Applying Porter’s Five Forces to Pixar…….. 1 answer below »
Applying Porter’s Five Forces to Pixar
This section should be one to three paragraphs long and introduce the topic, tell why it is important/relevant, and then outline the rest of the paper. A few of your citations will show up in this section.
This section gives both the background of your theory (in this case Porter’s Five Forces) and then discusses the background of the case that you are talking about. This section should be at least a page and a half long. Most of your citations will show up in this section since you are writing about what other researchers have said.
Although Disney is involved in many different industries, the industry it belongs to in this specific case is the film distribution industry (La Monica, 2006). As a first step to evaluating Disney’s current positioning in the industry, we completed the Porter’s 5 Forces Analysis as shown below. This allows better understanding of the industry that Disney and Pixar individually fall under and the current situations and pressures that the firms face within their specific industry.
• Power of Buyers:Pixar is a hugely established brand and a household name. The buyers in the film distribution industry refer to theatres and retailers that carry films through showings, DVDs, Blu-ray, etc. creating lots of revenue. The buying power threat is moderate as there are many potential consumers with limited financial impact on the industry. Although retailers and theaters make the ultimate decision of which movies they want to purchase, due to the distributor’s size, brand recognition, high customer loyalty, and bargaining power for retailers and theaters are moderate. Customer’s willingness to spend on movies and merchandise is high, which also works in favor for distributors in terms of bargaining power.
Power of Suppliers: The suppliers in this case are film creators hoping to distribute films. Due to high prices charged on merchandise by Disney, suppliers up their prices. This threat is moderate since with technology, hand-drawn animation is being replaced by computer technology (Pixar, 2013). There are lots of different revenue streams which result in high costs to switching suppliers. Also, marketing and distribution are essential for the success of a film, so gaining support and partnership from large distributors are very important to film creators.
• Threat of New Entries: In the film distribution industry, threat of new entries is low due to the high entry barriers. Currently, there are few big players that dominate the industry like DreamWorks, Fox & Disney, making it difficult for new start-up companies to match existing companies in size and success. Film distribution requires high capital investments, which makes it hard for anyone to enter. Disney has already built up a great awareness of brand and created a distinctive position in the industry. Also, success in this industry depends on the number of distribution channels and partnerships, which is much easier for bigger and well-established brands.
• Threat of Substitutes:This force is low for Pixar. Substitutes to the film distribution industry are other channels of entertainment, including television, theatre, and YouTube, to name a few. Although these channels are growing in popularity, they are not strong enough to match and compete with the current success and popularity of movies in our society. Film distributors, such as Disney, also carry a wide fan-base and strong brand recognition, meaning customersare willing to go out of their way to see a movie distributed by these companies.
• Rivalry:This force is high for Pixar. The movie industry is running under oligopoly. It means that this industry is dominated by few companies so that the competition level is very intense. In order to enhance the competitiveness, companies always think about how to increase the movie quality, attractiveness, new interesting story, or even a lovely character. A few big players in the industry currently dominate the market for filmdistributors. There is direct competition between Pixar and DreamWorks, as many of these large firms share similar market share. This makes the competition fierce. There is a tendency for firms to acquire other studios in order to reduce competitive pressure. Each distributor wants to partner with the best filmmakers, making it a blood battle between big players to get their hands on the next top film. If companies fail to do so, it probably results in customers choosing a better one.
This section allows you to provide recommendations to enhance the firm’s competitiveness based on the discussion you provided. Make specific recommendations here. A few citations may show up in this section.
Drive home the point. Summarize what you have discussed and recommended. The end it. This section should be a couple of paragraphs long. Most people will have no citations in this section.
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