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

Pixar Case Study
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Institutional Affiliation
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 the merger, it is important that one, looks at the internal analysis of the company first. The internal analysis looks at the company’s corporate culture and how it has operated in the past. The strength of Pixar Inc. lies in its corporate culture. Pixar operates on a bottom-up corporate culture, where the firm values ideas and contributions of its members and employees from the bottom to the top. Pixar’s culture operates on three principles. First, Pixar insists that employees and people within the firm have the freedom to communicate freely. This encourages creativity. The company insists that the company creates a viable and safe environment for everyone to offer ideas in the company. This encourages corporate relationship among people and creates room for innovation. The advantage of this is that everyone feels part of the firm and would do everything to increase the performance of firm in the market. The final principle is that the company has to stay close to the academic community. Pixar has attained this by introducing Pixar University where students learn creative techniques and are introduced to the creative ideas of the company. The advantage of this approach is that it creates a society that is ready to employ and support the culture of the firm. Another advantage of this strategy is that it provides the communal support for the company’s culture.

Pixar Inc. has developed one of the interesting techniques of dealing with and treating its staff. Employees are hired at will with no binding contracts. This creates a free environment for employees and makes sure that they stay happy and committed to their work. Another strategy that Pixar Inc. uses is that of perfectionism. This is where the company picks an idea, whether good or bad, and works on it until it generates viable results. Perfectionism is a strategy that the company has been using for a while and has helped it in staying relevant and competent in the market. According to Alcacer, Collis, and Furrey ( 2010), the company does not entertain “cheapquels” in its production lines. Creative employees with PhDs are employed by the firm and they are responsible for the success of the firm in the industry. Teamwork forms part of the company’s operational strategy. Employees are first asked whether they can work with others before their creative skills and abilities are evaluated. The company understands that sometimes people can be talented but very difficult to work with.
Available Alternatives
Pixar stands to choose from a number of alternatives if indeed it wants to succeed in the industry. On...