Disney And Pixar The case solution
Integrating Organizational and Human Behavior Perspectives on Mergers and Acquisitions
The merger and acquisition is not only about two companies that sign an agreement and then start working in collaboration. In contrast,merger and acquisition brings changes into both the companies’ cultures and environments. So these changes are very necessary, because they affect the employees’ behaviors. So, it is important for the companies to integrate the organizational culture and also to consider the employees’ response to the merger and acquisition. For Disney, the negotiations was very critical because it was a risky option for Disney to re-develop the integration again with another firm.
As it is stated in the case that it takes ten years to merge two different cultures, now therenewal of the contract needs to be successful because merging two different cultures require time and efforts. Pixar had the culture of considering the script first, rest the creativity was in their culture. Pixar believed that if you have a good team then you can turn a poor idea into a huge success generating idea. Pixar’s culture involved free communication with others, and at all levels. And good ideas are always welcomed. Disney still had two options, which were either to buy and fully acquire Pixar or to get another long-term contact. Employees are the vital source of forming a culture, and merging two cultures affect the behaviors of these employees. Resisting change is human behavior and merging two cultures is not an easy task. People as well as managers have to work collectively to make employees adjust to the new culture. The culture clash has the tendency to cause failure to the merger or the acquisition. Culture clash in an organization create stress among the employees,it increases the turnover in the organization and reduces the performance of the companies refer appendix. As we know that if Disney does not renew the contract or acquire Pixar then it would create troubles for Disney. And Disney would be left with no other option but to deal with another company which would have more cultural clashes as compared to Pixar.
Acquiring Pixar and transaction theory
The transaction cost theory refers to the costs that provide some goods or services through the market, by carrying out the transactions that the company wants to deal with. These transactions incur some costs, such as: the search and information cost, bargaining and decision costs, and policing and reinforcement costs. These transaction costs will only arrive when the company opts to sign a new contract or renew it due to the upgrading of technologies. These transaction costs and their market prices maintain the relationships between the firms and their decisions to maximize the profits for the company. As it is known that the contracts have limitations towards decisions, power, etc., but when Disney acquired Pixar then it might not be obliged to follow any restrictions and limitations to make any changes in the business environment to maximize the profits. The acquisition of Pixar will save the search and information cost, bargaining and decision costs, and policing and reinforcement cost incurs if Disney chooses to make long term contract. There is one negative point in long term contracts, which is that in case of any damage or improvement in the existing technology (such as CG); it will not be an easy step to adopt the change..............................
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