Case Analysis Report: Sainsbury's Acquisition of Argos and Integration

This report provides a comprehensive case analysis of Sainsbury's acquisition of Argos. It begins with an executive summary outlining the significance of mergers and acquisitions in business growth, followed by an introduction that establishes the report's purpose: to evaluate the merger and acquisition strategy through a case study. The report then delves into Sainsbury's motives behind the acquisition, exploring factors like sales growth enhancement and the value of Argos's delivery networks. It examines the post-acquisition integration process using the Haspeslagh and Jemison model, detailing the stages of Absorption, Preservation, Symbiosis, and Holding. The report justifies the validity of the Argos acquisition by referencing the "Buy, Ally or DIY" model, highlighting the opportunities for market and product development, and the strategic advantages gained. The conclusion summarizes the key findings, emphasizing the benefits of the merger for Sainsbury and its potential to increase services and revenue. The report incorporates references to support its analysis.

Running head: CASE ANALYSIS OF ARGOS ACQUISTION
CASE ANALYSIS OF ARGOS ACQUISTION
Name of the student
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Author Note

1CASE ANALYSIS OF ARGOS ACQUISTION
Executive summary
Merging, acquisitions and alliances are the most common methods of achieving growth
strategies and considerably one of the common aspects in terms of business building. These
methods are the key methods that are used for pursuing the strategic options and would be
considered along wise the chief alternative of the organizational development.
This report investigates the important factors, including the perspectives behind the reasons
of acquiring and merging of Argos by Sainsbury. This report critically analyzes about reason
of bidding and acquiring Argos, including understanding about the methods of integrating
Argos by Sainsbury. This report also deals with the justification about the validity of the
acquisition and merger method, with reference to the “Buy, Ally or DIY” matrix.
The purpose of the report is to understand and evaluate the significance of the Merger and
Acquisition strategy with the help of a case study.

2CASE ANALYSIS OF ARGOS ACQUISTION
Table of contents
Introduction................................................................................................................................2
Sainsbury’s motive behind the acquisition................................................................................2
Post acquisition integration of Argos.........................................................................................3
Justification of the validity of Argos acquisition.......................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

3CASE ANALYSIS OF ARGOS ACQUISTION
Introduction
Mergers, acquisitions and alliances are the most common methods of achieving
growth strategies and considerably one of the common aspects in terms of business building.
These methods are the key methods that are used for pursuing the strategic options and would
be considered along wise the chief alternative of the organizational development1.
This report deals with the important factors including the perspectives behind the
reasons of acquiring and merging of Argos by Sainsbury. This report critically analyzes about
reason of bidding and acquiring Argos, including understanding about the methods of
integrating Argos by Sainsbury. This report also deals with the justification about the validity
of the acquisition and merger method, with reference to the “Buy, Ally or DIY” matrix.
The purpose of the report is to understand and evaluate the significance of the Merger
and Acquisition strategy with the help of a case study.
Sainsbury’s motive behind the acquisition
The acquisition has been justified by certain arguments that have been put forward by
Sainsbury. The main concern that been put forward is the enhancement in the sale growth that
would be amplified by the newly acquired sites and the stores that was previously operating
under the Home Retail Group. This would also facilitate the concessions about the click and
collection of points, including the granting of access to the delivery networks as well as
imparting of new opportunities to the sell the products to the other customers of the
company2. However, the main reason for the acquisition might be due to the delivery
networks of Argos, which can help with the business activities of Sainsbury. In the year of
1 Vazirani, N. and Mohapatra, S., 2012. Merging Organisational Culture through Communication-'Post Mergers
& Acquisitions'. SIES Journal of Management, 8(1).

4CASE ANALYSIS OF ARGOS ACQUISTION
2012, it was revealed by Argos that it would be establishing itself as one of the known leaders
in the digital retail segment with the progress and the advancement in the technology
depended catalogues. This also included the further development in the strategies of boosting
the delivery services, with one-day delivery facility that was implemented3. The lease of
around 40 percent of the Argos store was further due for the renewal in the around four to
five years, where Sainsbury intends to shut and move around or convert half of these stores
into the Sainsbury stores4. This can be justified by the fact that cutting down of the property
saving, the legal and the administration costs would effectively boost the synergy by a £160
million. The main concept behind this action is to keep the stores less and points of presence
high.
Post acquisition integration of Argos
With reference to, the Haspeslagh and Jemison model of post acquisition the retail
giant is considerably entering the integration phrase with newly acquired Argos. The four
stages of the model include Absorption, Preservation, Symbiosis and Holding5. As per the
model, the absorption stage refers to the acceptance and the fulfillment of the vision for
2 Bareiss, R., 2014. Exemplar-based knowledge acquisition: A unified approach to concept representation,
classification, and learning (Vol. 2). Academic Press.
3 Marcus, S. ed., 2013. Automating knowledge acquisition for expert systems (Vol. 57). Springer Science &
Business Media.
4 Mirc, N., 2015. Merging networks. The Routledge Companion to Mergers and Acquisitions, p.259.
5 Angwin, D.N. and Meadows, M., 2015. New integration strategies for post-acquisition management. Long
Range Planning, 48(4), pp.235-251.

5CASE ANALYSIS OF ARGOS ACQUISTION
which the acquisition needs to be carried out as well as the management should have the
courage to accept it. With relevance to such, the management of both the companies,
Sainsbury and Argos, need to be aware of the acquisition motives as well as understand the
vision that followed the acquisition. The preservation stage refers to the management focus
that ensures to keep the source of the acquired benefit intact. With relevance to this stage,
Sainsbury wishes to keep the delivery system as well as the strategies that ensure the quick
delivery of the products, intact as well as utilize this facility of Argos to the advantageous end
of Sainsbury, also keep it subjected to improvising. The symbiosis stage refers to the
managerial activities that ensure the simultaneous preservation of the boundaries as well as
the permeability in the gradual process. With reference to this stage, Sainsbury wishes to
expand the business in its own terms as well keep the integrity of both companies perform
side by side as well as keep an interdependent nature alive6. This also refers to the
interdependency of both the companies to serve each other despite the merging and the
acquisition. This includes the strategy where Sainsbury wishes to convert and serve Argos’
customers and clients by diversifying the services and in return, Sainsbury would keep the
management and the delivery systems in order to serve the customers in a more easier,
effective and faster manner. The holding stage of the model refers to the non-intention of
organization yet only the financial transfers, the risk sharing or the general management
capability only creates the value. With close relevance to this stage, Sainsbury wishes to
follow the stage of sharing only the financial transfers and the general management since the
primary motive behind the acquisition of Argos was to diversify the distribution networks of
Sainsbury. This also includes the expanding of business by utilizing the contact and customer
6 Stahl, G.K., Angwin, D.N., Very, P., Gomes, E., Weber, Y., Tarba, S.Y., Noorderhaven, N., Benyamini, H.,
Bouckenooghe, D., Chreim, S. and Durand, M., 2013. Sociocultural integration in mergers and acquisitions:
Unresolved paradoxes and directions for future research. Thunderbird International Business Review, 55(4),
pp.333-356.

6CASE ANALYSIS OF ARGOS ACQUISTION
resources of Argos as well using the DIY system of the company to compete with the rising
rivals in the same industry, whereas no major integration has been implemented for within.
The value is only created by the exchange of the financial liabilities and achievements and
the management capabilities of Argos. The only section where the integration post
acquisition has been done is the incorporation of the vision, identifying and diversifying the
target market, the selection of the growth method and control the ongoing improvement of
both the companies, post acquisition7.
Justification of the validity of Argos acquisition
It is obvious that the Argos acquisition is one of the best strategic deals by Sainsbury.
With reference to the “Buy, Ally or DIY” model, it can be justified that the acquisition of
HRG directly points to a huge opportunity for the market growth, development, product
development as well as the diversification.
The taking over of Argos can help Sainsbury develop an effective synergy through the
reduction of the incurring cost due to the mass manufacturing and the effective gains as well
as the reduction of the competition, thus enhancing the market growth and prospect. The
acquisition would further boost the market development and the product development. These
in turn would give access to the newer market opportunities and further enhance the market
and product development, including the introduction of new product lines and varieties. Even
though this acquisition would pose some of the intense threats to Sainsbury due to the
penetration of new areas as well as the need for information in the new areas, the merging of
Sainsbury with Argos would help it gather more knowledge from Argos while entering the
newer markets. The presence of the close linkage between the two companies as well as their
activities is a huge advantage since both of them represents a related diversity due to their
7 Cooper, C.L. and Finkelstein, S. eds., 2014. Advances in mergers and acquisitions. Emerald Group Publishing.

7CASE ANALYSIS OF ARGOS ACQUISTION
existence in the retail industry. This would help in ensuring as well as guaranteeing the cost
reduction and effectiveness in terms of channeling the resources of the distribution networks.
The higher diversification would ensure a sustaining prospect in the end, since the changes in
the combined group would help the synergies increase or decrease than those, which has been
estimated8.
Conclusion
With the help of this report, it can be concluded that the merger and acquisition of
Argos have been rightly justified by Sainsbury, since the increase in the number of outlets
would help Sainsbury to significantly increase its services as well as meet newer market
opportunities. The close and acquisition would further help Sainsbury to generate higher sales
and revenue in the retail industry as well eliminates the rivals and the competition amongst
the companies.
8 Gleich, R., Hasselbach, T. and Kierans, G. eds., 2012. Value in due diligence: contemporary strategies for
merger and acquisition success. Gower Publishing, Ltd..

8CASE ANALYSIS OF ARGOS ACQUISTION
References
Angwin, D.N. and Meadows, M., 2015. New integration strategies for post-acquisition
management. Long Range Planning, 48(4), pp.235-251.
Bareiss, R., 2014. Exemplar-based knowledge acquisition: A unified approach to concept
representation, classification, and learning (Vol. 2). Academic Press.
Cooper, C.L. and Finkelstein, S. eds., 2014. Advances in mergers and acquisitions. Emerald
Group Publishing.
Gleich, R., Hasselbach, T. and Kierans, G. eds., 2012. Value in due diligence: contemporary
strategies for merger and acquisition success. Gower Publishing, Ltd..
Marcus, S. ed., 2013. Automating knowledge acquisition for expert systems (Vol. 57).
Springer Science & Business Media.
Mirc, N., 2015. Merging networks. The Routledge Companion to Mergers and Acquisitions,
p.259.
Stahl, G.K., Angwin, D.N., Very, P., Gomes, E., Weber, Y., Tarba, S.Y., Noorderhaven, N.,
Benyamini, H., Bouckenooghe, D., Chreim, S. and Durand, M., 2013. Sociocultural
integration in mergers and acquisitions: Unresolved paradoxes and directions for future
research. Thunderbird International Business Review, 55(4), pp.333-356.
Vazirani, N. and Mohapatra, S., 2012. Merging Organisational Culture through
Communication-'Post Mergers & Acquisitions'. SIES Journal of Management, 8(1).