Onec each case is read, a one page, summary should be tuped and contain the following information :

1- Abstract of the case to include oberview of the problem or issue.

2- Contribution of case to strategic management.

3- Recommendations for solving the problem or issue.

A one page and 3 paragraphs are required.

CASE 4 PIXAR* On the morning of January 10, 2013. everyone at Pixar EXHIBIT 1 Pixar Films Animated Studios was pleased to find that Brave had received an Academy Award nomination for best animated All of Pixar's films released to date have ended up among the top feature. After a continuous string of critically acclaimed animated films of all time based on worldwide box office revenue films running through Toy Story. Finding Nemo, Rata- in millions of U.S. dollars. tie, Wall-E and Up, the studio had failed to obtain a Rank Title Year Revenue single nomination for Cars 2. This was a great setback for Pixar, which had already claimed five trophies, more than 1 Toy Story 3 2010 $1064 any other studio, since the category was added in 2001 2 Finding Nemo 2003 $906 Although Cars 2 made about $560 million in theaters worldwide, matching the success of many of the studio's 3 Up 2009 $731 other hits, the film did not win the critical acclaim that has 4 The Incredibles 2005 $631 been accorded to every other Pixar offering (see Exhibit I). 5 Ratatouille 2007 S624 This led many industry observers to question whether the sequel had been developed as a result of pressure from the 6 Cars 2 2011 5560 Walt Disney Company because of the opportunities that it 7 Brave 2012 5555 would offer for sales of related merchandise. John Lasse- 8 Monsters, Inc 2002 $525 ter. Pixar's chief creative officer and the director of Cars 2 denied that there was any such pressure: "Ic's not true. It's 9 Wall-E 2009 $521 people who don't know the facts, rushing to judget! 10 Toy Story 2 1999 $485 Pixar had been acquired by Disney in 2006 for the 11 Cars 2006 $452 hefty sum of $7.4 billon. The deal had been finalized by the late Steve Jobs, the Apple Computer chief executive 12 A Bog's Life 1998 $363 who had also served as the head of the computer anima- 13 Toy Story 1995 $362 bon firm. Jobs had previously developed a deal that had allowed Disney to distribute all of Pixar's films and to Source IMDb. Mari split the profits. Disney CEO Bob Iger worked hard to cventually acquire Pixar, whose track record had made it one of the world's most successful animation companies despite the risks involved. They make sequels only when Both Jobs and Iger had been aware, however, that they they are able to come up with a compelling story that must try and protect Pixar's creative culture while they can make use of the old characters. Lasseter claims. also tried to carry some of this over to Disney's anima- however, that because everyone expects Pixar to stick tion efforts. In order to ensure this, Disney has not only with original films, any sequels that it makes are judged allowed Pixar to operate on its own. but also assigned rather harshly. He compared his role as director of Cars Some of the animation studio's key talent to take over the 2 to that of a trapeze artist with a death wish. "Not only combined activities of both Pixar and Disney. The creative is there no nel," he said, "you're doing it over spikes team at Pixar has been trying to use elements of its lengthy with poisoned ends. process of playfully crafting a film to replace the standard production line approach that had been pursued by Disney Pushing for Computer Animated Films This contrast in culture is best reflected in the Oscars that The roots of Pixar stretch back to 1975 with the founding the employees at Pixar have displayed proudly, but which of a vocational school in Old Westbury, New York. called have been painstakingly dressed in Barbie doll clothing the New York Institute of Technology. It was there that Above all, everyone at Pixar remains committed to Edwin E. Catmull. a straitlaced Mormon from Salt Lake making films that are original in concept and execution. City who loved animation but couldn't draw, teamed up with the people who would later form the core of Pixar. Ce developed by Professor Jamal Sham, Michigan University, "It was artists and technologists from the very start." ence of Professor Alan Pace Univery Material has recalled Alvy Ray Smith, who worked with Catmall fres published the used for purposes of con College Baul Shamic and Alan H. during those years. It was like a fairy tale." CASE 4 PIXAR CT By 1979, Catmull and his team decided to join forces friend, Oracle CEO Lawrence J. Ellison, to tell him he had , were hopeful that this would allow them to pursue their cess, Jobs returned to strike a new deal with Disney. Eady 1996, at a lunch with Walt Disney chief Michael D. E, dream of making animated films. As part of Lucas's film- otaking facility in San Rafael, California, Catmull's group fobs made his demands an equal share of the protis, court of aspiring animators was able to make substantial progress billing on merchandise and on-screen credits, and guarantee in that Disney would market Pixar films as they did its own to generate any profits, and Lucas was not willing to let it grow beyond using computer animation for special effects. Boosting the Creative Component Catmull finally turned in 1985 to Jobs, who had just been With the success of Toy Story Jobs realized that he had hit ousted from Apple. Jobs was reluctant to invest in a firm something big. He had tapped into his Silicon Valley Foods that wanted to make full-length feature films using com- and, with Catmull's team, used computers to forge a unique puter animation. But a year later, Jobs did decide to buy style of creative moviemaking. In each of their subsequem Catmull's unit for just $10 million, which represented a third films, Pixar has continued to develop computer animatie of Lucas's asking price. While the newly named Pixar Anima- that has allowed for more lifelike backgrounds, texture, tion Studios tried to push the boundaries of computer anima- and movement than ever before. For example, because tion over the next five years, Jobs ended up having to invest leaves are translucent, Pixar's engineers developed special an additional $50 million more than 25 percent of his total software algorithms that both reflect and absorb light.cre- wealth at the time. There were times that we all despaired. ating luminous scenes among jungles of clover but fortunately not all at the same time," said Jobs. In spite of the significance of these advancements a Still, Catmull's team did continue to make substantial computer animation, Jobs was well aware that successful breakthroughs in the development of computer-generated feature films would require a strong creative spark. He full-length feature films (see Exhibit 2). In 1991, Disney understood that it would be the marriage of technology gave Pixar a three-film contract that started with Toy Story with creativity that would allow Pixar to rise above it When the movie was finally released in 1995. its success competition. To get that, Jobs fostered a campuslikem surprised everyone in the film industry. Rather than the ronment within the newly formed outfit, similar to the nice little film Disney had expected, Toy Story became the freewheeling, charged atmosphere in the early days of his sensation of 1995. It rose to the rank of the third highest beloved Apple (where he also returned as acting CEO) grossing animated film of all time, camning $362 million in "It's not simply the technology that makes Picar," said worldwide box office revenues. Dick Cook, former president of Walt Disney studios Within days. Jobs decided to take Pixar public. When Even though Jobs did play a crucial supportive role the shares, priced at $22, shot pust $33. Jobs called his best it is Catmull, now elevated to the position of Pixar's EXHIBIT 2 Milestones 1986 1988 1991 1995 1997 Steve Jobs buys Lucas's computer group and christens it Pixar. The firm completes a short tim Luxor, which is nominated for an Oscar. Pacar adds computer animated ads to its repertoire, making spots for Listerine Lifesavers, and Tropicana. Another short. Tin Toy, wins an Oscar Pecar signs a production agreement with Disney Disney is to invest $26 milion: Plaar is men det at least three full-length, computer-animated feature films Puur releases Toy Story the first fully digital feature film, which becomes the top-grossing more of the year and wins an Oscar. A week after release, the company goes public Plear and Disney negotiate a new agreement a fifty-fifty split of development costs and profits of five feature-length movies. Short Gerl's Game wins an Oscar A Bug's Life and Toy Story Zare released, together pulling in $1.3 billion in box office and is A string of hits from Par. Monsters, Inc: Finding Nemo, and The Incredib Disney acquires Puxar and assigns responsibilities for its own animation unit op brass Cars is released and becomes another box office hit Wal-Ebecomes the fourth film from Poor to receive the Oscar for a feature-length animated in Toy Story 3 receives live Oscar nominations and wins two, including one for best animated 1998-99 2001-04 2006 2009 2011 Source: Par CS CASE & POLAR colorful iMac computers president who has been mainly responsible for ensuring Once the script has been developed, artists create story apie in's creative efforts. He has been the keeper of the plot. "No amount of great animation is going to save a bad ar dhe firm's technological achievements help to pump boards that connect the various characters to the developing company unique innovative culture, which has blended Story." he said. "That's why we go so far to make it night. Silicon Valley techies, Hollywood production bonchos, Only after the basic story has been set does Lasseter begin and artsy animation experts. In the pursuit of Catmull's to think about what he'll need from Pixar's technologists. o this eclectic group has transformed their office ubicles imo tiki huts, circustents, and cardboard castles. Lasseter , for example, demanded that the crowds of ants in A And it's always more than the computer animators expect. with bookshelves stuffed with toys and desks adorned with Bue's Life not be a single mass of look-alike faces. To solve Catmull has also worked hard to build upon this pur- the problem, computer expert William T. Reeves developed sait of creative innovation by creating programs to develop acteristics to each ant. In another instance, writers brought software that randomly applied physical and emotional char the employees. Employees are encouraged to devote up to four hours a week, every week, to further their education at them to write code so that when she rubs her antennae, you a model of a butterfly named Gypsy to researchers, asking Piss University. The in-house training program offers 110 ifferent courses that cover subjects such as live improvi can see the hairs press down and pop back up. At any stage during the process, Lasseter may go back txt, creative writing, painting, drawing, sculpting, and to potential problems that he sees with the story. In A Bug's cinematography. For many years, the school's dean was Randall E Nelson, a former juggler who has been known Life, for example, the story was totally revamped after more than a year of work had been completed. Originally, it was to perform bis act using chain saws so students in anima- about a troupe of circus bugs run by PT. Flea that tries to ben classes have something compelling to draw. rescue a colony of ants from marading grasshoppers. But is such an emphasis on the creative use of technol because of a llaw in the story-- Why would the circus bugs ogy that has kept Pixar on the cutting edge. The firm has risk their lives to save stranger ants?---codirector Andrew turned out ever more lifelike short films, including 1998's Stanton recast the story to be about Flik, the heroic ant who Oscar-winning Geri's Game, which used a technology recruits Flea's troupe to fight the grasshoppers. "You have called subdivision surfaces. This makes realistic simula to rework and rework it," explained Lasseter. It is not rare tion of human skin and clothing possible. "They're abso for a scene to be rewritten as much as 30 times. lute geniuses." gushed Jules Roman, cofounder and CEO of trial Tippelt Studio "They're the people who created Pumping Out the Hits computer animation recally." In spite of its formidable string of hits, Pixar has had dif- ficulty in stepping up its pace of production. Although they Becoming Accomplished Storytellers may cost 30 percent less, computer-generated animated comiderable part of the creative energy goes into story films do still take considerable time to develop. Further development Jobs had understood that a film works only if more, because of the emphasis on every single detail, Pixar sory can move the hearts and minds of families around used to complete most of the work on a film before moving he world. His goal was to develop Pixar into an animated on to the next one. Catmull and Lasseter have since decided movie studio that becomes known for the quality of its story to work on several projects at the same time, but the firm elling above everything else: "We want to create some great has not been able to release more than one movie in a year Hories and characters that endure with each generation." In order to push for an increase in production, Pixar has For story development, Pixar has relied heavily on more than doubled its number of employees over the last 3.year old John Lasseter, who goes by the title of vice decade. It is also turning to a stable of directors to oversee president of the creative. Known for his collection of 358 its movies. Lasseter, who directed Pixar's first three films, Hawaiian shirts and his irrepressible playfulness with toys. la supervising other directores who are taking the helm of Later has been the key to the appeal of all of Pixar's various films that the studio chooses to develop. Monsters, Inc. Finding Nemo, The Incredibles. Ratatouille and Brewe were directed by some of this new talent. But there are con aries and then harnessing computers to tell these stories. Most of Pear's employees believe it is this passion that cerns about the number of directors that Pixar can rely upon Secured that each of the studio's films has been a com- to turn out high-quality animated films. Michael Savner of cual bit. In fact, Lasseter is being regarded as the Walt Bane of America Securities commented, "You can't simply double production. There is a finite amount of talent. When is time to start a project, Lascer Poltes a group added new divisions, including one to help with the develo coints of technology. The group bounces ideas of each opment of new movies and one to oversee movie develop her taking collective responsibility for developing a story ment shot by shot. The eight-person development team has Les up to two years just to work out all the details We may studios try to rush from script to production, helped to generate more ideas for new film "Once more ideas are percolating, we have more options to choose CASE 4: POLAR OS Deney for the 21st century, 11 12 from so no one artist is feeling the weight of the world by Disney to boost its own animation efforts by group in which the talent of the individuals and the quali on their shoulders," said Sarah McArthur, who served as of the finished product are valued above everything Pixar's vice president of production. In order to ensure this, Ed Catmull and John Law Finally, Catmull keeps pushing on technology in order have been in charge of the combined animation business to improve the quality of animation with no more than both Pixar and Disney Tangled and Wreck-It Ralph 100 animators working on each film. Toward this end, were both commercial and critical successes were in Catmull has been overseeing the development of new ani- films that were completed under the supervision of the mation software, called Luxo, which has allowed him to Pixar heads. For Lasseter, the new responsibilities for use fewer people who can focus on addressing various challenges that come up. During the production of Browe, Disney have represented a return to his roots. He had be for example, the animators had to make the curly hair of inspired by Disney films as a kid and started this can be the main character appear to be natural, Claudia Chung. Disney before being lured away to Pixar by Cathal. The many of us at Pixar, it was the magic of Disney that ini ous methods they kept trying "We'd kind of roll our eyes enced us to pursue our dreams of becoming animators and say, 'I guess we can do that, but inside we were all ists, storytellers and filmmakers." Lasseter stated excited, because it's one more stretch we can do." But Catmull and Lasseter continue to face a challeng Catmull is well aware of the dangers of growth for a ing task. They must ensure that they keep developing ho studio whose successes came out of a lean structure that for Pixar even as they try to turn things around at Disney wagered everything on each film. It remains to be seen Furthermore, it is still too early to tell whether Pixar a whether Pixar can keep drawing on its talent to increase be affected by the loss of Jobs, who passed away in 2011 production without compromising the high standards that He was an important sounding board for Lasseter, have been set by Catmall and Lasseter. Jobs was keen often relied on the perspective of Jobs in supervising the to maintain the quality of every one of Pixar's films by films that Pixar was developing ensuring that each one got the best efforts of the firm's At the same time, everyone at Pixar understand that animators, storytellers, and technologists. "Quality is more a large part of their success can be attributed to the tale important than quantity," he emphasized. "One home run that the firm is able to recruit and train to work together is better than two doubles." This leads to a continuous exchange of ideas and foes In order to preserve Pixar's high standards, Catwall has collective sense of responsibility on all their projects been working hard to retain the company's commitment to created the studio we want to work in." Lasseter renurial quality even as it grows. He has been using Pixar University "We have an environment that's wacky. It's a creative brain to encourage collaboration among all employees so that they trust: It's not a place where I make my movies-atsaplace can develop and retain the key values that are tied to their where a group of people make movies success. And he has helped devise ways to avoid collective bumot. A masseuse and a doctor now come by Pixar's cam ENDNOTES pus each week, and animators must get permission from their 1. Bares, B.2011. It was a wreck, not really loves Supervisors if they want to work more than 50 hours a week. October 18.4 2. Tid:CI To Infinity and Beyond? 3. Burrows... Cover, 1998. Steve Jobs Movie Bw November 2190 The growth in emphasis on sequels has raised concerns 4 TL 150 about the ability of Pixar to keep turning out movies that Shd-146 generate both box office revenues and critical acclaim, thid-146 given their reliance on a high degree of creativity. The stu- 7. Grawer, M. 1999. Tikar run by focused groups dio will be releasing a sequel to Monsters, Inc. later this December 2014 year and has a sequel to Finding Nemo in the works At the Ries, op. cit C4 same time. Lasseter is overseeing work on films with bold 9. Bmw Grover, op. cit. 146 new ideas, such as Inside Out, based on a story told from the 10. Bary, A. 2003. Coy story Barron October 1221 perspective of the emotions inside the mind of a little girl. Il Teriman, D. 2012 ravely going where Part et on CNET News June 16. Despite the poor reviews that some critics gave to Cars 2 12. Tum. P.W. 2001 Will quantity hunt Priyal Som it is widely believed that Pixar will continue to maintain its Journal February 15:34 creativity even while it is owned by Disney. In fact, Jobs 13. B & G G 3006 Steve picknam was convinced that Pixar's links with Disney would be Bek February 666 mutually beneficial for both finns. In his own words, "Dis- 14 Soom, C. 2006. Plus crative chief to secure ney is the only company with animation in their DNA. magie. Nie vol Ther 25: Ch 15. In fact, the acquisition of Pixar was viewed as an attempt 16. Bury. A 2005. Cay sor)Marron 11 010 CASE 4 PIXAR