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Macro & micro economics: Disney-Pixar merger

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  1. The Disney-Pixar Merge
  2. Firms
  3. Consumers
  4. Wider economy

A merger occurs when two or more organizations come together under common ownership. The benefits of mergers step from the concept of synergy which holds that when units are combined together greater value is achieved (Gaughan 2010, p. 132). The coming together of companies gives them the ability to exercise more control over product prices. Moreover, it helps in achieving economies of scale. Other organizations engage in mergers as a way of reducing competition intensity in the market while also reducing risk (Siebert 2005, p. 33). Since companies are hit differently by economic recession, mergers have become one of the main ways of reducing risks. This paper evaluates the advantages and the disadvantages of the Disney-Pixar merger.

[...] This created a new shift in the market with Disney and Pixar benefitting more. Conclusion The merger between Disney and Pixar is one of the most famous mergers that have taken place in the entertainment industry. The merger affected the two firms, the consumers and the general economy (Rajni & Preeti 2015, p. 342). Although several shortcomings may be associated with the merger, the advantages outweigh the disadvantages. Pixar, Disney, consumers and the economy have greatly benefited from the merger. [...]

[...] The profits from the films would be shared on a 50- 50 basis (Fried 2006). The merger between Disney and Pixar can be better evaluated by looking at its advantages and disadvantages with respect to the firms, the customers and the wider economy. Firms Disney Walt The Disney-Pixar merger benefited Disney in several ways. First, the merger also reduced the competition that Disney was facing in the market (Kuijper p. 129). Prior to the merger, Pixar and Disney belonged to different stages of one market (Rajni & Preeti 2015, p. [...]

[...] Under the agreement, all the marketing and distribution activities were to be funded by Disney and this meant the rise in operating income was also accompanied by a rise in marketing and distribution expenses. The merger between Disney and Pixar resulted in the rise in the Disney share prices. When tow company's merger they operations, the change is likely to be witnessed on the share prices. For the buying company, the share prices are likely to go down in the short term. In the case of Disney, the merger led to a rise in the share prices. [...]

[...] 222).With the combined input levels, the Pixar was able to come up with quality products at lower prices. However, the effect of the economies of scale was limited because of the difference in organizational cultures and structures. Consequently, the price reductions have been minimal. Wider Economy The merger between Pixar-Disney allowed the two companies to work together in the dynamic entertainment industry. After the merger, Pixar was able to double its yearly animation and film output. It is however worth noting that the doubling of the animation output increase the intensity of competitionas other stakeholders had to compete with Pixar and Disney. [...]

[...] In reality, Disney could not compete with Pixar in producing animations that attract customers. Therefore, the merger with Pixar helped the companyreduce the intensity of competition in the market. However, this did not come without its own share of challenges. With the two companies now under one control, the culture clash that was witnessed made it difficult for the two companies to function as a unit in the initial stages of the merger. The merger between Disney and Pixar also increased Disney's operating income. [...]

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