Premium Essay

Disney Harvad Business Case

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Submitted By chrizracer
Words 804
Pages 4
Since 1986 Disney and Pixar collaborated several years on different animation movie projects. The first feature film agreement in 1991 was in total favour for Disney. They agreed to produce three full-length 3D CG animation movies. Disney assumed the expenses of production and owned the movie rights, whereas Pixar received a participation fee of the revenue. At this time Pixar was glad to participate in a partnership and called it going to Disney University. In 1997 the co-production agreement was a more mutual business partnership. Disney bought 5% of Pixar and thus tied Pixar to a 10-year business deal. Steve Jobs, CEO of Pixar, was eager to negotiate new conditions for Pixar in order to receive more favourable economic terms for Pixar. This led to conflicting goal positions of the two companies, which caused a breakdown of the partnership. Pixar had two options: compromising on the business conditions with Disney in order to keep the collaboration or trying to find another suitable business partner. On the contrary, Disney thought about acquiring the company Pixar.
Disney´s main strategy was to get into the animations business with the new CG technology. Therefore, the main reasons for an acquisition were the valuable assets of the innovative technology of Pixar. The unique selling point of Pixar, the own 3D computer-generated animation technology, positioned the company ahead of the competitors on the market. Furthermore, the three technologies RenderMan, Marionette and Ringmaster were the keys to Pixar´s success in the movie industry. Shown on the exhibit 1 of the case study, Pixar could gain more profit with only six movies, compared to Disney and the other competitors on the market. In comparison to Disney, Pixar´s average profit in 2005 was $242,9 in the U.S. market and $294,9 in the international market and hence much higher than

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