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Pixar

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Pixar

1. What is Pixar’s strategy?

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Pixar

2. Identify and critically assess Pixar’s resources.

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Pixar

3. What is Pixar’s basis of competitive advantage?

How does the company’s value chain help support this advantage?

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Pixar

4. Can Pixar increase its output without sacrificing quality?

How can the firm maintain its strong creative edge?

Does Pixar still need to depend on Disney for the success of its films?

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Q1. Pixar’s Strategy

Focus exclusively on films that utilize computer animation

Committed to being great storytellers using computer animation as a tool

Depend on Disney for distribution and marketing

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Q2. Resources

Tangible Financial - strong cash flow, no marketing/distribution expenses Technological – computer animation processes, rights to

characters Organizational – strong culture with emphasis on teamwork and

creativity; visionary leadership from Jobs, Catmull, and Lasseter

Intangible Human – experience/capability of employees in computer

animation Innovation – innovative capabilities in computer animation and

script development Reputation – brand name recognition for quality family films;

Disney relationship

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Q3: Pixar’s Value Chain

Value Chain Activity

Primary:

Inbound logistics

Operations Attention to detail; software to make animation more lifelike; deliberate process of moviemaking with strong emphasis on story development (e.g., reworking “A Bug’s Life”)

Outbound logistics

Marketing and sales Reliance on Disney brand name to attract family audiences; Pixar brand name also strong; dependence on Disney for downstream activities reduces need for cash outlays

Service

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Q3: Pixar’s Value Chain (contd.)

Value Chain Activity

Secondary:

Procurement

Technology development

Creation of new software to help in production process; Luxo enables creation of movies with fewer people

Human resource management

Recruitment/training of individuals that can make strong contribution; Pixar University for training; masseuse/doctor on campus every week; 50 hour/week limit

General administration

Strong visionary leadership; culture emphasizes creativity; sound financial position – over $500 million cash and no debt

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Q4. Key Issues

Movie production pace 18 months lead time, risky in a hit-or-miss industry Doubling employee size (to 750) helps as also

software such as Luxo; also hiring freelance directors Breakup of partnership with Disney

Unequal partnership (Disney 57% vs. Pixar 43% after fee)

Disney’s refusal of a distribution-fee only agreement Financial position

Sound -- $500 cash plus no debt No flops in history Risky because of lead time and hit-or-miss type

industry