The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire?
1) The acquisition of Pixar would be beneficial to Disney due to how both companies’ businesses are related. This related acquisition would lead to the formation of more synergies and hence create value through the integration of their resources and capabilities. By acquiring some of Pixar’s core competencies and strengths, Disney may realise a new growth potential while reinforcing its strategic competitiveness.
Firstly, the acquisition would cause Disney’s market power to rise due to the increase of its resources and capabilities to compete in the industry and also a greater share in the market. This is of great importance due to the intense competitiveness in the industry that is dominated by only a few key players. Any increase in market power would be greatly advantageous.
Also, by acquiring Pixar, Disney would gain access to Pixar’s leading computer-generated (CG) animation technology at lower costs than if it were to develop similar technologies by itself. The acquisition of such technology provides more predictable returns than developing an internal product, which entails a great amount of risk. In addition, Disney would reduce future costs by eliminating various fees to Pixar such as the participation fee. Besides, physical and technological resources, Disney would obtain Pixar’s human resources such as their highly talented and technical animators. Together with Disney’s superior distribution know-how, they will definitely be a force not to be reckoned with.
Another benefit of acquiring Pixar would be that Disney would have the rights over the use of its characters from the films, which would propel ticket and retails sales in both its theme parks and consumer product divisions respectively. Furthermore, it can be expected that Pixar would generate new streams of revenue for Disney through the production of future “smash hits” due to its stellar track record.
As a board member, by procuring Pixar, bringing on Steve Jobs to the board may
Firstly, the acquisition would cause Disney’s market power to rise due to the increase of its resources and capabilities to compete in the industry and also a greater share in the market. This is of great importance due to the intense competitiveness in the industry that is dominated by only a few key players. Any increase in market power would be greatly advantageous.
Also, by acquiring Pixar, Disney would gain access to Pixar’s leading computer-generated (CG) animation technology at lower costs than if it were to develop similar technologies by itself. The acquisition of such technology provides more predictable returns than developing an internal product, which entails a great amount of risk. In addition, Disney would reduce future costs by eliminating various fees to Pixar such as the participation fee. Besides, physical and technological resources, Disney would obtain Pixar’s human resources such as their highly talented and technical animators. Together with Disney’s superior distribution know-how, they will definitely be a force not to be reckoned with.
Another benefit of acquiring Pixar would be that Disney would have the rights over the use of its characters from the films, which would propel ticket and retails sales in both its theme parks and consumer product divisions respectively. Furthermore, it can be expected that Pixar would generate new streams of revenue for Disney through the production of future “smash hits” due to its stellar track record.
As a board member, by procuring Pixar, bringing on Steve Jobs to the board may
References: Alacer, J., Collis, D., Furey, M. (2010), The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire?, Harvard Business School Barnes, B (2008), Disney and Pixar: The Power of the Prenup [Online] [Available] http://www.nytimes.com/2008/06/01/business/media/01pixar.html? [16 Feb 2014] Hitt, M., Ireland, R., Hoskisson, R. (2013) Strategic Management: Competitiveness & Globalisation, 10th edition, Cengage Learning Porter, M. (2013), On Competition, Harvard Business Press The Walt Disney Company (n.d.), Disney History [Online] [Available] http://thewaltdisneycompany.com/about-disney/disney-history [16 Feb 2014] Pixar Inc. (n.d.), The Pixar Timeline: 1979 to Present [Online] [Available] http://www.pixar.com/about/Our-Story [16 Feb 2014]