The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?
Soon after Robert Iger took over as CEO of the Walt Disney Company in late 2005, he turned his attention toward Pixar, the animation studio with which Disney had worked since 1991 and was responsible for producing hits such as Toy Story and Finding Nemo. Disney's own animated film business had been in decline since Jeffrey Katzenberg left to establish rival studio Dreamworks and the business relied on revenue from its partnership with Pixar to maintain performance. With the Co- Production Agreement between the two studios coming to a close in 2006, Pixar was looking to negotiate better terms with another distribution partner. Could Disney risk losing them?
Authors :: Juan Alcacer, David J. Collis, Mary Furey
Swot Analysis of "The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?" written by Juan Alcacer, David J. Collis, Mary Furey includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pixar Disney facing as an external strategic factors. Some of the topics covered in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? case study are - Strategic Management Strategies, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? casestudy better are - – talent flight as more people leaving formal jobs, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, increasing transportation and logistics costs,
challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pixar Disney, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pixar Disney operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? can be done for the following purposes –
1. Strategic planning using facts provided in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? case study
2. Improving business portfolio management of Pixar Disney
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pixar Disney
Strengths The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pixar Disney in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Pixar Disney in the sector have low bargaining power. The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pixar Disney to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Pixar Disney is one of the most innovative firm in sector. Manager in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Pixar Disney has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Pixar Disney are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Pixar Disney is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Pixar Disney is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Pixar Disney
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pixar Disney does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Pixar Disney is present in almost all the verticals within the industry. This has provided firm in The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Pixar Disney is one of the leading recruiters in the industry. Managers in the The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Pixar Disney is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Juan Alcacer, David J. Collis, Mary Furey can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Pixar Disney in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Pixar Disney has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? are -
Slow to strategic competitive environment developments
– As The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? HBR case study mentions - Pixar Disney takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Pixar Disney is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Pixar Disney needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pixar Disney to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?, is just above the industry average. Pixar Disney needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Pixar Disney supply chain. Even after few cautionary changes mentioned in the HBR case study - The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pixar Disney vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Juan Alcacer, David J. Collis, Mary Furey suggests that, Pixar Disney is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Pixar Disney has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? can leverage the sales team experience to cultivate customer relationships as Pixar Disney is planning to shift buying processes online.
Interest costs
– Compare to the competition, Pixar Disney has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
No frontier risks strategy
– After analyzing the HBR case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?, in the dynamic environment Pixar Disney has struggled to respond to the nimble upstart competition. Pixar Disney has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Pixar Disney 's lucrative customers.
Opportunities The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? are -
Buying journey improvements
– Pixar Disney can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Pixar Disney in the consumer business. Now Pixar Disney can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pixar Disney can use these opportunities to build new business models that can help the communities that Pixar Disney operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pixar Disney can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Pixar Disney has opened avenues for new revenue streams for the organization in the industry. This can help Pixar Disney to build a more holistic ecosystem as suggested in the The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? case study. Pixar Disney can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pixar Disney can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Pixar Disney can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Using analytics as competitive advantage
– Pixar Disney has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pixar Disney to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Pixar Disney has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Developing new processes and practices
– Pixar Disney can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pixar Disney to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Pixar Disney to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Pixar Disney can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Pixar Disney to increase its market reach. Pixar Disney will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Pixar Disney business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pixar Disney with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Pixar Disney demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Pixar Disney in the Strategy & Execution sector and impact the bottomline of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Pixar Disney will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Pixar Disney
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pixar Disney.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pixar Disney can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? .
High dependence on third party suppliers
– Pixar Disney high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Pixar Disney has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Pixar Disney needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Pixar Disney.
Stagnating economy with rate increase
– Pixar Disney can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pixar Disney in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pixar Disney can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Pixar Disney needs to make to build a sustainable competitive advantage.