preview

Pros And Cons Of Disney's Acquisition Of Pixar

Decent Essays
Open Document

Disney’s acquisition of Pixar had both benefits and implications for both parties involved. By acquiring Pixar, Disney was given access to Pixar’s proprietary technology, which was an important factor, as well as access to new characters. These characters provided a new source of income for Disney, not just for movies, but also to use in theme parks, merchandise stores, etc., meaning new characters would supply immense revenue streams for Disney in several forms. Disney also gained strengthened market power, as acquiring one of their rivals would give them a competitive advantage and would simultaneously make them more powerful in the market. Additionally, Disney was never very successful with their animated movies, and acquiring Pixar would …show more content…

Firstly, Disney allowed Pixar to have larger budgets, as Disney had funding capabilities and budgets that were enormous compared to Pixar, which allowed Pixar to explore opportunities they might not have the resources to pursue. Besides this, Pixar were also able to start more projects, and they were provided with more security and stability due to Disney’s large size and their financial resources. However, what was potentially most important for Steve Jobs, was that this acquisition would allow Jobs to put Disney content for sale in the App Store, providing more revenue for Apple. Nonetheless, Pixar were also negatively affected by the acquisition. They were mostly scared of the threat to their corporate culture. Pixar had built up a culture, that they were afraid would clash with Disney’s culture, since Disney was a much larger company. Additionally, there were differences in organizational structures in the two firms, and Pixar artists were no longer independent, nor had the same amount of discretion with regard to decision-making as previously held, as Disney now made most of the decisions.

Overall, it seems that Disney had the most benefits from the acquisition of Pixar, while there were mainly cons for Pixar. However, the general conception is that Disney overpaid for Pixar, which is potentially why have they have been willing to …show more content…

Its large size gives Disney several advantages, such as a large budget and a large human resource base. Internally, Disney follows a top-down approach, where managers tend to impose the culture, and bureaucracy is considered large with 185,000 employees in 2016 (Forbes, 2016). The decision making lies at top management level, giving the company a hierarchical structure. In the creative world Disney is known to make movies based on profitability, rather than quality of animation and image. Pixar’s core competence is their technological 3D success in computer animation. When looking at the staff at Pixar , it can be seen that they are very technically educated and have a lot of in-house creativity. This is the reason for their high level of innovation. Furthermore, they focus on quality instead of sales figures. Internally, Pixar uses the bottom-up approach, where input of employees is highly valued, and Pixar offers a very communicative and open working environment.

The second factor is the economies of scale. The success of the acquisition regarding the economies of scale is questionable as the companies did not seem to work together (Zahed, 2012). Disney started developing their own computer animations, while Pixar got a lot of revenue from their six animated motion pictures. Pixar has the technology plus the creativity, and Disney has good stories plus the

Get Access
Related
Get Access