Strategic Analysis of Argos: Market and Competitive Strategies

This report provides a comprehensive strategic analysis of Argos, a leading UK retail chain. It begins with an introduction to the competitive retail market and Argos's market share, followed by an overview of the company's organizational objectives. The report then delves into a detailed SWOT analysis, identifying Argos's strengths, weaknesses, opportunities, and threats. Subsequently, it applies the Ansoff matrix to explore market development, product development, and market penetration strategies. Porter's generic strategies are also examined, focusing on cost leadership, product differentiation, and market focus. The evaluation section assesses the suitability, accessibility, and feasibility of the proposed strategies, leading to specific recommendations for Argos's strategic direction. The report concludes with a summary of findings and a list of references.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the student
Name of the university
Author note

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Table of contents
Introduction......................................................................................................................................3
Organizational objectives................................................................................................................4
SWOT analysis:...............................................................................................................................4
Ansoff matrix analysis.....................................................................................................................6
Market development....................................................................................................................6
Product development...................................................................................................................7
Market penetration.......................................................................................................................7
Porter generic strategies...................................................................................................................7
Evaluation:.......................................................................................................................................8
Strategic analysis...........................................................................................................................10
Suitability...................................................................................................................................10
Accessibility..............................................................................................................................11
Feasibility..................................................................................................................................11
Recommendations:........................................................................................................................12
Conclusion.....................................................................................................................................12
Reference list and bibliography.....................................................................................................14

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Introduction
The current retail market scenario is much competitive than it was a decade ago
mainly due to the presence of large number of retailers. Thus, it is getting more important for the
retailers in United Kingdom to stay ahead over others by acquiring the majority of the market
share. Argos is one of the leading retail chains operating in the United Kingdom and takeover by
Sainsbury further cemented their position in the domestic market. It is identified that Argos is
having the market share of 6.6 percent as of 2017. Thus, they are not having the market
leadership status in the country but their average market share is increasing from 4 percent in
2016 to 6.6 percent in the next year. However, in the industry towering over £358 billion, this
market share is viable enough (Telegraph 2019). The saturated market condition in the United
Kingdom is one of the major reasons for the limitations in the growth of their market share. In
terms of the organizational perspectives, Argos is gaining market share but in terms of the
industrial perspective, the current markets share is negligible (Bruwer et al. 2014).
It is also identified that currently, Argos is operating on the basis of cost leadership over
the product differentiation. This is due to the reason that Argos is positioned in line of the high
street retailer. Initiation of the cost leadership involves offering of lower price of their products
to attract the major market share (Friederiszick and Glowicka 2015). However, on the other
hand, initiation of the cost leadership strategy is affecting the profit margins of Argos even their
sales volume is increasing. Product differentiation is also not a viable option for Argos due to the
reason that almost all the retailers are offering the same brands and goods to the customers.
This report will discuss about the internal determining factors for Argos. In addition,
Ansoff matrix and Porter generic strategies will be used to determine their strategic directions in

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the long term. SAF analysis will be done to review the effectiveness of the proposed strategies
from the perspectives of Argos.
Organizational objectives
Argos is the multi-product providing multi-channel business chain in the UK retail
market, which has aimed to establish itself as the most trusted brand in the retail industry.
Ensuring the customer satisfaction, Argos aims to establish its sustainable position in the market.
Analyzing the strategic aim of the company it has been identified that the company aims to bring
long term sustainability initiative through reducing CO2 emission.
 To ensure the customer satisfaction for increasing customer base to gain positive growth
 To fulfill the sustainability commitment through the reduction of CO2 emission
 To enhanced its customer values for becoming most trusted retail brand in the UK retail
industry
 To critically analyze both the internal and external environment of the company and
introduced effective strategies for ensuring positive growth.
SWOT analysis:
Strength Weakness
 The major strength of the company is
it has introduced diversified products
in the market.
 Both the offline and online services
are being provided by the company,
 Analyzing the weakness of Argos, it
has been identified that due to the
traditional practices for workers’
treatment, it becomes tough for the
company to merge with ASDA. Due

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which has helped the company to
introduced advanced technology in its
transaction process.
 By merging with Sainsbury’s
supermarket, Argos has reduced its
competitive risk in the market.
 Due to its standard product delivery
process, the company has developed
strong brand image in the market.
 Following the emerging beauty
products selling trends, Argos has
enhanced its customer base in the
market.
to improper employee management, it
has become difficult for the company
to make proper employee engagement
in the workplace.
 Lack of equal payment opportunity
has bought challenges of the company
to maintain employee standard
(Ennew, Binks and Chiplin, B. 2015).
Opportunities Threats
 With increasing business opportunities
in the retail industry, online sales has
become highly popular in the market.
Hence, it can be said that online sales
opportunities in the market can bring
the positive business growth in Argos.
 Online transaction has become highly
popular in the market. In order to
make transaction, various payment
 After the Brexit vote incident, price
war between the competitors in the
market has become the major concern
for Argos.
 In order to ensuring the corruption
free environment in the trade sector,
government has introduced various
rules and regulations in the market,
which has increased the challenges of

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apps have been introduced in the
market, which can make the business
process easier (Bbc.co.uk, 2019).
 Emerging demands of beauty products
in the market, it can be said that in this
situation it will be easier for the
company to sustain in the market.
Argos.
 Due to economic and socio cultural
opportunities in the market, increasing
numbers of retail organizations have
influenced thee market threat of the
company.
 Rental cost has also increased, which
has influenced the store location
selection process complicated.
Ansoff matrix analysis
Market development
According to the ansoff matrix, there are four major strategic options being available for
Argos. One of the most potential options suitable for Argos will be the market development.
With the help of this option, Argos can enter in the potential foreign markets with their existing
products and services approach. It should be noted that in the recent time, developing countries
such as India and China are witnessing more growth compared to the United Kingdom and thus
entering in these developing economies will pose more opportunities for Argos. Emergence of
brexit will further create limitation in the market potentiality of Argos in the United Kingdom
(Kang and Montoya 2014). This is due to the reason that with implementation of the brexit will
create more barriers for Argos in targeting the other European countries and they will not have
the free trade agreements in entering in these countries. Hence, prior to the full fledged impact of
the brexit, the market development strategy will be suitable for Argos. Developing countries like

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India and China will have no impact of brexit and thus Argos will also have lower impact on
their foreign operations. The strategic growth approach of Argos will also be aligned with the
market development process (Urde, Baumgarth and Merrilees 2013).
Product development
The next feasible option available for Argos is product development that refers to the
process of developing and introducing new products in the existing market. Argos can introduce
new product or product line in their operation in the United Kingdom. This can include grocery
items. The more will be the diversity and assortment of the available products of Argos, the more
will the target customer segments for them. This will ensure more market penetration and sales
volume in their existing markets (Edvardsson et al. 2013). This should be noted that innovation
business approach of Argos can be aligned with this product development strategy. This is due to
the reason that innovation will help Argos to develop new products with greater value
proposition, which will ensure their further market penetration in the United Kingdom.
Market penetration
The last viable strategic option for Argos as per the Ansoff matrix is market penetration.
This refers to the process introducing more variants of their existing products and services in the
United Kingdom. For instance, currently Argis is positioned as the high street retailer and thus
they are not catering to the premium customers. In this case, initiation of the market penetration
strategy will help Argos to offer the premium variants of their existing products to the customers
(Stummer et al. 2015). The objective of Argos from the market penetration strategy is to cater to
different target customer segments across different price levels with same products.
Porter generic strategies

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According to the generic strategies stated by Porter, cost leadership is already being
followed by Argos. Hence, product differentiation and market focus strategy will be effective
and suitable for them. The point of differences of Argos should be increased as comparison to
their major competitors. This can be done with their private label products. These products
should be designed in order to have distinctive value proposition for the customers. The more
will be the distinctiveness in their value proposition, the more will be the competitiveness in the
market (Liu and Zhang 2013). Moreover, with the help of the differentiation strategy, Argos will
be able to cater to the premium customers without having the cost competitiveness. Hence, the
average profit margin can also be gained with the help of this approach. It should also be noted
that differentiation can be initiated by Argos in the forms of service delivery process also. This is
due to the reason that if the service delivery process can be made different to that of their
competitors, then the recall value among the customers will get increased.
Another feasible generic strategy for Argos will be the market focus due to the reason
that in order to cater the premium customers, it is important to identify the needs and
preferences. With the help of the market focus strategy, Argos will be able to target the niche
segment of the premium customers and can design the product and service approach accordingly.
The market focus strategy for Argos will be more applicable in the current time due to the fact
that they are already catering to the mass market customers and profit margin in catering to the
mass market customers is low (Bamiatzi and Kirchmaier 2014). On the other hand, the profit
margin in catering to the premium customers is more and this will ensure that Argos is being
able to increase their profit margins as well as long term viability in the market slowdown
situation in the United Kingdom.
Evaluation:

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Analyzing the strategic directions of the company it has been identified that it aims to
enhance its customer base so that it can be able to establish strong brand image in the market. In
both the external and internal environment analysis, it has been identified that improper
employment standard in the workplace has brought the challenging situation for the company.
Alwi, Ali and Nguyen (2017) stated that, it can be said that introducing an effective strategy for
enhancing the employment standard has become necessary. Increasing numbers of competitors in
the market has become another important challenge for the company. In this situation, Argos
aims to introduce effective strategies so that the competitive advantage in the market can be
gained.
In the above Ansoff matrix and Porter’s generic strategy, different strategic directions
have been provided. Researching on the emerging retail market in UK it has been mentioned that
product development, market penetration and market development strategy can be beneficial for
the company in case of achieving its strategic goals (Namada, 2018). In the porters, generic
analysis, it is mentioned that product differentiation and market focus strategy can be beneficial
for the company in case of achieving its strategic objectives. Using the product differentiation
strategy it will be easier for the company to enhance its customers. In case of engaging premium
customers in the customer base, not only the rate of profitability can be increased but also it can
play an important role for managing popular brand image of the company.
Analyzing the strategic vision of the company, it has been identified that through
ensuring long term sustainability, Argos aims to increase the customer satisfaction. In the words
of Becker (2016), sharing the strong values with the customers, it aims to develop strong
business communication. In that case, through the adoption of market focus strategy, profit
margin can be increased by including the premium customers in the customer base. In the SWOT

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analysis, it is mentioned that cost competitiveness is one of the important challenges faced by
Argos in UK retail sector. In this case it can be said that using the product diversification
strategy, it will be easier for the company to avoid the cost competitiveness challenges. It is true
that the company aims to ensure its sustainable position in the competitive business environment.
Argos can introduce new product or product line in their operation in the United Kingdom. This
can include grocery or beauty items. The more will be the diversity and assortment of the
available products of Argos, the more will the target customer segments for them. In that case, if
the Argos will apply the product development strategy in the market, it will help the company to
maintain the interest of the customers in it.
Strategic analysis
SAF analysis
Suitability Accessibility Feasibility
Market
development
 After Brexit
incident, market
development
strategy can
help to expand
its business in
Asian countries.
It cannot be denied
that Developing
countries like India
and China do not
have any impact of
Brexit. As its result,
Argos will get lower
impact on its foreign
operations.
 Introducing
market
development
strategy
Argos can
take the
opportunity
from the
Asian

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countries like
China and
India.
Product
development
 The product
development
strategy will be
suitable for
Argos as this
strategy can
help Argos to
introduce new
product or
product line in
their operation
in the United
Kingdom.
 Introducing
grocery as
well as beauty
items product
development
strategy can
be
implemented
by the
company.
 This strategy
will help the
company to
increase its
customer base
and business
revenue.
Market penetration  This strategy
will be suitable
for introducing
more variants of
existing
products and
services
 By targeting
different
target
segment,
market
penetration
strategy can
 The market
penetration
strategy will
help Argos
for offering
the premium
variants of its

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introduced by
Argos in the UK
market.
be applied in
the market
through
introduction
of different
price levels
with same
products.
existing
products to
the customers
Product
differentiation
 This strategy
will be suitable
in case of
catering the
premium
customers
without having
the fear of cost
competitiveness.
 By improving
the service
delivery
process and
making
effective
competitor
analysis, this
strategy can
be
implemented.
 The average
profit margin
can also be
gained with
the help of
this approach.
Focus strategy  The strategy
helps to gain the
competitive
advantage
 Due to the
ongoing
Brexit
negotiation,
 Through the
focus
strategy,
Argos will be