Strategic Analysis of Sainsbury's Acquisition of Argos Case Study

This case study examines Sainsbury's acquisition of Argos, focusing on the strategic rationale behind the bid, including acquiring Argos' online delivery business, reducing reliance on the competitive grocery market, and broadening product range. It analyzes post-acquisition integration using the integration matrix, suggesting the 'Absorption' approach is most suitable. The study also applies the 'buy, ally, or DIY' matrix to assess the acquisition's strategic value, concluding that it presents a significant opportunity for Sainsbury's to enhance its market position and operational efficiency. Desklib provides similar case studies and resources for students.

Activity 5 .2 Case study

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Question 1: Why did Sainsbury Bid for Argos?.....................................................................1
Question 2: In post-acquisition Integration matrix, consider how Sainsbury strength best
integrate agro?........................................................................................................................1
Question 3: In context to “buy, ally or DIY” matrix , consider if acquisitions of Argos is
considered to be greater strategy for company?.....................................................................3
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................5
Online.....................................................................................................................................5

INTRODUCTION
The Analysts were shock when supermarket in UK, Sainsbury declared that it will take
on Argos which is general Merchandise. The present report basically on the Case Study “Future-
proofing business? Sainsbury acquires Argos.
MAIN BODY
Question 1: Why did Sainsbury Bid for Argos?
Answer: As per the Case Study, Sainsbury is buying Argos for the purpose to acquire online
delivery business of the company, to reduce its reliance on the highly competitive grocery market
and the major reason is to broaden its product range. In reference to the organization, the
company will put Argos stores in their supermarkets and also adding its own range of non food
goods and homeware range. It is considered to be a very logical move by the company as it
offered these delivery channels, a resource they never possessed. Through Acquiring Argos, the
company indicated that they would be able to increase their delivery networks, would be able to
boost up their sales and can sell products to each other's consumers. In addition to that, the
company's motive for the bid is that it could move Argos stores to their current supermarkets. In
case of Sainsbury's 1300 stores could then easily become click and collect spots. This move can
be highly beneficial as it could lead to turning their supermarkets into one stop destinations for
both the consumers of Argos and Sainsbury's which offers them opportunities related to cross
selling and also increasing footfall (UddinAhmed, Mazid and Ahmed, 2020).
Question 2: In post-acquisition Integration matrix, consider how Sainsbury strength best
integrate agro?
Mergers and Acquisitions basically bring together the organizations through complete
changes in the ownership. It also comprises of a Strategic Alliance where organizations portion
activities or resources in order to implement strategies. It is considered to be a very famous
method among organizations for the objective to pursue strategy. In case of integration, it is
basically the procedure of centralizing two entities or resources, tasks and individuals in a way
which helps in creating value for company's future through realizing synergies & efficiencies.
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The passage value from acquisition totally depends upon on how it is incorporate with acquirer.
When it comes to the process of integration, it is considered to be highly challenging due to
organisational fit's problems. Also, the poor integration could cause failure in acquisitions. For
organizations, its significant to have right formulation to integration of merged or acquired
firms.
In reference to five integration approaches, it basically comprises of two criteria result
which plays a very important role.
Absorption: At this step, there is very less need for autonomy of organisational and where the
need for high level of strategic interdependence is necessary. In case of Absorption, it generally
requires speedy adjustments of the old structure and strategies (Bentham, 2018).
Preservation: Such type of approach is suitable where the take on organization is running well is
not compatible with their acquirer.
Symbiosis: It basically indicates a strong requirement of strategic interdependence but a
requirement for higher autonomy. This generally depicts that acquiring firm or acquired
company should acquire the good qualities. It is considered to be the most complex approach.
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Intensive Care: It basically took point where there is a little need gained by integration. Such
learning generally occurs when acquired firm needs rapid remedial or poor financial health.
When it comes to supermarket industry, there is an intensified competition in the context
to the different factors such as logistic services, price wars, activities of promotion, marketing
activities and store closure programs which pushes Sainsbury to make a step towards level up the
game through acquisition of Argos Organization. In reference to the integration process,
integrating the operation is considered as one that they should specially pay emphasis on
incorporation of online shopping experience to its consumers (EXPLORING STRATEGY
ELEVENTH EDITION).
Through the support of web platforms and just in time logistic services, the company can
offer faster and more variety of choices which is basically driven by digital technology and cell
phones. With the help of integration, it will help in bringing new changes to Company's
supermarket by offering good quality customer service both online and offline and also
enhancing technological development. Moreover, the integration would result in adoption of
Argos stores in the supermarket which will offer wide range of products and offering better
shopping experience. In reference to Sainsbury integration of Argos, it must focus on creation of
values for the companies. The Absorption is considered to be the most suitable approach wherein
there is lesser Organizational Autonomy and high level of strategic interdependence. With the
support of this approach, it would lead to appointment of a new integration manager for the
objective to handle the firm in different manner (Colley and Spyridonidis, 2022).
Question 3: In context to “buy, ally or DIY” matrix , consider if acquisitions of Argos is
considered to be greater strategy for company?
The Acquisition could be considered to be a greater opportunity for the company and also
it needs a thorough analysis. Majorly, the organization assess first whether it is a great idea to
acquire the entire firm or they could basically form a partnership with it instead, it specifically
depends on the necessity level of company and the goals of strategies. A 'buy, ally or DIY'
matrix basically summarizes four key factors which helps in choosing among the alliances,
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acquisitions and organic development. For the objective to analyse the acquisition done using the
matrix, it basically depicts that the urgency upon Sainsbury is high due to the intensified
competition in the surroundings and also the new entrance of online shopping store (5 things you
need to know about Sainsbury’s takeover bid for Argos, 2016).
CONCLUSION
From the above, it could be determined that Argos is considered as the well establish
logistic services which is highly efficient and effective in their operations. In case of Sainsbury's,
it is considered to be a great strategy to acquire Argos.
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REFERENCES
Books and Journals
UddinAhmed, J., Mazid, T. and Ahmed, A., 2020. Argos: Revolution in Non-Food Retailing.
In SAGE Business Cases. SAGE Publications: SAGE Business Cases Originals.
Bentham, J., 2018. Business and Economics in the News–Sainsbury's and Asda-the decade's
mega-merger. Teaching Business & Economics, 22(3), pp.11-12.
Colley, J. and Spyridonidis, D., 2022. Making Decisions in a Volatile, Uncertain World.
In Unprecedented Leadership (pp. 41-63). Palgrave Macmillan, Cham.
Online
EXPLORING STRATEGY ELEVENTH EDITION [Online] Available Through
<https://www.academia.edu/44504531/EXPLORING_STRATEGY_ELEVENTH_EDITION>
5 things you need to know about Sainsbury’s takeover bid for Argos, 2016. [Online] Available
Through <https://www.thedrum.com/news/2016/03/18/5-things-you-need-know-about-sainsbury-
s-takeover-bid-argos>
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