Out Of Major Players

Dreamworks (Viacom) 9.5%

21st Century Fox 16.3%

Movie Industry has gone down as a
whole
Exporting Internationally has
Increased
Bringing in more sales from foreign
Picture sales
2005 Exports = 4.7 M
2014 = 4.3 M
However,
Projected in 2019 = 5.1 M
ALTERNATIVE COURSE OF
ACTION
Stand-alone as a film production and
Distribution company

Creative Freedom

Proprietary rights of its patented

technologies (Renderman, Marionette,
Ringmaster) and the movies that they
will be producing

Maximization of Profits
ALTERNATIVE COURSE
OF ACTION
Stand-alone as a film production and
Distribution company

Inability to Focus on Core Business

Financially risky

No experience in distribution
business
Lack of other avenues for
enhancing popularity of
characteristics & movies
ALTERNATIVE COURSE
OF ACTION
Be open to alliances with
various distribution companies

Inability to Focus on Core Business

Financially risky

No experience in distribution
business
Lack of other avenues for
enhancing popularity of
characteristics & movies
ALTERNATIVE COURSE OF
ACTION

Be open to alliances with

various distribution companies

Possibility of negotiating more

favorable deals with other
companies

Not limited to films that meet Disney

criteria
ALTERNATIVE COURSE
OF ACTION
Be open to alliances with
various distribution companies

Difficulty to find a partner & enter into

mutually beneficial agreement.

Focus may be detailed with time

dedicated negotiations

Value might diminish if another

product surpasses their technology

Disney will become a competitor

ALTERNATIVE COURSE
OF ACTION
Stand-alone as a film production and
Distribution company

Difficulty to find a partner & enter into

mutually beneficial agreement.

Focus may be detailed with time

dedicated negotiations

Value might diminish if another

product surpasses their technology

Disney will become a competitor

ALTERNATIVE COURSE OF
ACTION
Continue strategic
alliance and Disney & re-negotiate its
agreement terms

Existing to partnership
since 1991
Power to leverage might
be higher due to box
office success

Share in risk

Pixar’s stock price growth

can be sustained
ALTERNATIVE COURSE
OF ACTION
Continue strategic alliance and Disney
& re-negotiate its agreement terms

Shared profits

Disney can still exercise control

Continuous re-negotiation with Disney

Sustainability upon the end of the

contract
ALTERNATIVE COURSE
OF ACTION
Continue strategic alliance and Disney
& re-negotiate its agreement terms

Shared profits

Disney can still exercise control

Continuous re-negotiation with Disney

Sustainability upon the end of the

contract
ALTERNATIVE COURSE OF
ACTION

Sell to Disney

Strategic fit & Strengthen

competitive position

Access to critical
complementary assets

Pixar can focus on

creative innovation
Increase in Value – 7.4 Billion
vs Book Value (Overpriced)
ALTERNATIVE COURSE
OF ACTION
Sell to Disney

Stuck with Disney with possible

restrictions

Differences in culture and leadership

style that can stifle Pixar’s Creativity

Potential mass exodus of Pixar’s

creative talent
ALTERNATIVE COURSE
OF ACTION
Sell to Disney

Stuck with Disney with possible

restrictions

Differences in culture and leadership

style that can stifle Pixar’s Creativity

Potential mass exodus of Pixar’s

creative talent