Introduction This paper conducts a strategic analysis to examine if The Walt Disney Company should or should not acquire Pixar Inc. The first part highlights the core competencies of Pixar Inc and key strengths and weaknesses of Disney. By applying the Resource Pathway Framework and Transactions Cost Economics, the analysis thoroughly determines if Disney should ally with or acquire Pixar. Lastly, main risk factors of a potential acquisition and possible solutions to mitigate their impact are emphasised. The Core Competencies of Pixar Inc. Three important key factors make Pixar a powerhouse in the animated computer generated film industry. Firstly, Pixar owns ten years of proprietary technology and cutting edge software such as RenderMan, Marionette and Ringmaster. These are all considered state-of-the-art software, as they build on 3D and computer generated (CG) technology. This enables Pixar to produce more creative and more cost-efficient animations compared to its competitors. …show more content…
This free-flowing work culture which takes years to incorporate within a company leads to high retention rates among employees. Furthermore, a unique combination of employees with diverse technical, academic and arts backgrounds creates a thriving environment of industry innovation which makes Pixar as a whole extremely valuable and successful. Lastly, Pixar realises strong financial performances. The company has a very low debt to equity ratio, because it produces and develops its software’s in-house (based on exhibit 4). Furthermore, revenues and net income for the company have grown exponentially throughout the years, especially the surge of net income from -2.4 million in 1994 to 141.7 million in