Disney Competitive Background in Animation Case study Summary: Harvard Strategic Management

Introduction:

This case study analyses and differentiates the merger and acquisition strategy for the companies of Disney and Pixar, In the first section, you will find the brief analysis of the market share and competitor overview of the Animation, production and CG industry . In the next two sections, the detailed analysis of the companies Disney and Pixar are considered with respect to the acquisition regarding the view of each firm respectively. The fourth section explains complementary and counter-arguments and an analysis of a strategic merger and acquisition proposal for each company respectively. The final section: conclusion, interpretations, assumptions and suggestion showcase the final thoughts interpreted through the strategic merger and acquisition analysis.

Animation market analysis and prominence:

With the evident box-office hits of animation and 3D-Computer graphic films namely Toy story, Finding Nemo, there was a sudden competitive rise in the CG industry as a whole, production companies fought internal battles in-order to dominant the market. Pixar was one of the top contenders in this competitive market, followed by DreamWorks. Disney had a few box-office hits in 2D animation during this period of 2D animations: like snow white, 1934; but, was struggling to keep up with the technological computer rendering production studios, this is where the conflict arises and raised the argument: whether Disney should acquire Pixar or not. With the event of having a limited 5-film partnership, is it in Disney’s best interest to acquire Pixar? Will Pixar’s freedom and unchained creativity fit and be complementary to Disney’s governance or will be do more harm than good? This is the present dilemma in this case-study: Also, whether Disney has to acquire Pixar in-order to achieve competitive market advantage?

 

Overview of Disney’s strategic background with the regard in the viewpoint of Pixar:

Disney, being mostly recognized as a brand recognition and a market leader in animated film productions due to its much reputed success in creating life-like memorable animated characters in film. Disney’s initial success lied in the brand character of “Mickey Mouse” created by founder: Walt Disney.The continued success in 2D animated movies vested in snow-white, 1934; the little mermaid; beauty and the beast; and the lion king, 1994 which alone has generated over $1 billion in net income for the company.Disney though being immensely successful during the 2D animation era, struggled with the technological advancement of the new 3D rendered compute animated film productions. In the struggling of Disney, companies such as pixar, dreamworks captured most of the market share in CG Film productions while diney lagged behind incrementally.

Disney spends a lot of its time in meetings, arguing, discussing and , having given remuneration to the employees based on idea contribution: it promoted its creative thinking in a motivated level .The governance of Disney after the release of the some of its most reputed films caused a more hierarchical approach to move and film productions which caused the loss of creative idea engagement and diminished the contributive attitude of its employees, while this was a minor cause of its decrementation; it had also failed to catch up with the rise of technology which competitor and future-to be partner Pixar as successfully embezzled. Most of its films after the lion king led to below-expected performance, but was compensated with its entertainment revenue model, Disneyland, toys, home videos, etc. Disney’s board and Eisner also had failed to realize Katzenberg’s suggestions in regard to the growing industry of CG films, which led Ketzenberg to leave and create a powerful rival-competitor studio: Dreamworks.

Disney was losing its capability to deliver engaging, modern and 3D CG films and cinema, hence has induced and proposed a deal with pixar for a 5-film co-operative contract: Disney had an idea to utilize its brand value, revenue models and history to partner with Pixar’s modern and creative production system to create excellent and adequate films to the industry.

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