Disney Pixar case study

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2. Case reviewCompany introductionThe acquisitionCase studyAdvantageDisadvantageDiscussionAbout the future 3. Case review 4. Founded in 1923, America 1930s Mickey Mouse & Donald Duck 5. Snow White and the Seven DwarvesCinderella Alice in Wonderland51 animated 2D films in total.Not strong in 3D animation. Peter PanThe Lion KingMulan Winnie the Pooh 6. Previously Lucas Filmcomputer animationworkshop Offered 3D technique in StarWars (1977)1986 Steve Jobsacquired Lucas Film &renamed it PixarAnimation Studios 7. 1991 Disney and Pixarsigned cooperativeagreement for 5 movies 2004 Broke upJobs wanted 100%revenue, not the splitcost (50-50) 8. acquire Jobs became theWalt Disney Co.Pixar largest shareholder$7.4 billion in DisneyJobs being theCEO of Pixar 9. AdvantagesOptimistic PerspectiveHow they benefit from each other 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. 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. 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. Optimistic PerspectiveHow 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. 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 Disneys monthly share price (2006-2011) 15. Disadvantagespessimistic perspectiveWhats the risk? 16. Financial burden Estimated value of Pixar 6.5 billion 7.4billion End of fiscal year of 2005 Disney had netincome of 2.5billion USD 17. Financial burden1billionUSD cash 14%cashstock inexchange 86% Stock worth -6.4 billion USDPixar stock deal worth 18. Financial burden Changed original ownership structure ofthe company. The Stock-for-Stock often provoke risk 19. Disneys CultureBig company, big bureaucracy 150,000 employee in 2008 Hierarchical structure: distant upper management Micromanagement ->low morale, brain drain ofcreative 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. Pixar: Free-spirited creativityEmeryville location( the anti-Hollywood)Individuallydecorated workspaces; huts instead of cubiclesHawaiian shirts and scootersPolicy against employment contracts 21. Pixar: Egalitarian CollaborationEnvironment invites congregationPixar universityThemes of teamworkBonus structure 22. Pixar: Perfectionism Pixar short films no cheapquels () Pick 1 idea, good or bad and stick it until itworks 23. The three basic principles Everyone must have the freedom tocommunicate with anyone It must be safe for everyone to offer ideas Stay close to innovations happening in theacademic community 24. Risk of culture Disney soldier Pixar artist 25. Apple and Jobs May lost rational and independent businesschoice.Right or Tight? 26. Discussion 27. DiscussionQ1:For Disney, are there any other alternativeslike strategic alliance better than acquiringPixar? 28. Discussion Internal Developmenthuman&technology asset, 3D technology, development cost&fiercecompetition 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&Arevitalize animation department,eliminate competition,access to technology &human capital 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. 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