Executive Summary
This report focuses on the strategic management that Pixar, as a leading animated film company, needs to follow. It will investigate the issues that led to the decline of the company in the film industry and the factors that caused this decline. Furthermore, it will investigate possible solutions that can help Pixar regain its name in the movie industry. It will also compare its business statistics in the past with the current number of movies and the revenues it collects per year from these movies.
The research was conducted on the problems in Pixar’s strategic management and how they decreased the company’s yearly revenue, revealing that the financial stability of the company depends on the level of creativity and amount of new technology in its movies. The company, which previously had a strong motive to ensure quality in its movies, ignored the importance of quantity in generating profits and suffered because of its rigidity. The research describes how Pixar can formulate its strategy by increasing creativity while maintaining storyline and interest factors in its movies and introducing new technologies like 3D and CGI to sustain viewers’ interest. The case study describes Pixar’s initiative toward the introduction of new computer animations in its movies and how the company tried to increase creative components by using special software and computer systems, an initiative taken by Steve Jobs. It also describes how Pixar faced a lot of competition and took necessary measures to deal with competition while ensuring quality (O’Neill, Beauvais, & Scholl, 2016).
Possible solutions for the problems Pixar is facing are provided in this report with the support of a SWOT analysis, and recommendations are given that suggest an increase in creativity and productivity as well as new technologies in upcoming movies by Pixar.
Pixar’s Downfall
The Pixar case study written by Jamal Shamsie and Alan B. Eisner describes the progress of Pixar Animation Studios and the problems the company faced in achieving its goals. The company faced two major problems at the start; the first and biggest problem was the need for strategy formulation, and the second was a lack of human capital. In its initial days, the company faced many problems due to its lack of strategic planning. The company faced mismanagement and setbacks because of a lack of good leadership. Due to this lack of leadership, the company delayed the production of its movies, and the company’s name in the movie industry was affected. In the first 10 years after the company’s formation in 1975, the company did not have an idea of what strategy to adopt to make its place in the movie industry, which had no full-length animated movies at that time. Another problem that the company faced was the market situation. Many competitors entered the industry, and Pixar’s value decreased as it did not improve its methods and pace in the growing industry. The lack of a market strategy adversely affected its progress and decreased its market value. In this assignment, we will perform an analysis of the problems and provide strategies to possibly solve them. We will discuss the implementation of the strategies and provide recommendations for the case (O’Neill, Beauvais, & Scholl, 2016).
Analysis of the Issues
The problems faced by Pixar included its decrease in market value, which was due to its lack of a formulated strategy for the future and a lack of good leadership. The downfall was visible in the decrease in revenue. John Lasseter was more focused on quality rather than quantity, and in his opinion, the time taken to produce a good movie was worth the wait and risk rather than producing a movie that was poor in quality and disliked by viewers. This problem became the cause of the initial delay in the release of “The Good Dinosaur.” When Steve Jobs bought the company, he formulated new strategies for the future, but his death caused another setback for the company as Jobs was the main thinker and planner of the whole company (O’Neill, Beauvais, & Scholl, 2016).
Strategic Planning for Pixar
To provide solutions to the strategic management problem, we present methods that Pixar can use to regain its place in the movie industry. We take help from the marketing communication and distribution strategy by Bacile, Ye, and Swilley. This marketing strategy allows companies to perform market research and develop their communication with the target market, ensuring that this target market is satisfied with the product. This type of communication attempts to persuade the target market by judging its interest in the product and how it wants the product to be. For this purpose, Pixar has to understand the interests of the target market for its movies and determine which new technologies are liked by viewers. To improve the quality of its movies, product research is essential, as many other companies have entered the field. Pixar has to develop its product strategy after the downfall of the company because of the absence of good leaders (Artinger et al., 2015; O’Neill, Beauvais, & Scholl, 2016).
Solutions
Our proposed solution for the downfall of Pixar includes improved market research and improvement of product quality as well as possible advancements in the industry. The first solution to the problem is an improvement in quality. John Lasseter’s view of the best quality was undoubtedly in favor of the company, but it decreased the revenue obtained by the company. The solution to this decreased revenue is that the company has to understand the needs of its target market and pick up the pace to produce more movies. Pixar’s competitors, Viacom and NBC Universal, are producing more movies per year, whereas Pixar focuses on quality with too little concern about quantity. The second-best solution can be to modify the product, which can make Pixar stand out from the competition (Artinger et al., 2015).
SWOT Analysis
Given below is the SWOT analysis for Pixar.
| Strengths | Weaknesses |
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| Opportunities | Threats |
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We can see that the low number of movies produced per year is one of the factors negatively affecting Pixar and resulting in a decrease in revenue. Pixar needs a constant increase in creative material and new technologies in its movies, as creative material keeps viewers interested in movies and encourages them to watch other movies when their previous experience is good. While making more movies per year, Pixar can keep the interest of its market linked to its movies and can generate more revenue from the increased number of movies. The second solution, improving technology in movies, is clearly needed at this time. Competitors are using new technologies like 3D and CGI in animated movies to provide a more realistic experience of animated movies (Artinger et al., 2015; O’Neill, Beauvais, & Scholl, 2016).
How Pixar Can Achieve Its Lost Legacy
The implementation of these solutions requires improvement in Pixar’s creative program. Pixar already has a team of creative designers of stories, visualizations, and art, but the problem that needs a solution is the continuous improvement of creativity. We can see that the number of movies Pixar produces per year has decreased to two from an initial ten. Pixar can find new professionals and creative people to brainstorm and produce new ideas for stories in less time, as well as a team of professional artists and simulation designers who can shape the script, story, and digital art into the best movie with greater efficiency (O’Neill, Beauvais, & Scholl, 2016).
Introducing new technology in movies can be a hectic and risky step in terms of Pixar’s economic structure, but we have seen that new technologies like 3D and CGI are liked by viewers, and people want more movies with improved picture quality that provide a realistic experience.
Increasing the number of movies per year with improved and new technology will provide the following benefits to Pixar:
- Increased viewer interest in Pixar movies.
- More movies will generate more revenue per year.
- New technologies will ensure a positive viewer response.
- Creativity and new ideas will increase the popularity of the company.
Conclusion
In short, Pixar’s need to regain the name it had several years ago requires improvement in its creative program. Pixar, which was once the number one animated arts company, reduced the number of movies it produced every year and decreased its revenues because of its lack of strategies for the future and rigidity in ensuring quality. With the introduction of new technologies and new competitors in the animation industry, the need to formulate new strategies for Pixar has become inevitable. Therefore, to regain its position in the industry, the company has to show flexibility toward change and learn from its mistakes if it wants to ensure the survival of the company among gigantic competitors (Artinger et al., 2015; O’Neill, Beauvais, & Scholl, 2016).
Lack of Human Capital, Strategy, and Market Share
(Decrease in film sales and loss of market due to this)
Market Share
(Lost market share)
Strategy Formulation
(Pixar had no strategy to take forward)
Managerial Skills
(Company lacked management and skills needed)
Reasons
How did this happen?
Death of Steve Jobs
Lack of proper aim
Hard competition
Management roles undefined
No senior management
Lack of management skills
Solution?
No quality films are produced.
The company lacked employees for management roles.
Solution?
The company needs to introduce new technologies to stand out from the competition.
Solution?
The number of movies per year should be increased.
Income started to decrease with time.
The company needs to hire creative staff who can work with speed and efficiency.
References
Artinger, F., Petersen, M., Gigerenzer, G., & Weibler, J. (2015). Heuristics as adaptive decision strategies in management. Journal of Organizational Behavior, 36(S1).
O’Neill, J. W., Beauvais, L. L., & Scholl, R. W. (2016). The use of organizational culture and structure to guide strategic behavior: An information processing perspective. Journal of Behavioral and Applied Management, 2(2).
Pradhan, R. P., Arvin, M. B., Hall, J. H., & Bahmani, S. (2014). Causal nexus between economic growth, banking sector development, stock market development, and other macroeconomic variables: The case of ASEAN countries. Review of Financial Economics, 23(4), 155-173.
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