Management Strategy and Policy
Walt DisneyPixar Case Analysis
Disney’s main hurdle before making a decision of acquiring Pixar is negotiating proper terms. The Walt Disney and Pixar merger carries many advantages for Disney. Disney will be able to tap into Pixar’s resources, capabilities and collaborative culture while integrating Pixar into Disney’s organizational structure. As Pixar has created a competitive advantage with its average total box performance of 6 animated films that averaged a total of $538 million. An acquisition between Disney and Pixar will allow for synergy and a competitive strategy to overcome its average revenue growth stall of 5.3% thus creating a focus on more innovative stories and films.
Acquiring Pixar would not only bring the already proven successful synergy with Disney, but it would it also mean that Disney would be obtaining a great asset and leader such as Steve Jobs. Even though, the negotiation between Pixar and Disney for the ownership of future movies might be overestimated, having Steve Jobs on the board for Disney can definitely create a surge in innovation of stories, films and characters. Pixar also leads the PE ratio in its industry of CG with 46 while its closest competitor DreamWorks only has 30. Previously, between 19982004, Pixar CG movies contributed a total of more than $3.5 billion to Disney Studio revenues which was more than $1.2 billion to Disney’s operating income which was about 10% of its revenue and 60% of Disney’s operating income. This demonstrates their previous successful relationship and how it accounted for a good percentage of Disney’s revenue making Disney’s decision to acquire Pixar the right one.
“Drucker believes that acquisitions rarely work unless the company that does the acquiring is willing and able within a fairly short amount to furnish the management to the acquisition” (Management, Pg. 363)
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