Since Disney purchased all of Pixar’s stock shares, the corporate action initiated by Disney is acquisition. The corporate action of Disney’s acquisition of Pixar was launched in 2006 when Disney acquired Pixar for $7.4 billion (Calandro, 2019; Joo, 2020). From the perspective of Cost Leadership Strategies, Disney’s decision for the acquisition was motivated by reduced costs for product diversification and an increase of competitive advantage by integrated 3D animation into its products (DePamphilis, 2019; Junni et al., 2015). The VRIO analysis indicates that being in a vulnerable position of rising competition from Pixar’s side, Disney eliminated the competitor and acquired a profitable 3D animation studio for further development and a higher level of presence in the entertainment market (Fisher, 2020). The Resource-Based View (RBV) on the corporate action on acquisition demonstrates that since Disney could not achieve high revenues in producing animated characters, Pixar’s resources were valuable for the company (Wills, 2017).
In terms of the SWOT analysis, the acquisition’s strengths are in the expanded product range, higher profit, and increased market dominance of Disney (Debruge, 2016; Yang, 2019). The weaknesses of Disney before acquisition included the competitive disadvantage in generating animated characters and 3D animation in general (Douglas, 2019; Wills, 2017). The acquisition of a promising and highly competitive animation company that had resources, technological potential, and creative ideas was a valuable opportunity for Disney to maintain its dominance in the competitive entertainment business. The threats are related to risks imposed on synergy and possible additional competition in the entertainment business (Barbosa, 2020; Bohas, 2016).
The financial indicators of the Walt Disney Company demonstrate the changes in its financial health over the years after the acquisition. The observed increase in revenue as derived from the annual reports of the company shows that Disney’s financial situation has significantly improved since 2016. Indeed, the revenue generated before the acquisition varied around $40,000 million and increased to over $60,000 million in 2020 (“Disney financial statements,” 2020; “Walt Disney Co.,” 2020; The Walt Disney Company, 2020; “The Walt Disney Company reports,” 2020). Technological, operational, and human resource aspects played a beneficial role in Disney’s product diversification and strategic competitive improvement (Nakajima, 2016; Wasko, 2020). In conclusion, Disney’s corporate action allowed for acquiring Pixar was an important beneficial strategic step that allowed the company to obtain improved competitive advantage and a higher level of market presence and revenue.
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