STRATEGIC ALLIANCE

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INTRODUCTION

In 2006 many analyst of the Wall Street made some speculations that Pixar and Disney studios were going to merge. Disney which is a studio that specializes with motion pictures was in the process of acquiring Pixar which produces movies of hit animation such as the Incredible, Finding Nermo and Toy story among others. Disney aimed to protect its business in animation given that business on hand drawn animation was becoming outdated and therefore on the verge of coming to an end. The two companies signed an agreement where Disney was supposed to market and also distribute those movies that were being manufactured by the Pixar. This agreement was meant to hold until the end of 2006, however as the year came to the close Disney started to weigh  various options that were there such as extending the alliance, forming a  merger or alliance with the Pixar studio. After reaching an agreement with Steve Job who was the CEO of the Pixar studio, the Disney agreed to purchase Pixar at price that was approximated to be about $7.4 billion. Steve Job being the largest shareholder of Pixar studio (50.1%), also became the single shareholder who owned the largest number of shares in the Disney company. This is paper will focus on how the new alliance between Pixar studio and the Disney company will change the future plans and strategies of the company.  The paper will focus on how the marketing strategies as well as product planning of Disney will be affected by the influence of Steve Job and the new alliance (Chawla & Ray, 2006).

STRATEGIES AND VISION CHANGE

According to Hitt at el (2009), corporative alliance in many cases will benefit the two parties that are forming an alliance. Partnership will increase the capabilities of the two companies such as resources, networks, market among other advantage which will enable the partners to enjoy the economies of scale. The partners share their resources and capabilities that help them to increase their competitive advantage. First, the formation of alliance will help two partners to form network alliance which means that one party will connect the other party with its partners.  This will result in what is known as network alliance where the two parties link their markets to enlarge their customer base. For instance, the formation of alliance between Disney and Pixar will enable the two parties to combine their customer base thus reaching more customers with their product. Network alliance between the parties will help them to increase their competitive advantage in the market while at the same time benefiting from their main activities. The alliance between two studios will enable product innovations which will give the new formed company (Disney) an advantage in the market. Disney used to specialize in motion pictures while Pixar usually specialize in making of animated movies. This means the alliance between these two studios will enable the new company to manufacture movies that are animated using the specialty of motion pictures made by the old Disney Company. This will lead to creation of different variety of movies that will utilize the specialties of the two studios.

PRODUCT PLANNING

Disney who are entertainment giant combine their skills with the computer animation skills that were used by Pixar to make many features that are computer animated such as monster Inc, toy story among other entertaining features. This has enabled the new company to raise its profit higher above the profit it used to make as a single company. The new alliance will increase the market power of the new company. Armed with a large resource base the company will be able to make plans that will help it to have some market power. For instance, the company can increase its advertising budget to enable it have more customers through strategic advertising.  The new company will be able to carry out large capital projects using the resources of the new alliance. This will give the company an upper hand when it comes to competition. As Wang et al (2011) argues many companies prefer to form an alliance in order to enable them withstand high competition in the market. The increased competition in the market is forcing many companies to look for ways to survive under the market pressure. When Disney and Pixar form an alliance, the new company will be in a better position to compete with other similar companies in the market. This will enable the new company to raise it sales and thus the profit.

MARKETING STRATEGY

The company will also be in a position to pool it resources together in order to have a competitive advantage in the market.  This will include human capital such as experienced personnel from the other studio. For instance, Mr. Steve Job who has a lot experience in corporate business as well as a good reputation will help to increase the sales of the new company. Steve job has been the CEO of the Pixar Company for many years which have given him a lot of experience in business. These skills and business techniques will be pulled together with the skills of the other managers to help increase the profitability of the new company. This pool of experience will be applied when the directors are making strategic plan in order to raise the profitability of the company.  The new company will benefit from new business techniques that were applied in each of the former company. The formation of strong management team will change the way things are done in Disney Company. The bargaining power of the new company will increase and therefore manage to get better deals from their business engagement. As Young et al (2011) argues one of the reason why companies are forming alliance is to enable them improve their political influence and obtain protection from any form of exhortation.

CONCLUSION

The formation of a strategic alliance between Disney Company and the Pixar studio changed the future vision and operations of the new company in many ways. The new alliance has enabled Disney Company to increase their competitive advantage in the market through expansion of its market. Product planning of the company has also changed in the new company since the alliance between the studios has led to product innovation. New products were manufactured using the combined skills and specialty of the two former studios. Marketing strategies have also changed since the capabilities of new company have increased enabling the new company to take large capital projects. New management skills from Steve Job have also given the new company a good reputation in the market. These have increased the sales and thus profitability of the Disney Company.

 

 

 

 

 

 

 

 

REFERENCES

Chawla, T. & Ray ,K.S.(2006), Disney & Pixar: On the Road to Merge. Entertainment journal. Retrieved on 1st march, 2011.

http://www.ibscdc.org/Case_Studies/Strategy/Mergers,%20Acquisitions%20and%20Takeovers/MAA0090K.htm

Hitt, M.A.,  Ireland, R.D&  Hoskisson, R.E (2009),Strategic management: competitiveness and globalization : concepts & cases. Eighth edition, Mason, Cengage Learning Inc. USA.

Wang, K., Lin, Y.& Yu, J. (2011),Optimizing inventory policy for products with time-sensitive deteriorating rates in a multi-echelon supply chain. International Journal of Production Economics. Vol. 130, Iss. 1;( 66 )

Young, M.N., Ahlstrom, G.& Rubanik, Y. (2011).What do firms from transition economies want from their strategic alliance partners?
Business Horizons. Vol. 54, Iss. 2;(163)

 

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