Disney and Pixar - A Good Combination?

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Disney should acquire Pixar, aiming to benefit from strategic advantages and the value that the latter could add to the brand. First, the timing for such a serious step was perfect, as Disney's animation films were experiencing low demand rates. The decision-makers expected to benefit their business by raising the entry barriers while experiencing decreased competition and increased market share owned by the company. Regarding the potential value that Pixar could add, the deal is quite advantageous as it offers new opportunities in various segments. For instance, the human resources capital can be used by both companies, creating original products that distinguish them from their direct competitors on the market (Aylott, 2014). Moreover, Pixar employees get an opportunity to hold several trainings for their Disney colleagues to improve their expertise and introduce them to specific techniques used by the company (Alcacer, Collis & Furey, 2010). Joint efforts will later provide the organizational opportunities to launch more than one movie per year. The merger option is better regarding the possible revenue as it increases the price per share.

Nevertheless, Disney and Pixar managers could create another form of the alliance. For instance, the companies might focus on acquiring highly professional human capital and technology assets, development of 3D, and implementation of innovative technological tools. The disadvantages of the strategic alliance with Pixar might include the distribution channel factors, complications in building new business ties, and an obligation to confirm them with the partner. In other words, as opposed to merging, the strategic alliance ties both companies together and leaves them little space for external maneuvers (Barney & Hesterly, 2014). On the contrary, Merging provides Disney with all the instruments of influence on Pixar and a possibility to make all the decisions disregarding a partnership agreement. A strategic alliance between these companies might result in feature film agreements or co-production contracts, which might be less limiting in terms of business freedoms and grant less responsibility over the content produced by Pixar. M&A, however, eliminates the competition and provides access to the technologies and human capital while revitalizing the animation department of Disney (Barney & Hesterly, 2014). The risks or threats associated with the acquisition mostly refer to the finances, as the buying company lacks cash, thus managers apply some innovative financial instruments to make the deal.

The culture of Disney and Pixar might also be considered risky factors since merging frequently results in failure, as a dominating company starts to cultivate its corporate culture within a newly acquired enterprise. Disney has long been known for a high level of bureaucracy and prolonged decision-making. Unfortunately, profitability seems to run the company's culture. On the other hand, Pixar is more individual-oriented and adheres less to strict schedules (Alcacer, Collis, & Furey, 2010). Its culture is grounded on three cornerstones: freedom to communicate, strong involvement of the scientific community, and the application of innovations as well as safety to offer the ideas without a fear of being criticized or misunderstood. A better option is to leave the corporate culture at Pixar unchanged since, otherwise, many employees might leave the company, decreasing its ability to design creative content.

In conclusion, due to a number of benefits and Pixar’s potential to increase Disney’s value, the decision to acquire is the best option. Nevertheless, it is beneficial for Disney to leave Pixar’s original culture.

References

Alcacer, J., Collis, D., & Furey, M. (2010). The Walt Disney Company and Pixar Inc.: To acquire or not to acquire? Harvard Business Review.

Aylott, E. (2014). Employee relations (HR fundamentals). New York, NY: Kogan Page.

Barney, J. B., & Hesterly, W. S. (2014). Strategic management and competitive advantage. New York, NY: Pearson.