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Key Topics
Briefly describe the company in the case analysis. What is their primary business, who were
the officers or key players described in the case study? If the case study company is
currently in business, list the company’s current CEO, total sales, and profit or loss for the
last year where data is available. Identify key events or phases in the company’s history.
Describe the performance of this company in the industry. Visit the company’s website and
use http://finance.yahoo.com and/or some other financial search engine to find this data.
the officers or key players described in the case study? If the case study company is
currently in business, list the company’s current CEO, total sales, and profit or loss for the
last year where data is available. Identify key events or phases in the company’s history.
Describe the performance of this company in the industry. Visit the company’s website and
use http://finance.yahoo.com and/or some other financial search engine to find this data.
NOTE: Make sure to use APA citations throughout the paper. The textbook should be
cited if it is the source of information. If you are not familiar with APA citation, check
out the tutorial APA Guidelines for Citing Sources at the end of the course
Syllabus.
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
Analyze the competitive environment by listing the threat of new entrants, the bargaining
power of buyers, the bargaining power of suppliers, the threat of substitute products and
services, and the intensity of rivalry among competitors in the industry
Summarize your key points in a figure.
STRATEGY USED
How does this company create and sustain a competitive advantage? What strategy from
the readings was undertaken by this company? Were they successful? Can all companies
use this strategy? How is the strategy affected by the life cycle in the industry? Remember
to reference Porter’s generic strategies identified in the textbook
cited if it is the source of information. If you are not familiar with APA citation, check
out the tutorial APA Guidelines for Citing Sources at the end of the course
Syllabus.
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
Analyze the competitive environment by listing the threat of new entrants, the bargaining
power of buyers, the bargaining power of suppliers, the threat of substitute products and
services, and the intensity of rivalry among competitors in the industry
Summarize your key points in a figure.
STRATEGY USED
How does this company create and sustain a competitive advantage? What strategy from
the readings was undertaken by this company? Were they successful? Can all companies
use this strategy? How is the strategy affected by the life cycle in the industry? Remember
to reference Porter’s generic strategies identified in the textbook
Case Study Analysis - Pixar
Introduction
In the present business environment of cut throat competition and ever rising demands of consumers, it becomes pertinent for every organization, irrespective of its size and market dominance to look for means to sustain its competitive advantage (Barker, Valos, & Shimp, 2012). In this paper we would highlight the case of Pixar Animation Studios, a subsidiary of The Walt Disney Company and a leading name in the industry of computer animation motion pictures. Pixar is headquartered at Emeryville, California and its website is www.pixar.com.
Background & History
The idea of Pixar was founded in the year 1975 by Edwin E. Catmull but was then known as The New York Institute of Technology (Pixar, 2018). Steve Jobs bought Catmull’s unit for $ 10 million and named it Pixar. The same year, delved out its first animation film Luxo Junior which received a prompt Oscar nomination. In 1991, Disney enters a three film contract with Pixar with the former investing $ 26 million. 2006 witnesses Disney acquiring Pixar after the latter delivered a string of box office hits. In 20 (Pixar, 2018)11, after Jobs death, Catmull again gains charge of Pixar and presently serves as the President. John Lasseter, another genius in the industry of animation film making is presently the CCO of Pixar.
Financial statements of Pixar are not directly available, and regretfully could not be shown in this paper. However, its parent company Walt Disney Company earned hefty $ 8980,000 thousands as its net income in 2017 (Finance Yahoo, 2018).
Financial statements of Pixar are not directly available, and regretfully could not be shown in this paper. However, its parent company Walt Disney Company earned hefty $ 8980,000 thousands as its net income in 2017 (Finance Yahoo, 2018).
Analysis
Porter’s Five Forces Model
The 19 feature film rich Pixar Animation Studios, has been hugely successful due to its immense creativity, unique content and complementary technology to create the most premium cinematic viewing experience for the audience. However, having said that, though Pixar appears to be market dominating giant, it would be prudent to conduct a Porter’s Five Forces Analysis on it to understand its present position in the market in terms of the forces.
• Bargaining Power of Suppliers – Though Pixar depends strongly on technology, it has its unique resource of engineering and creative staff that are responsible for creating everything from scratch. Pixar does not even allow scripts originating from outside. This total dependence on its in house resources makes the bargaining power of suppliers considerably low for Pixar (Keller, Parameswaran, & Jacob, 2011).
• Bargaining Power of Customers – This force is also low to moderate, as Pixar has a huge fan following and this loyal customer base helps to generate its high revenues. Such loyal fan base is quite unheard of and this lowers the power of this force as well.
• Threat of New Entrants – This threat is moderate, as the entry barrier to animation industry is quite high due to the heavy investments in technology and talent. What Pixar has achieved over the years, and together with Disney, it is quite difficult for any new entrant to enter this field. But the chances cannot be completely neglected, hence, the power of this force is moderate to low.
• Threat of Substitutes – Pixar is hugely successful due to its uniqueness in terms of technology and quality. Its concepts, quality of animation, technological tools etc cannot be replicated by any other means (Chan-Olmsted & Kang, 2003). Hence, threat of new substitutes is also low in case of Pixar.
• Industry Rivalry – This is high as Pixar faces direct competition from Dream Works and Warner Brothers. However, with Disney acquiring most of the important animation brands, the position of Pixar is only strengthened (Fiascone & Christensen, 2014).
Overall, it can safely be assumed that Pixar’s position in the industry is quite strong and dominant.
• Bargaining Power of Suppliers – Though Pixar depends strongly on technology, it has its unique resource of engineering and creative staff that are responsible for creating everything from scratch. Pixar does not even allow scripts originating from outside. This total dependence on its in house resources makes the bargaining power of suppliers considerably low for Pixar (Keller, Parameswaran, & Jacob, 2011).
• Bargaining Power of Customers – This force is also low to moderate, as Pixar has a huge fan following and this loyal customer base helps to generate its high revenues. Such loyal fan base is quite unheard of and this lowers the power of this force as well.
• Threat of New Entrants – This threat is moderate, as the entry barrier to animation industry is quite high due to the heavy investments in technology and talent. What Pixar has achieved over the years, and together with Disney, it is quite difficult for any new entrant to enter this field. But the chances cannot be completely neglected, hence, the power of this force is moderate to low.
• Threat of Substitutes – Pixar is hugely successful due to its uniqueness in terms of technology and quality. Its concepts, quality of animation, technological tools etc cannot be replicated by any other means (Chan-Olmsted & Kang, 2003). Hence, threat of new substitutes is also low in case of Pixar.
• Industry Rivalry – This is high as Pixar faces direct competition from Dream Works and Warner Brothers. However, with Disney acquiring most of the important animation brands, the position of Pixar is only strengthened (Fiascone & Christensen, 2014).
Overall, it can safely be assumed that Pixar’s position in the industry is quite strong and dominant.
Strategy Used by Pixar
It becomes the imperative for every firm in every business to attain and sustain its competitive advantage (Kotler & Keller, 2011). However, there are two main competitive advantage which a firm can acquire – the cost advantage and the differentiation advantage; these two types of advantages, when combined with the very scope of activities, leads to the development of three generic strategies as coined by Michael E Porter (Keller, 2009). These are – cost leadership, differentiation and focus.
Pixar’s success can be attributed to its excellent use of technology and its groundbreaking imagination and innovation. Pixar’s competitive advantage critically lies in its successful merge of imagination with technology guided by Lasseter. Passionate leadership is something Pixar had since the very inception of its idea (Aaker, 2010). First Catmull, who was a visionary, then Jobs who was almost a magician and then Lasseter whose passion for creating unique and unheard of products drives Pixar to its profitability. Differentiation is the key strategy used by Pixar and its management to stand out from the crowd. In a typical differentiation generic strategy, a firm aims to be unique amongst its peers along certain aspects which are valued by its target customers. For Pixar these are – flawless story telling; content to suit all ages; unique concepts; development of in house premium technology all are instrumental in bringing the competitive advantage of Pixar.
Transformational leadership, great passion amongst the management has led Pixar in being successful. It is the dedication and the passion of the Pixar leaders which has helped the company achieve an unique place in the industry. This differentiation strategy utilized by Pixar is very difficult to imitate and hence, cannot be recreated by potential competitors or existing ones. Pixar places immense importance on its human resources and the latter has helped Pixar create and sustain its competitive advantage (Gerdeman, 2012). As with every movie Pixar breaks its own boundaries and achieves beyond the box, it can safely be said that, even with the lifecycle of the industry tending towards maturity, Pixar will continue its streak of success in the future as well. Coco, can be seen as the most recent example, which broke all records and grossed $ 680.6 million in the box office in 2017 (Box Office Mojo, 2018).
Pixar’s success can be attributed to its excellent use of technology and its groundbreaking imagination and innovation. Pixar’s competitive advantage critically lies in its successful merge of imagination with technology guided by Lasseter. Passionate leadership is something Pixar had since the very inception of its idea (Aaker, 2010). First Catmull, who was a visionary, then Jobs who was almost a magician and then Lasseter whose passion for creating unique and unheard of products drives Pixar to its profitability. Differentiation is the key strategy used by Pixar and its management to stand out from the crowd. In a typical differentiation generic strategy, a firm aims to be unique amongst its peers along certain aspects which are valued by its target customers. For Pixar these are – flawless story telling; content to suit all ages; unique concepts; development of in house premium technology all are instrumental in bringing the competitive advantage of Pixar.
Transformational leadership, great passion amongst the management has led Pixar in being successful. It is the dedication and the passion of the Pixar leaders which has helped the company achieve an unique place in the industry. This differentiation strategy utilized by Pixar is very difficult to imitate and hence, cannot be recreated by potential competitors or existing ones. Pixar places immense importance on its human resources and the latter has helped Pixar create and sustain its competitive advantage (Gerdeman, 2012). As with every movie Pixar breaks its own boundaries and achieves beyond the box, it can safely be said that, even with the lifecycle of the industry tending towards maturity, Pixar will continue its streak of success in the future as well. Coco, can be seen as the most recent example, which broke all records and grossed $ 680.6 million in the box office in 2017 (Box Office Mojo, 2018).
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Place Your OrderStrategies to be Used
The two strategies chosen for Pixar are – Achieving competitive advantage and creating an ambidextrous organization design for its operations.
Achieving Competitive Advantage
Pixar has already achieved and sustained its competitive advantage till now. Its advantage lies on its exemplary leadership, unique ideas, technological breakthroughs, premium quality animation, flawless concepts etc. However, what has been achieved and is guarded presently might not be sufficient in the future. Though Pixar has delved out a series of hits in the past, the volume of film production has been very low. It is understandable that to ascertain high quality the quantity has been overlooked. This gap in quantity and quality has to be lessened by Pixar itself. Pixar should focus on improving its animation efforts in order to sustain its competitive advantage. Pixar had achieved its competitive advantage due to technological advancements and onboarding of the right talent for its culture. These two regions require intense focus in future to be able to churn out hits at a higher rate. If more and right talent is absorbed then Pixar can aim at making higher numbers of quality movies and not compromise on its unique quality.
Creation of Ambidextrous Organization Designs
Pixar has already established itself as an iconic animation movie maker. It can owe its success on its constant innovation and high technological advancements by its talented workforce. But in order to sustain its competitive advantage and maintain its profit streak, it needs to bring about certain changes. Ambidextrous organization designs is one such strategy that helps firms create unique specific units that have their very own processes, cultures and structures aimed at supporting different stages of early innovations (O'Reilly III & Tushman, 2004). These small units, consisting of small innovating teams, reside at peace within the main organization but have been set up to support different activities, different approaches, and different behaviors required for the new business. The leadership of Lasseter can use this organization model to create different business units for the exploring and the development of breakthrough innovative strategies while at the same time keeping the overall business unit whole (O'Reilly III & Tushman, 2004). These units can work on different technological aspects and then bring together the whole aspect together during the launch of any new concept or movie idea. Though Pixar already has a flexible work model in place, this organizational design can only help in strengthening its core areas while taking care of regions that need focus and attention.
Recommendation
It is of critical importance that the management and the staff of Pixar have synergistic goals towards attaining and sustaining their competitive advantage. It is also of critical importance for the brand to continue delivering unique results. Focus on creativity and innovation must not be lost, and these are the aspects that act as pillars for Pixar’s path-breaking profitability. Similarly, focus should also be provided on technology without which these stories would be incomplete and the movies would fail to attain the status of cult phenomenon (Paik, 2007). Lastly, strategies, like sustaining competitive advantage and adhering to an ambidextrous organization designs, can be undertaken to bring about positive changes in the future.
Conclusion
Pixar is a bright example of a company which can achieve an iconic status due to its exemplary leadership and competitive advantage. At the same time, it is a cult case study for great management strategy. Leadership of Jobs, Catmull and Lasseter and their combined passion has guided Pixar to its present goals and serves as an inspiration for other companies (Haley & Sidky, 2009). However, it is Pixar’s own premium standards of quality which differentiates it from its peers. Its commitment for delivering unique quality has helped it achieve a dominant position in the industry of animation movies.
References
Aaker, D. (2010). Brand relevance: Making Competitors Irrelevant. US: John Wiley & Sons.
Barker, N., Valos, M., & Shimp, A. (2012). Integrated Marketing Communications. US: Cengage Learning.
Box Office Mojo. (2018). Coco. Retrieved January 29, 2018, from http://www.boxofficemojo.com/movies/?id=pixar1117.htm: http://www.boxofficemojo.com/movies/?id=pixar1117.htm
Chan-Olmsted, S., & Kang, J. (2003). Theorizing the strategic architecture of a broadband television industry. The Journal of Media Exonomics , 16 (1), 3-21.
Fiascone, R., & Christensen, M. (2014). Disney & Pixar - Building a Magic Kingdom of Animation. US: John Wiley & Sons.
Finance Yahoo. (2018). The Walt Disney Company. Retrieved January 29, 2018, from Finance Yahoo: https://finance.yahoo.com/quote/DIS/financials?p=DIS
Gerdeman, D. (2012). Location, Location, Location - The Strategy of Place. US: Harvard Business School Working Knowledge.
Haley, J., & Sidky, M. (2009). Making Disney Pixar Into A Learning Organization. US: Annual American Business Research Conference .
Keller, K., Parameswaran, M., & Jacob, I. (2011). Strategic brand management : Building, measuring and managing brand equity. Delhi: PEarson Education India.
Keller, L. (2009). Building strong brands in a modern marketing communications environment. Taylor Francis Online , 139-155.
Kotler, P., & Keller, K. (2011). Marketing Management. US: Prentice-Hall.
O'Reilly III, A., & Tushman, L. (2004). The Ambidextrous Organization. US: Harvard Business Review.
Paik, K. (2007). To Infinity and Beyond - The Story of Pixar Animation Studios. US: Chronicle Books.
Pixar. (2018). Our Story. Retrieved January 29, 2018, from Pixar: https://www.pixar.com/our-story-1#our-story
Barker, N., Valos, M., & Shimp, A. (2012). Integrated Marketing Communications. US: Cengage Learning.
Box Office Mojo. (2018). Coco. Retrieved January 29, 2018, from http://www.boxofficemojo.com/movies/?id=pixar1117.htm: http://www.boxofficemojo.com/movies/?id=pixar1117.htm
Chan-Olmsted, S., & Kang, J. (2003). Theorizing the strategic architecture of a broadband television industry. The Journal of Media Exonomics , 16 (1), 3-21.
Fiascone, R., & Christensen, M. (2014). Disney & Pixar - Building a Magic Kingdom of Animation. US: John Wiley & Sons.
Finance Yahoo. (2018). The Walt Disney Company. Retrieved January 29, 2018, from Finance Yahoo: https://finance.yahoo.com/quote/DIS/financials?p=DIS
Gerdeman, D. (2012). Location, Location, Location - The Strategy of Place. US: Harvard Business School Working Knowledge.
Haley, J., & Sidky, M. (2009). Making Disney Pixar Into A Learning Organization. US: Annual American Business Research Conference .
Keller, K., Parameswaran, M., & Jacob, I. (2011). Strategic brand management : Building, measuring and managing brand equity. Delhi: PEarson Education India.
Keller, L. (2009). Building strong brands in a modern marketing communications environment. Taylor Francis Online , 139-155.
Kotler, P., & Keller, K. (2011). Marketing Management. US: Prentice-Hall.
O'Reilly III, A., & Tushman, L. (2004). The Ambidextrous Organization. US: Harvard Business Review.
Paik, K. (2007). To Infinity and Beyond - The Story of Pixar Animation Studios. US: Chronicle Books.
Pixar. (2018). Our Story. Retrieved January 29, 2018, from Pixar: https://www.pixar.com/our-story-1#our-story
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