Disney Acquires Pixars

        It has been noticed that there is a concern with your relationship with Pixar.  Having collaborated with Pixar in the past it is clear that the connection shared is one of a kind.  Based on your impressive box office numbers it is easy to conclude that a deal of some kind must be reached. This executive summary will present an overview of the analyzed firms, identify the problem at hand, include a firm and industry analysis, outline your four choices (acquire Pixar, negotiate a new deal with Pixar, seek a new partner, or internalize the CG department), and finally conclude with our recommendation along with a suitable implementation method.  In hopes that this problem is resolved as effectively and perfectly as possible we hope that you take our recommendation and points into consideration.  

        First let’s look at a brief overview of the two firms.  Disney was founded in 1923 and has had immense success with 2D films but has been lagging in the 3D department, thus the need for Pixar’s talent.  It has become the largest media conglomerate in the world by dabbling in many industries and perhaps has become best known for product merchandising and branding. On the other hand, Pixar was founded more recently (1980’s) and originally specialized in visual effects until the company began to perform poorly, then transitioned its focus primarily to animation.  The software used by Pixar was developed in house and after many years adding on to this software it as immediately become one of a kind. More importantly and perhaps even harder to replicate is Pixar’s employees and culture.  Pixar’s culture is based on freedom to communicate, a safe environment where all workers can nonjudgmentally offer ideas and finally, innovation. Because of their strategy and culture they have become very successful with retaining their employees over time.

        Now, your five-movie contract with Pixar has just ended and action needs to be taken. The amount of success and money accumulated from your partnership is unprecedented and incomparable.  So, the question that needs to be asked is, should you acquire Pixar or seek an alternate solution for CG animation production? The answer to that question will become clear at the conclusion of this analysis, but we now need to conduct a proper SWOT analysis.

        Now that it is clear that Disney should fully acquire Pixar, we now need to determine the best way to implement this decision. It was obvious that a sound negotiation could not be made in the past mainly because of the merciless relationship between Pixar CEO, Steve Jobs, and Disney CEO Michael Eisner.  Now that Michael Eisner has left the company the slate is now clean.  You should immediately have your new CEO, Bob Iger, begin acquisition talks with Steve Jobs because there are many reasons why Pixar would benefit from an acquisition.  Some issues may arise throughout all stages of this acquisition and it is important that you are prepared to mitigate and minimize these issues.  First, Disney must be prepared to spend upwards of seven billion dollars.  This is a gargantuan amount of money for almost any company so finding the funds to reach that number may become difficult. However it may be well worth it because Pixar is yet to produce a flop and their practicing of perfectionism is yet to be deemed a failure. And second, Disney needs to be prepared to make some organizational structure changes in order to accommodate Pixar’s talent and unique culture.  It may prove to be difficult to integrate a small technical company into an enormous conglomerate that employees over 100,000 people. It is imperative that Disney does not allow an exodus of talent to occur after they acquire Disney, this may happen if Disney does integrate Pixar’s culture correctly.  Including Pixar’s top management will assist Pixar’s lower level employees stay on board because there is already a foundation of trust.  If Disney does not resolve this potential issue appropriately then Disney just bought the most expensive computers of all time. We hope that this analysis will assist you in making a more informed decision and has brought up points that you may have overlooked.