Strategic Evaluation of Sainsbury's Acquisition of Argos

maNAgement

Contents
Introduction...........................................................................................................................................3
External Analysis....................................................................................................................................3
PESTLE Analysis-................................................................................................................................3
Porter`s five forces –..........................................................................................................................5
Internal Analysis....................................................................................................................................7
Critical success factor-.......................................................................................................................7
Unique resources...............................................................................................................................7
Unique capability-..............................................................................................................................7
Linking to advantages........................................................................................................................7
Evaluation..............................................................................................................................................8
Strategic evaluation...........................................................................................................................8
Evaluation acceptable......................................................................................................................10
Evaluation feasible-.........................................................................................................................10
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12

Introduction
Sainsbury is one of the largest chain listed supermarkets in UK. The company started as a
dairy shop and later on, it expanded in packaged fresh foods. Mainly, it focuses on customer
satisfaction and it always tries to give best experiences of shopping to the customers
(Sainsbury, 2018). The aim of the company is to have a concise and long-term vision to
achieve the objectives. Apart from this, the tactical plan of the company is to become one of
the most trusted retailers in the industry. Main objective of the company is to make the lives
of customers a bit easier according to the demand. The report brings out a discussion on
external analysis, internal analysis, and strategic evaluation on the basis of acquisition of
Argos. This strategic report deals with a purpose of evaluating the acquisition of Argos by
Sainsbury (Sainsbury, 2018). For evaluating the acquisition, the report highlights external
analysis, internal analysis, and also the strategy undertaken by the Sainsbury to acquire
Argos.
External Analysis
Current business operations affects UK`s grocery retailing industry which consists of both
macro and micro environment. Macro level factors affect both Sainsbury and its competitors,
which further affects supermarkets who operates in UK. To analyse the macro level factors,
Pestle framework can be used to identify the future trends in political, social, economic, legal,
technological, and environment that affect the industry and all the individual organisations
(Laffy, and Walters, 2016).
PESTLE Analysis-
Political factors- These factors influence the business operations. After the acquisition
process of Argos, Sainsbury is exposed to several political upheaval, risk, and uncertainty in
UK. Brexit led to Flashed Force due to increasing inflation, declining consumer expending,

devaluation of currency that further coupled with growth depression in regards to wages that
negatively affect the UK`s supermarket sales (Laffy, and Walters, 2016).
Economic factors- Brexit affected the acquisition process of Sainsbury, which turned to
financial headaches especially when it comes to managing with currency hedges and dollar
pricing imports hike up in catalogues. With increasing inflation and economic stagnation that
has depressing wage growth in UK, it is seen that several households have become more
conscious regarding the pricing and modifying their shopping habits in an appropriate way
that ultimately affected profitability of Sainsbury (Laffy, and Walters, 2016).
Social factors- the main reason of the above mentioned changes are due to the shopping
habits that has affected UK`s grocery industry. Moreover, social changes drives grocery
retailing. Many people has abandoned their weekly food shopping, and started preferring to
spend the money for numerous other local convenience stores especially in relation to
internet shopping, and discounters. This situation have affected the Sainsbury`s sales and
profits. IGD forecast shows that supermarket spending will decrease from 73.7billion to
70.8billion for the next five years (Marketingweek, 2016). Whereas at the same side,
convenience grocery sales have been growing and being doubled for the discount retailer.
However, Sainsbury is still at the advantage as it has developed the online food shopping and
operating over 806 stores where the sales have increased nearly 6 percent as compared to
huge supermarkets and those sales dropped by 2 percent (Laffy, and Walters, 2016).
Technological factors- when most business organisations adopt digital revolution and
operate their business online, Sainsbury has never left any trend behind. Sainsbury has
introduced certain digital facilities such as food shopping through online websites and
collecting the services, which the customers place orders online. At last, collect it from their
local supermarket. Inline retail businesses have increased by 80 percent that has further