Analyzing Sainsbury's & Argos Merger: Change Drivers and Strategy

This case study provides an analysis of the strategic implications surrounding Sainsbury's acquisition of Argos, focusing on the drivers of change and their impact on strategic decision-making. It explores the marketplace requirements for success and essential business imperatives that influenced the merger. A SWOT analysis highlights the strengths, weaknesses, opportunities, and threats associated with the merger, while a PESTLE analysis examines the political, economic, social, technological, environmental, and legal factors affecting the business. Porter's Five Forces model is applied to assess the competitive intensity within the retail sector, specifically focusing on the bargaining power of buyers and suppliers, the threat of substitution, and competitive rivalry. The analysis concludes with recommendations for enhancing the organization's responses to future challenges, aiming to optimize strategic decision-making and overall business performance. Desklib offers a variety of similar case studies and solved assignments to aid students in their academic endeavors.

Contempary
Management Issues

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Sainsbury's has strategically responded to those drivers of change with consideration for the
nature of pressures of change......................................................................................................2
Sound recommendation how the organization which might enhance its responses highlighted.6
CONCLUSION................................................................................................................................8

INTRODUCTION
Management is the term of managing activities through planning, organizing, staffing
directing and controlling. The application of management principles is defined to create better
financial, physical and controlling information resources that effectively ensure accomplishing
goals and objectives (Airlie, Robertson and Brooks, 2021). In the rapid changing of global
environment has affected large number of organisation and industries within present scenario.
Effective policy is one of the essential aspects that can help the organisation within the process
of strategic decision-making. Many business organizations are now working towards strategic
decision-making so that they can easily maximize the benefits that can be received from such
decisions. This takes over and merger has optimized resulted of completely customized of the
present operations at Sainsbury's that will affect present and future functioning effectively. This
following report is based on analysation about drivers of change and how it impacts the effective
strategic decision-making process and other commercial and operational activities of Argos. In
this report, it based on case study analysis of Argos that has been over by Sainsbury's. Based on
analysis, further recommendations are formulated to channelize better and effective decision-
making process in the coming time period with application of a relevant change model.
MAIN BODY.
About Case Scenario:
The changing environment is leading to many changes that are essentially required to deal
with uncertainty and issues. For this purpose, Argos is willing to takeover boost of Sainsbury
present trading situation (Alfirević, Aver and Kerolli Mustafa, 2021). The retail sector is
changing very fast, leading to certain particular changes needed to sustain a high retail
competitive market. The financial condition of Sainsbury in the present half-year of ptofit is
more cost-saving and adding more enhancement in trading intensity of both retail brands.
Strategy Formulation:
Mergers and Acquisition are regraded as popular business strategies that organisations are
seeking for objective for purpose of expansion in new Market to get better competitive
advantages. It can also be helpful in the Acquisition of new manpower skill set, advanved
technologies, and new business opportunities.
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Sainsbury's has strategically responded to those drivers of change with consideration for the
nature of pressures of change.
Important Drivers of Change: There are different drivers of Catalysts of change that may
require better change in the organisation. There are many times organisation may face issues
because of not show concerned the attention such drivers. Some of the important drivers that
have affected Saisnbury and Argos are going to impact the strategic decision-making
process.
 Marketplace requirement of success: The fluctuation of customer needs leads to
business requirements to better succeed in the Market. This might lead to changes
in delivery speed, level of quality, need for motivation, innovation, and, most
importantly, to follow market trends. In the perspective of Sainsbury and Argos
must focus on these requirement that help to understand the Market at the time of
merger.
 Business Imperatives: According to this driver of change related to the
requirement for the organisation to be strategically successful in the Market. The
current strategic decision-making and strategic plan of Sainsbury and Argos is
formulated to address business imperatives (Anastasiou, and Garametsi., 2021). It
is creating a need of systematic to rethinking and changes are required in
organisation product goals, branding, pricing strategies. The present strategic
decision-making and strategic plan of Sainsbury and Argos is formulated to
address better business imperatives.
In changing scenario for Sainsbury, it has become important to analyse different factors
associated with the brand that can assist in evaluating the way different external factors have
affected the present functioning of a business. For this motive, there is an evaluation of the
internal and external factors are affecting the business functioning.
Swot Analysation:
It is analysis on basic internal analytical tools that are used to manage the understanding with
different perspectives, which can assist Sainsbury and Argos together in accomplishing the
required better competitive advantages after the merger.
Strength Weakness
 Sainsbury is one of the most trusted  There could be issue during merger of
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retail business brand. For this they have
also launched their sustainability plan.
The brand has identified its major five
core values that will be reflected in its
merger statement with Argos and it is
important for the long term of
functioning of this organization.
 The merger between Sainsbury and
Argos which has provide both
companies with an immense tencity to
analye over the Market with their
various outlets and online store.
 Argo's web delivers platforms as their
strength to provide services quicker to
customer relatives to their competitors.
both companies due to not having jobs
to generate after Sainsbury's emphasied
on establishing themselves in the online
market space.
 It has disrupted through internal
working and get caused confusion
within communication channels that
collectively protest by employees has
also negatively affected the brand
image thate leading to decline in
Market.
Opportunity Threats
 Through the merger of both companies
can create an opportunity to expand and
generate new offering of their product
and services. They utilise both their
strength and knowledge of Market. The
structure of expanding business by
Sainsbury and Argos will ensure a
higher customer base is attracted
combined into new products and
services being price in affordable
pricing.
 Using of E-commerce and social medis
marketing platform by Sainsbury and
Argo advertise their product and
services with different offerings
 There are still competitive retail
businesses such as Tesco, Asda, and
IKEA who have high market share and
can overtake the retail Market. This can
create high threat for Sainsbruy and
Argo company (Andraska and et. al.,
2021).
 In future perspective, there would be
agrressive pricing strategy of product to
just sustain in Market. This strategy can
reduce the Sainsbruy and Argo product
quality within Market.
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effectively.
Pestle Analysis:
According to this framework is help to analyze the key factors political, economic, social,
technological, Environment and Legal factors that influence an organization from external
forces. This model also help to provide actual information regarding challenges and
opportunities from external competitive Market in perspective of a company. At the time of
organisation is willing to adopt certain changes because of changing requirements of the
environment.
There is a need to determine several forces that are important parts of the macro
environment and may impact future strategic formulation process (Balkin and Lenz., 2021). So,
the present situation of Sainsbury is having merger plan with Argo company where there are
some of the factor which is going to impact future functioning post-merger as mentioned below:
Political factor: Many political decisions can impact the present functioning of Sainsbury and its
future strategies. In United Kingdom, Brexit market can create scenario has posed a challenge
for may retail sector organisation. As Sainsbury used to sold their 20%-30% around product and
services from European Union that generate resulted to getting a settlement.
Economic factor: The changing economic situation which also has significant impact on the
present functioning of Sainsbury. Conclusion: there is a very drastic present situation because the
Covid-19 situation is also going to affect the way various organizations are functioning. The
impact of Covid has shut down business in Market and also there are less job generated.
Through this, the government of UK announced a lockdown in the early days. This leads to
difficult in physical retail outlets to managing their sales. People's overall purchasing power is
also affected, which is reduced because of contraction personal disposable income.
Social factor: The present merger of Sainsbury with Argos may benefit their existing loyal
customers. In perspective, Sainsbury is a brand with differentiation advantages in offering a wide
range of products and services such as in food and other cosmetics. Further more, UK has wide
range of audience where they can offer discounts in their home base and other different product
and services. Through Argo and Sainsbury Merger and Acquisition, they are going to assist their
present and future base customers by having advantages to different product range offer to their
customer.
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Technology Factor: As technology contributes big development in resulting many brands to
adopt the new technological development, it can help them maximize its welfare. For this
purpose, presently as retail brands with both Argo and Sainsbury are using data-driven analytical
customer insights (Benuyenah, 2021). As per current situation, Covid-19 virus creates drastic
impact on businesses through which many of them have established their business on online
platforms to expand its customer base.
Legal factor: In Mergers and acquisitions, many legal practices must be considered, which must
be followed and implemented to adhere to the regulatory framework. Apart from this, various
legal frameworks are essential for Argos and Sainsbury's post their merger, such as anti trust
laws, discrimination laws, copyright, patent law, customer protection laws, employment laws,
etc.
Environmental factors: There are many factors that are part of the external environment that
may impact the organization's internal strategic decision-making. Sainsbury and Argo
collaborate and work towards properly implementing healthy products and services with
environmental protection and safety (Boon., 2021). As Sainsbury has a strategic objective of
sustainability that instructs them to reduce plastic wastage material that help them to attain high
competitive advantages. Another objective is to reduce carbon footprint to avoid global warming
causes and clean the environment from chemical gas that can affect human life.
Porter Five forces:
Porter five forces is frequently used for identify an industry's structure to determine
corporate strategy better. It is a framework for analysing a company's competitive environment
that shapes every industry helps determine an industry's weakness and strengths. In following
there is a Porter Five Forces implementation in the perspective of Argo and Sainsbury. There
will be analysis of such forces and its impact on furture strategic decision-making of the
business.
Bargaining Power of Buyers: Argo is a retail-based brand with a strong brand portfolio in a
competitive marketplace. Sainsbury is also one of popular retail brands with diversified range of
product and services. Further, automation of activities has resulted in better consistency of
quality and has enabled the brand to scale up based on present demand in the Market. There
would high bargaining power of the customer. With such aspect of retail brand helps to manage
customer bargaining power in the upcoming time.
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Bargaining power of Suppliers: Sainsbury and Argos have a strong base of suppliers that offers
them competitive advantages in the long term. The overall bargaining power of suppliers is
Moderate because Sainsbury and Argo are one of the well-established brands and a merger
scenario is might offer them long-term association with their existing suppliers base.
Threat of Substitution: Sainsbury and Argo have some effective strength like Argo is the
largest retail brand with around 500-800 stores across the UK. In this, Argo is able to serve
approx 130 million customers and 18 million household across UK (Boronski, 2021). The brands
are offering wide range of products both offline and online mediums. Thus, this may creates
complexity in substitution of product from other existing brands. This would guide for both the
brands within process of having lower threats of substitution.
Competitive Rivarly: There is a strong rivalry in retail sector organisations in the UK. In the
perspective of Sainsbury and Argo mergers, they can face high competition in the competitive
retail Market. Diversifying business areas and strong market share would help maintain
consistent profitability. According to this force is depicts about information provide availability
of competitors in present competitive Market.
Evaluation:
In the above analysis of Sainsbury and Argo is summarised that as per the present case
scenerio of merger and Sainsbury and Argo is having a high competitive rivalry and bargaining
power buyers. Sainsbury and Argo need to implement a penetration pricing strategy that reduces
the cost and focuses on product and services quality. Thus, this strategy practices can help to
mitigate the risk factor from their competitive Market.
Sound recommendation how the organization which might enhance its responses highlighted
Using Kurt Lewin's change management model defines understanding the procedure of
organization change as par of three-stage theory (Chinomona and Bikissa-Macongue, 2021). The
motive of using Kurt Lewin model is to analyze how organizational change is adopted and the
way that involves different transactions before accomplishing sustainability through
organizational functioning. In following there are three stages explain within context of
Sainsbury and Argo mergers:
First Stage: Unfreezing: This first stage explains the business transicition that is one of the
most critical stages in the entire process. This is related to improvising people's readiness and
willingness by forestering about realisation to shift from the present zone towards a future
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transformed business. During this stage, there is analysis regarding with thinking process that
existing organizational structure and having old behaviour with having an objective to managing
the different functionalities in this scenario in the organisation just before the change is being
adopted or implemented. The main purpose of Sainsbury is to purchase Argo having a wide
product range, eliminate carbon footprints and competitive influence from Market. Another
objective by Sainsbury to merge with Argo is to provide the different products to offering
customers added high-value specifications at lower prices.
This innovative vision of Sainsbury and Argo to provide positive exposure to their customer
where they comfort to shopping. With the changing of trends, many organizations follow the
latest trends such as technology advancement. In this many organizations plan to shift into online
offering by choosing platforms such as Amazon (Alfirević., Aver and Kerolli Mustafa., 2021). In
this, an individual company can easily advertise its products and services in social media
marketing. Similarly, Sainsbury and Argo can utilize this opportunity to improvise their product
promotional activities and attain more customers. In the future, the retail business would be
dependent on online or E-commerce businesses where the customers' need is to have a similar
range of product availability as they are present in offline stores.
Second Stage: Change: According to this, it is regarded as transition or the stage on
which there is actual implementation of change. In the perspective of Argo and Sainsbury after
post merger, they work towards will work carefully and systematically planning, encouraging
involvement and proper communication at the time of product endorsement. This mainly
includes accepting some new process of performing business transactions.
The change perspective of Sainsbury and Argo merging can lead to further integration of
head office function within both companies' departments where functional department includes
finance, retail, human resource, technological and commercial. There were some changes in
Sainsbury and Argo's leadership roles, such as mitigating various senior leadership roles after a
merger. There is a fast change in the behavior of customer buying patterns where now they
prefer online shopping. For this, both companies need to create a strategy to attract customers or
create a plan to establish their retail product and services on an online platform.
For Argo, their supermarket chain has also revealed that will be closing around 70 of its
stores they are willing to open brand concessions in their own supermarkets. The merger resulted
in the better sense of momentum across. The integration of business to better unlock to making a
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further investment can happen on which Argo can provide the best offering to their existing
customers (Sainsbury's to cut hundreds of more jobs after Argos takeover, 2020).
In the year of 2016, the organization contributes after the Argo acquisition occurs (Emma
Brazel, 2020). There are lot of integration when the organization structure got to change and it
took place in the department. So, the different jobs roles were cut during this process. This
mainly includes maximum leadership roles that were affected in this particular situation.
Third stage: Freeze (Refreezing): In this stage, it is a unique form of stage where
people internalize new working ways or accept new ways of working by establishing a new
relationship. In Argo and Sainsbury, this aspect is linked with reinforcing and strengthing with
new changed and analyze new behavior of working.
After the merger happens with Sainsbury and Argo, their plan to provide cost saving and
improved profitability in the present scenario. Apart from this, Sainbury company plans to merge
with other retail businesses such as Asda during the upcoming period (Anastasiou and
Garametsi., 2021). There is a positive benefit after getting merger where Sainsbury becomes the
second-largest retail business of supermarkets in the UK. But due to some instances, profit get
hit by costs that are related to restricting of the store management team. The merger of Sainsbury
and Argo is a well tactical decision to have greater help in effectively serving cost-saving
measures.
Evaluation:
From the above made analysis of the change in Argos and Sainsbury, where it can be
assumed that supermarkets monopolize. It prevents the result of retail brands from delighting
their customers by offering them low prices, improvising the overall convenience, and offering
endless, different products.
Ansoff Matrix:
This tool is also called the product/market expansion grid, where a firm uses this tool to
analyze and plan their strategies for better growth. This matrix shows four strategies that can be
used to help a firm and analyze the risk associated with each strategy. There is analysis of some
of future growth strategies as mentioned below:
Market Penetration: It is a strategy defines about the selling of an existing product in an
existing Market. With this purpose of Sainsbury can work towards maximizing the present range
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of products. In this enhancement in the present variety where they can be an achievement of
higher market share.
Product development: This Strategy depicts the selling of new products in the existing Market.
Sainsbury and Argo can use this strategy to launch their new product and promote to selling
purpose in the existing Market in price reduction.
Market Development: According to this strategy defines selling an existing product in a new
market area. After the merger of Sainsbury and Argo there can be new launches of product
which are to be made for selling and promoting in new Market to awareness among with new
customer
Diversification: In this Strategy, it allows to selling new product in the new Market. After
merging the scenario of Sainsbury and Argo, they can launch a new product range in different
market segments. By opting new product manufacture to sell in new Market need innovative
strategy to analyze the Market and seeking for new customers.
Evaluation:
Based on above Ansoff Matrix analysation where four strategies have been explained in
perspective of Sainsbury and Argos, they can adopt a product development strategy. This
stratergy can help to both companies after their merger as they both have their existing loyal
customers (Saha and Honeybul., 2021). On the other hand, Sainsbury and Argo brand products
are known for their quality with lower prices. As both companies develop a new product, a
customer would get a new specification offering in a product that can attract customers
effectively.
Recommendations :
 Sainsbury and Argo merger can utilize their marketing promotion team to collect
information about the latest retail market trends. They both can promote their product and
services aggressively to customers by using social media marketing channels such as
Facebook, Instagram, Twitter and You tube. They can be retargeting and other digital
platforms to attract potential customers to adopt for their product to better competitors.
 The company must seek new offering and added specification in new product launch to
promote in an existing market. This can leads to both companies to understand new and
existing customer behaviour. But suppose company is seeking for business expansion. In
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that case, they can approach Market development strategy to promote their existing
product in a new market to earn more profitability and competitive advantages.
 They need to have a focus on diversification to branch their product and services through
with new market segments. The diversification that ensures product differentiation
relative to their competitors provides them with marketing edge and increases
profitability. With that, the company also needs to change their pricing strategy to attain
more competitive advantages.
 The company must determine towards an aggressive promotional strategy and better
advertising campaign. To consider this promotional strategy, a company can directly
pitch their product to competitors' customers and Market. For example: after merger
between Sainsbury and Argo where they can easily surpass their competitor's Market.
 The company focuses on expanding their business in an online platform after a merger
where it can provide various range of products and services. This will positively impact
sales as a customer where they will introduce online shop applications. In this
application, customer can easily buy their product and services as per their convenience.
 The company can better improve on its inventory management by better forecasting its
product demand to mitigate inventory in offline and online channels. This will provide
them with a better understanding of their inventory and save them from unnecessary
financial loss.
 Through merger, Sainsbury and Argos can utilize advanced technologies by making
investments and opportunities in business effectively. Artificial intelligence is one of
most trending technology which more support to accomplish the task flexibly. Through
Artificial intelligence helps to automate process for identifying decision making pattern.
This will also benefit Sainsbury and Argo company at hiring point of time where
managers of both companies can easily hire potential candidates and operate their
complex task compliance-oriented manner.
 There can be the development of an effective growth strategy, a new business model that
can improvise to accomplish higher market share. There can be focus on using its
strength to influence existing loyal customers.
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