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The Negotiations for Collaboration between Pixar-Disney Name: Gi Hyun Kim Student ID: 082SIS48 Intl’ Negotiations :Theory & Practice by Prof. Jasper S. Kim
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Contents Background of three negotiations in 1991, 1994, and 2003 BATNA, Positions of Collaboration btwn Disney & Pixar in 1991- deal Deal set in 1991 reflected each interest=benefit The Reasons of Clash between them Missing Points to Successful Relationship
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Background of three negotiations 1991 deal to try the first blockbuster animated picture Successfully done Bargaining power: Disney > Pixar 1994 deal after successful IPO of Pixar and mega-hit of Toy Story, the first movie by collaboration Done, but the relationship damaged due to renegotiation suggested by Steve jobs, the former CEO of Pixar Bargaining power: Disney < Pixar 2003 deal after the smash box-office hit of Finding Nemo Failed Disney walked out due to unreasonable wish from Steve Jobs Bargaining power: Disney << Pixar
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BATNA, POSITIONS of Collaboration of Disney-Pixar No deal, no regret for Disney Tempt John Lasseter who is at Pixar to join Disney again Breaking new ground for Disney as the first-ever animation production to be outsourced, proceeding with due caution made sense Disney was the be-all and end-all, and Pixar just a gnat No BATNA due to Steve’s serious financial burden, he desperately needed the deal Willing to take deal Rent Disney’s marketing system, not partner with Disney
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Deal set in 1991 reflected each interest=benefit Disney would fund the production cost, promotion, and the distribution Disney would keep the income from merchandising royalties-toys, games, T-shirts, fast-food tie-ins, and video sales from the three movies Controlling the rights to make sequels would belong to Disney Pixar would develop all the creative aspects- characters, character appearances, screenplay, dialogue, casting of actors for the voices, instead, Disney would retain approval power over all creative decisions Pixar would accept to receive 12.5 percent of the net profits from three movies
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Disney’s special benefit=interest reflected on term John Lasseter in the controlling role as director and head writer should sign off a long-term contract, binding him to stay on board for all three of pictures covered by the agreement
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The Development of the situation after Toy Story’s mega hit Bargaining Position changed; Pixar > Disney Steve’s wish to rewrite the contract: Pixar wants 92% of net profits & to own two remaining movies Relationship got worst Commitment damaged after the alteration Relationship got worse Commitment damaged again Disney walked out
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The Reasons of Clash Steve Jobs of Pixar and Michael Eisner of Disney ignored these simple rules Don’t Bargain Over Positions Preparation – Legitimacy, Commitments Separate the People from the Problem Invent Options for Mutual Gain
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Don’t Bargain Over Positions Steve of PixarEisner of Disney In 1991 - Bargaining power was weak In 1994, after Toy Story’s success - Bargaining power became stronger than 1991 and made the change of terms even already set In 2003, after Finding Nemo, including the success of Toy Story 2, Bug’s life, and Monster Inc. - Rent a Disney’s marketing system, not partner with it In 1991 - Disney was the be-all and end-all, and Pixar just a gnat In 1994, - Disney still came first, leveraged its strong bargaining power In 2003, -Disney did not corporate with Steve’s wish to get 92% of net profits - Do not listen to Steve at all
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Preparation - Legitimacy In 1991 - Insisted 12.5% of net profits to deliver to Pixar, 12.5% is not legitimate number - All revenues from merchandising royalties, video sales should go to Disney In 1991 - did not gather information what number would be the appropriate portion of profits taken In 1994 - found that 12.5% of net profits taken was not legitimate, so should be shared fifty-fifty In 2003, after Finding Nemo, including the success of Toy Story 2, Bug’s life, and Monster Inc. - 92% of net profits was supported by Steve, also was not legitimate Steve of Pixar Eisner of Disney
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Preparation - Commitments Steve of Pixar Eisner of Disney In 1994, after Toy Story’s success -Steve showed his willingness to change the terms of the contract already made Before release of Finding Nemo - Steve insulted Eisner that he intended to steal Disney from him In 2003, after Finding Nemo’s success - Showing no respect to continue partnership with insisting huge number of profits In 2003, before release of Finding Nemo -Attacked Apple’s marketing campaign, “Rip, Mix, Burn” giving consumers permission to “create a theft if they buy his computer” During the partnership, - Eisner had been spreading that he took possession of Pixar
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Separate the People from the Problem They were both master negotiator who could spot weaknesses of counterparty and took advantage of it, however they were vindictive Whenever they were insulted by each other, they treated problem on soft & people on hard
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Invent Options for Mutual Gain In 2003, after Finding Nemo’s success Steve of Pixar’s view point Eisner of Disney’s view point He could have invented options, such as longer term commitment or higher distribution fees instead of insisting 92% of net profits in contract renewal, which would never be considered seriously Even though Sony Pictures and Warner Bros wanted to contact to Steve, but finally found that it would be hard to make deal happen Rather than angry, Eisner should have been prepared to listen to him carefully or actively would have to suggest options for mutual gain Eisner could have notified Steve that the risks of his persistence which would never meet satisfaction from other companies as well
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Thank You For Your Attention
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