Pixar Case Study. Company Overview. Pixar’s Internal Analysis

Pixar Case Study
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Pixar Case Study
Executive Summary
Pixar is currently facing a difficult decision in its relationship with Disney. Pixar Inc. was founded in 1979 as an entertainment company and it has always operated within the line of animation industry. Both Pixar and Disney have been facing competition in the market and Disney has been thinking of full acquisition of Pixar. Pixar has been considering Disney’s offer, especially considering the fact that the two companies have different strengths and weaknesses. This case analysis focuses on the merger between Pixar and Disney. The paper explores potential advantages of the merger to Pixar and threats that the company is likely to face if it is to turn down the offer from Disney Inc. A strict consideration for alternatives for the merger is also provided with a view that the merger holds high potential benefits to the alternatives. The paper ends with a recommendation that Pixar stands to gain from full acquisition by Disney Inc. and, therefore, it is high time that it Steve Jobs, the CEO of Pixar accepts the offer for a merger.
Company Overview
Pixar Inc. was established in 1976 as a graphics company, mainly dealing with animations. According to Alcacer, Collis, and Furrey ( 2010), Pixar Inc. was the first company to introduce and use computer-generated 3D models in animations. Disney had the same potential at the time but Pixar was slightly ahead because it carried out all its operation in-house. Pixar owns its own proprietary computer software that the company employees use to transform real-life motions into animated graphics that generates a lot of revenue to the company from the market. Steve Jobs, the CEO and owner of the company bought it from LucasFilm in 1986 with the goal of transforming it into a computer hardware and software company. Three years after buying the company, Jobs used it to generate three computer software including Marionette, Renderman, and Ringmaster. Marionette is the leading software in the company’s animation productions and it has helped the firm remain competitive in the market. This was slightly successful, but Jobs thought that it would necessary to maintain the company as an animations company.
Pixar and Disney’s Relationships
There is currently strong mutual marketing relationship between the two companies. In 1991, Disney and Pixar signed the first feature film agreement. According to Alcacer, Collis, and Furrey ( 2010), the Disney was to reserve the distribution rights while Pixar was to be paid a participation fee based on the overall revenue. It was the first time that the two rivals in the entertainment industry were coming together and there is little doubt that the two could no longer work together. Jobs used this opportunity to learn about the industry and know how it operated. In 1997, Pixar and Disney signed another co-production agreement that saw Disney Inc. reserve the distribution right of the co-production. In 2004, Pixar decided to end its deals with Disney and started considering potential partners in the industry, including Sony, Warner Brothers, and Fox Company.
Pixar’s Internal Analysis
To understand the potential benefits of t...