Investigating Merger Impact on Customer Satisfaction: Sainsbury's

This dissertation investigates the impact of the Sainsbury's and Argos merger on customer satisfaction within the UK retail sector. It begins with an abstract highlighting the importance of mergers in enhancing customer satisfaction, followed by an introduction that provides background information on the research topic and organization. The study explores the research rationale, questions, aims, and objectives, including the concept of customer satisfaction, benefits and drawbacks of mergers, and the relationship between the Sainsbury's and Argos merger and customer satisfaction. The literature review examines customer satisfaction models, advantages and disadvantages of mergers, and the relationship between the merger and customer satisfaction. The methodology section details the research process, approach, strategy, methodology, instruments, sampling, and ethical implications. The findings, discussion, and conclusion sections present the results of the research, analyze the implications, and offer recommendations for future research, focusing on strategies for enhancing customer satisfaction through merger activity. The dissertation utilizes both primary and secondary data collection methods to explore how the merger has influenced customer satisfaction and loyalty within the UK retail landscape.

Dissertation

Abstract
In the competitive era, each and every business wants to introduce new product and
service to gain customer satisfaction. Similarly, the present study highlights the importance of
merger within the company in order to gain customer attraction. The current research is based
upon merger on Sainsbury and Argos and its impact upon the customer satisfaction. Therefore,
with the help of qualitative study, scholar collect information which in turn assist to meet the
defined aim and determine the relationship between the merger activity upon customer
satisfaction. Both primary and secondary data collection has been used in order to conduct the
study in precise manner. Moreover, through data analysis section, it can be evaluated that
customers are satisfied with the overall performance of a company and increases their loyalty as
well. Overall, merger activity benefitted customers in order to improve the get effective services
from Sainsbury.

Acknowledgement
I would like to thank the University who offer me an opportunity to study on this topic that
assists me to increase my knowledge.
I would also thank my teachers who are available to solve the queries and assist me to complete
the study effectually.
I am also obliged to my parents who support me economically and non-economically, and last
but not least I thank my friends who always encourage to complete the study.

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION....................................................................................................6
Background to research topic......................................................................................................6
Background to research organization..........................................................................................6
Research rationale........................................................................................................................7
Research questions.......................................................................................................................7
Research aims and objectives......................................................................................................8
CHAPTER 2: LITERATURE REVIEW.........................................................................................9
2.1 Introduction of literature review............................................................................................9
2.2.1 Concept of customer satisfaction and merger.....................................................................9
2.2.2 Assessing the advantages and drawbacks associated with merger activity......................11
2.2.3 Relationship between merger and customer satisfaction within UK retail sector............13
2.3 Conclusion...........................................................................................................................15
2.4 Literature gap.......................................................................................................................15
CHAPTER 3: METHODOLOGY.................................................................................................17
3.1 Research process..................................................................................................................17
3.2 Research approach...............................................................................................................18
3.3 Research strategy.................................................................................................................18
3.4 Research methodology.........................................................................................................19
3.5 Research instruments/tools..................................................................................................19
3.6 Sampling..............................................................................................................................22

3.6 Ethical implications.............................................................................................................23
CHAPTER 4: FINDINGS.............................................................................................................24
CHAPTER 5: DISCUSSION........................................................................................................34
CHAPTER 6: CONCLUSION, RECOMMENDATIONS AND IMPLICATIONS FOR
FURTHER RESEARCH...............................................................................................................37
Conclusion.................................................................................................................................37
Recommendations......................................................................................................................37
REFERENCES..............................................................................................................................39

Topic: “To investigate the impact of merger on customer satisfaction within UK retail sector:
A Merger of Sainsbury and Argos.
CHAPTER 1: INTRODUCTION
Background to research topic
In UK, retail sector, companies are facing high competition with each other due to the
ever-increasing expectations of customers. There are several retail giants such as Aldi, Lidl,
Tesco, Sainsbury etc which are competing with each other in terms of brand image, customer
and market share. Thus, it is highly required for the firm to come up with innovative
technologies and products so that customer satisfaction can be enhanced. Moreover, satisfied
customer base may result into positive word of mouth publicity and thereby enhancement of both
sales as well as profit. Therefore, companies use different methods in order to improve the
overall brand image at global level as well as attract range of new customers towards it.
Similarly, the current study could also highlights upon how business strategy could benefit
business and grab attention of many customers towards it.
Besides, customer loyalty can be built through evolving high level of satisfaction among
them. Further, satisfied customer base also helps in attracting potential ones from the competitive
business arena. Thus, for limiting competition level and strengthening business operations now
companies are placing high level of emphasis on undertaking merger or acquisition strategy.
Acquisition may be defined as a process when one business unit gains majority of control or
shares in another organization. Through this process, company is easily increases the market
share of a business quickly and sustain its brand image at competitive market. Therefore, the
process will help the company to achieve market synergies as well. Along with this, the present
study could highlight how merger affect the customer satisfaction and this in turn leads to
examine whether there is any direct impact upon the business performance or not.
Background to research organization
This dissertation is based on Sainsbury which possess wide product portfolio containing
grocery, electronics, books, clothing etc. It is the second largest retailer of UK which provides
customers with products at discounted prices. Further, it is also listed on the recognized stock
exchange of London such as FTSE. Also, it has a brand image at global level but during crisis,

company is unable to offer process due to not having any mobile or online offerings. However,
before acquisition, Sainsbury was unable to offer mobile or online shopping experience to the
customers. Hence, in order to build and sustain competitive position Sainsbury took decision in
relation to acquiring Argos. Ion 2016, Argos, a catalogue retailer was acquired by Sainsbury by
paying £1.4 billion (Argos takeover boosts Sainsbury's trading, 2021). Further, supply chain and
logistics management of Argos is highly effectual which helps Sainsbury in getting desired level
of outcome or success.
Research rationale
The main reason behind conducting the current study is to analyze the extent to which
satisfaction level of customers can be raised through the means of merger. This is considered as
issue because due to the rapid changes take place in customer behavior. In order to gain
competitive edge over others Sainsbury is required to meet customers need and expectations to a
great extent. Along with this, now shoppers or customers lay high level of emphasis on choosing
options pertaining to home delivery, click & collect etc. There are several retailers in UK who
acquired other firm involved in home delivery services. Further, it is considered as issue now
because due to COVID-19 preferences of customers shifted on purchasing products through
stores which offer home delivery services. Now, customers do not prefer to shop from physical
store due to having high focus on safety, hygiene etc. Referring all these trends Argos takeover
by Sainsbury was done with the motive to satisfy wants of customers. Moreover, Argos having
wide network who provide customers with amazing online shopping experience (Why Retailers
Should Watch the Proposed Sainsbury’s Argos Takeover with Interest, 2021). Thus, through the
means of thematic perception test technique research could light on enhancement in customer
satisfaction level as result of concerned merger.
Research questions
Q.1 What is the concept of customer satisfaction and merger?
Q.2 Which benefits and drawbacks entice merger activity within UK retail sector?
Q.3 What is the relationship between Sainsbury & Argos merger and customer satisfaction.

Research aims and objectives
Aim: The aim of study is to analyze the impact of merger pertaining to Sainsbury and Argos
on customer satisfaction.
Objectives
 To develop understanding about the concept of customer satisfaction and merger.
 To ascertain benefits and drawbacks associated with merger activity within UK retail
sector.
 To determine relationship between Sainsbury & Argos merger and customer satisfaction.
 To recommend strategies to Sainsbury for enhancing customer satisfaction through
merger activity.

CHAPTER 2: LITERATURE REVIEW
2.1 Introduction of literature review
Literature review may be defined as a process which focuses on the evaluation of
scholarly articles. It enables researcher to increase current knowledge, assess theoretical models
and gap in the existing investigation. In this section, scholar uses relevant articles and books
which are already published so that, investigator is able to derived the relevant results. Moreover,
in the present section, researcher also collects information from the secondary sources in order to
attain the defined aim and objectives. In this, articles in relation to merger and customer
satisfaction have been evaluated for developing understanding about topic. Further, different
model will be applied with regard to customer satisfaction and then examine the benefits and
drawbacks associated with merger. Along with this, the present section also describes the
relationship between Sainsbury & Argos merger as well as customer satisfaction.
2.2.1 Concept of customer satisfaction and merger
As per Shokouhyar, Shokoohyar and Safari (2020), customer satisfaction refer to the
extent to company is fulfilling the wants and expectation of customers through current
capabilities, products & services. In the context of business organization, information pertaining
to customer satisfaction is highly significant which helps in determining the changes that need to
be done for fulfilling customers’ demands. Lucini and et.al., (2020) presented customer
satisfaction as a metric in their study which helps in quantifying the degree to which company’s
products or services surpass customer’s expectation level. In UK retail sector, customer
satisfaction is highly significant for building competitive position at marketplace. Ramanathan,
Subramanian and Vijaygopal (2017) investigated that satisfied customer base may result into
high word of mouth publicity. Moreover, when customers feel satisfied then they are encouraged
to share their views with friends and family members. This helps in increasing customer base and
market share by building loyalty among them.
Kano model of customer satisfaction

The model entails that product attributes are based on how they are perceived by
customers and their effects on customer satisfaction. These attributes are divided into three types
such that Threshold which are basic features that customer expect a product must have. Like,
when an individual go to purchase a food product then they make sure that it have bright color
along with good quality. Performance attributes which are not absolutely necessary, but enhance
the customer’s enjoyment like during hotel check-in, customer expect to have free Wi-Fi and
standard TV. Excitement Attributes which is considered as a surprise element that boosts up the
product’s competitive edge. For example, complimentary food products in hotel.
The model shows that customer is satisfied only when they get all the products so that
new ones will be attracted. In the competitive era, now companies use range of new tools and
models in order to gain attention of customers which includes Quality Function deployment and
Six Sigma in order to increase range of new customers towards it.

According to the views of Persson and Frostenson (2021), merger may be defined as an
agreement where two companies combine their business operations and run as a separate legal
entity. With the motive to increase customer base, market share, for gaining high economies of
scale and reduce competitive situation business units are encouraged to undertake merger
activity. In accordance with AL-HROOT and et.al., (2020), merger happens when two
companies join their operations for making the larger one. It is recognized as one of the most
effectual strategy which allows firm to grow and improve organizational culture as well as
position in the competitive business arena. Song and et.al., (2020) defined acquisition as a
strategic tool where one company hold majority of stake in another. For gaining high economies
of scale, diversification, cost reduction and profit maximization business units are encouraged to
employ acquisition tool. Along with this, Tan and et.al., (2019) identified acquisition as a
corporate transaction due to the purchasing of more than company’s 50% assets by acquirer. For
gaining competitive edge and achieving organizational goals and objectives business units can
use either merger or acquisition. Miśkiewicz (2017) entailed in their study that high level of
association takes place between customer satisfaction and sales revenue. When customers feel
satisfied then they usually interact with brand, making focus on purchase and recommending
products to others.
2.2.2 Assessing the advantages and drawbacks associated with merger activity
Bolton and Shankar (2018) stated in their study that merger offers opportunity to the firm
in relation to increasing market share and thereby build competitive position at marketplace.
Moreover, in the case of merger with the help of wide resources availability company become
able to provide customers with high quality products or services. However, on the critical note
that Mahadewi (2018) said that competition level reduced when merger activity takes place. This
in turns may result into increase in the prices of offerings due to monopoly market condition
which closely impacts satisfaction level of customers. On the other side, of Persson and
Frostenson (2021) mentioned in their study that through merger business organization can gain
high economies of scale. Moreover, when company offers products or services at large level then
it may result into lower cost as assets investment spread according to output. Thus, merger helps
in maintaining lower cost of products or services and creating satisfied customer base. Moreover,
now customers prefer to purchase products from the retailer who provides them high quality

offerings at affordable prices. González-Torres and et.al., (2020) criticized that in the case of
merger company faces difficulty in relation to communicating and coordinating with each other.
Due to this, firm gets diseconomies of scale which directly impacts cost level and thereby
satisfaction level of customer as well. Further, Pérez-Pérez, Benito-Osorio and García Moreno
(2021) depicted in their study that merger helps company in expanding its reach at global level.
In addition to this, either diversification and combination of two businesses through merger
creates several sales opportunities. For example: Sainsbury’s acquired Argos for enhancing sales
and increasing both customer base as well as profitability.
Burns, Minnick and Smith (2021) depicted in their study that acquisition strategy helps in
gaining competencies and resources which company failed to hold currently. Hence, rapid
growth in the sales and other aspects such as revenue, financial position can be experienced by
taking resort of acquisition strategy. For instance: In the case of Sainsbury, due to the lack of
having online presence business unit facing difficulty in offering home delivery services to the
customers. This in turn helps company to gain resources from Argos and offer the products as
per the need of their customers. According to Van Tonder and Petzer (2018) the another
advantage of using merger within a company is such that it helps to improve the research and
development which assists to discover new products. Also, merger enables firm to be more
profitable and raise greater funds for research and development. Similarly, in the context of
merger of Sainsbury and Argos, companies merger will benefitted customers because they get
new variety of products that helps to improve the brand image at global level.
However, on the contradictory note, it has been also evaluated by Kasemsap (2019) that
loss of experienced workers aside from workers in a leadership position can be consider as a
disadvantage of merger. Therefore, this type of loss inevitably involves loss of business because
if experience holders will lose their jobs then it will cause negative impact upon brand value and
somehow leads to cause adverse impact upon business performance as well. For example, during
merger of Sainsbury and Argos, companies might loss some of the old workers and this in turn
leads to cause opposite impact upon the brand image. Though, there are many workers who also
faces different difficulties in order to adjust with new environment and this in turn cause
opposite impact upon the brand image.