1155008442 Farica 1155008384 Agnes 1155008485 Tony 1155008361 Briseis

Case review
Company introduction The acquisition

Case study
Advantage Disadvantage

Discussion
About the future

Case review

 Founded in 1923, America 1930s Mickey Mouse & Donald Duck

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

 Previously Lucas Film computer animation workshop Offered 3D technique in Star Wars (1977)

1986 Steve Jobs acquired Lucas Film & renamed it Pixar Animation Studios

 1991 Disney and Pixar signed cooperative agreement for 5 movies

2004 Broke up Jobs wanted 100% revenue, not the split cost (50-50)

acquire Walt Disney Co. $7.4 billion Jobs being the CEO of Pixar Pixar

Jobs became the largest shareholder in Disney

Advantages
Optimistic Perspective How they benefit from each other

Optimistic Perspective
How 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

Optimistic Perspective
How 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

Optimistic Perspective
How 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 Disney's largest individual shareholder should he accept a stock swap.

Optimistic Perspective
How they benefit from each other
AppleThe 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 Apples new media terminals and receiving technical support from Apple.

VS.

Optimistic Perspective
How 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 Disneys monthly share price (2006-2011)

Disadvantages
pessimistic perspective Whats the risk?

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

Financial burden
1billion USD cash 14% cash stock in exchange 86%

Stock worth -6.4 billion USD

Pixar stock deal worth

Financial burden
Changed original ownership structure of the company.

The Stock-for-Stock often provoke risk

Disneys Culture
Big company, big bureaucracy
150,000 employee in 2008 Hierarchical structure: distant upper management Micromanagement ->low morale, brain drain of creative talent

Profitability, not quality, rules the day

Executives are the ones making creative decisions -Generic Disney formula for animated films -straight- to video cheapquels -makes films on a tight schedule

Pixar: Free-spirited creativity

Emeryville location( the anti-Hollywood) Individuallydecorated workspaces; huts instead of cubicles Hawaiian shirts and scooters Policy against employment contracts

Pixar: Egalitarian Collaboration

Environment invites congregation Pixar university Themes of teamwork Bonus structure

Pixar: Perfectionism
Pixar short films no cheapquels () Pick 1 idea, good or bad and stick it until it works

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

Risk of culture
Disney soldier Pixar artist

Apple and Jobs

May lost rational and independent business choice. Right or Tight?

Discussion

Discussion
Q1: For Disney, are there any other alternatives like strategic alliance better than acquiring Pixar?

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

Discussion
Q2: Before the death of Jobs, Disney, as entertainment industry, has brought Jobs enormous wealth.
Then, in your opinion, what about purchasing Disney for Apple in the future?

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