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Define Vertical Integration. In what ways is Disney's acquisition of Pixar an example of vertical integration? What were the benefits/risks and was it successful? In

  1. Define Vertical Integration. In what ways is Disney's acquisition of Pixar an example of vertical integration? What were the benefits/risks and was it successful? In answering this last part of the question, be sure to mention what are the GOOD reasons to integrate vertically, and then explain whether Disney pursued vertical integration for these"good" reasons or for"bad" ones.
  2. Define Horizontal integration. In what ways is Disney's acquisition of Pixar an example of horizontal integration? What are the good/bad reasons for horizontal integration, and did Disney pursue integration for these good or bad reasons?
  3. Disney and Pixar went through THREE rounds of contract negotiations (not including CAPS). For each contract, tell where on the Make-Buy continuum each contract would be located. Also please be sure to fully define the Make-Buy continuum for this question.
  4. What specific advantages/technologies/etc. are available to Disney by acquiring Pixar? Does Disney have many alternatives to the acquisition? What are the alternatives to Pixar instead of being acquired by Disney?
  5. Which is greater: the value of Disney and Pixar as a combined company, or the sum of the value that could be created from two separate companies that were allowed to form relationships with other companies? Why?
  6. Suppose you assume that Disney and Pixar are more valuable as a combined company (see question #4). In order to realize that value, is ownership really required? What about renegotiating an exclusivity contract (whereby the companies agree to do business only with each other, and then specify terms for all the combined business activities)?
  7. Shareholder value:
    1. As a shareholder of Disney, what do you make of the potential Disney/Pixar merger?
    2. As a shareholder of Pixar, what do you make of the potential Disney/Pixar merger?
  8. Compare the difference between AT&T's mergers and acquisitions and that of Disney and Pixar. Which (Disney or AT&T) created more value?
  9. Now, we know that in 2005 Disney bought Pixar for 7.4 bn and made Steve Jobs Disney's largest shareholder. In your opinion, was that good for Disney? What about Pixar?

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