2. Pixar McGraw-Hill/Irwin Strategic Management, 3/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

3. Pixar
What is Pixar’s strategy?

4. Pixar
Identify and critically assess Pixar’s resources.

5. Pixar What is Pixar’s basis of competitive advantage?
How does the company’s value chain help support this advantage?

6. Pixar 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?

7. 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

8. Q2. Resources Tangible Intangible
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

9. 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

10. 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

11. 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