Strategic Analysis of Argos UK: Industry, Objectives, and Strategies

This report provides a comprehensive strategic analysis of Argos UK, a prominent retailer in the United Kingdom. It begins with an executive summary and table of contents, followed by an introduction to the UK retail sector and an analysis of Argos's performance, including its association with Sainsbury's. The report delves into the company's organizational objectives and conducts a detailed SWOT analysis, highlighting strengths, weaknesses, opportunities, and threats. It then applies strategic tools like the Ansoff Matrix, generic strategies, and Porter's Five Forces to evaluate Argos's strategic direction, vision, and market strategy. A strategic analysis using the SAF framework is also included, culminating in recommendations for future strategies and a conclusion summarizing the key findings. The report covers various aspects of Argos's business, from market dynamics to internal capabilities, providing a holistic view of its competitive positioning and strategic options.

Running head: ARGOS UK
ARGOS UK
Name of the Student
Name of the University
Author Note

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Executive Summary
The business environment is very competitive in nature and with respect to this, it can be largely
understood that, the different businesses are required to undertake considerable efforts to
maintain their overall competitive positioning in the market. The report is based on the overall
performance of the Argos retailer as present in the United Kingdom. The firm is a retailer present
in the United Kingdom since a long time and with respect to this, the firm has been performing
considerably well. The report aims to present a strategic analysis of the overall per the overall
industry environment and presents an overall presentation of the strategy which can be chosen by
the firm in the long run.

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Table of Contents
1.0 Introduction to the UK Sector/ Industry analysis of Argos.......................................................3
About the association with Sainsbury..........................................................................................3
1.2 Industry analysis....................................................................................................................4
1.3 Company performance...........................................................................................................6
2.0 Organizational Objectives.........................................................................................................6
3.0 SWOT analysis.....................................................................................................................7
4.0 Ansoff Matrix/ Generic Strategies/ Porter’s 5 Forces..........................................................9
4.1 The Ansoff Matrix.................................................................................................................9
4.2 Generic strategies.................................................................................................................11
4.3 Five forces strategy..............................................................................................................12
5.0 Evaluation................................................................................................................................13
5.1. Strategic Direction..............................................................................................................13
5.2 Vision...................................................................................................................................14
5.3 Market Strategy...................................................................................................................14
6.0 Strategic Analysis – SAF....................................................................................................14
7.0 Recommendations....................................................................................................................15
8.0 Conclusion...............................................................................................................................16
9.0 References................................................................................................................................17

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1.0 Introduction to the UK Sector/ Industry analysis of Argos
As the business environment has become considerably dynamic in nature, it is very
crucial for all the firms as present in the dynamic business environment, to regularly monitor the
different strategies as faced by their organization. In addition to this, the firm would also be
required to form adequate plans with respect to the future of Argos. The report is based on the
strategic analysis of one such organization named the Argos (Frynas and Mellahi 2015). The
Argos is a retailer as present in the United Kingdom and has conducted operations for a long
time. The firm belongs to the category of a catalogue retailer and can be stated to be a subsidiary
of the Sainsbury`s. The company carries out its operations both online and physical shops as
well. In addition to this, the store has over 845 retail shops and serves approximately 29 million
customers in one year. The firm was found in 1972 and is also a constituent of the FTSE 100
Index (Argos.co.uk 2019). The company stocks a large range of brands and publishes the
catalogue of the firm twice a year. The item descriptions are given along with the printing of a
catalogue and the customers are required to order from the catalogue. In addition to this, the firm
also stocks its own brands which prove to be highly profitable for the long run of the firm.
About the association with Sainsbury
The Argos has got into an association with the Sainsbury, and has been able to drive an
increase in the overall trade intensity. This is because, the cost savings have improved the profits.
Moreover, Argos has been successful in reaching out to the different customers as well after its
long term association with the firm. In addition to this, although the costs for the Parent firm
increased, Argos has benefited greatly from the deal although the market remained highly
competitive in nature (Bbc.com 2019).

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Figure 1: The Sainsbury`s growth of the business post the association with Argos
(Source: Bbc.com 2019).
1.2 Industry analysis
The United Kingdom retail market is forecasted to grow by 14.8% by the year 2023 and
will provide it with a value of £218.5bn which predicts that the firm has been continuing with the
last year`s trend and the growth is predicted to be considerably higher across all the major
groceries as present (Argos.co.uk 2019). As the online sales have been increasing considerably,
it is anticipated that in the coming years every £3 in the £10 of growth will be coming
from the discounters (Ethiraj, Gambardella and Helfat 2016). The larger stores are
expected to improve in terms of investment in the price and range along

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with the customer experience which will assist in ensuring that the firms are
successfully able to attract and retain the market share in a better manner.
The organization, Argos, has been a target of considerable effects of
the Brexit and its issues can be identified from the given graph.
Figure 2: The Brexit impact on the firm
(Source: Market-isnpector.co.uk 2019).

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1.3 Company performance
With its unique concept, Argos has been managing to maintain its sales and ensure that it
is being successfully able to meet up with the requirements of the competitive industry and in
addition to this, also maintain its market share in the long run. The sales of Argos have edged up
by 0.1 percent last year. However, Argos has been feeling pressured under the competitive
environment of the UK retail industry with firms like Amazon and Curry have diversified
beyond their manageable range (Argos.co.uk 2019). Hence, due to this, although the last year
quarterly sales of the firm have increased considerably, on an overall basis the sales of the firm
have dropped to approximately 100 basis points. This has got considerable scope for Argos to
include new openings and make the sales rise to approximately £868m.Argos has been
performing considerably well in terms of Digital sales and approximately 50% of its sales comes
from the digital sales and its entrance into the domain of mobile commerce has also brought a
considerable scope for the overall welfare of Argos. The same day delivery aspect has gone a
long way in assisting the firm to achieve a long term success (Argos.co.uk 2019). Hence, if it is
able to compete with the different firms as present in the retail industry then Argos will be able
to ensure success for itself in the long run.
2.0 Organizational Objectives
All Argos who function in the business environment are required to have certain goals as
well as objectives which will go a long way in assisting these organizations, to achieve success
in the long run. The objectives of Argos can be stated to be as follows:
 To become the first choice of the different customers
 To train the employees for managerial levels and to ensure that they will be able to attain
success in the long run.

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 To foster a positive working environment
 To increases the sales of the firm by 20% in the coming 3 years
 To increase the net sales of Argos
 To analyse the existent business trends and take advantage of them in order to improve
the performance of the firm.
 To provide high quality products at considerable prices.
3.0 SWOT analysis
The SWOT analysis can be described as a useful tool which goes a long way in assisting
the different organizations to gain an understanding of the overall competitive positioning of the
firm. In addition to this, it also goes a long way in understanding whether the firm will be
successfully able to carry out the certain operations of the firm or not (Durand, Grant and
Madsen 2017). The given section will undertake the SWOT analysis of the firm which will be
supported by external sources.
Strengths
The strengths of the firm can be stated to be as follows:
 The store is the largest retailer as present in the United Kingdom with around 800 stores
 The company offers online as well as offline services to the customers
 The retailer owns popular brands like Elizabeth Duke, Alba and Bush
 Argos has a large working force with more than 50000 employees (Argos.co.uk 2019).
 In addition to this, the company reaches out to more than 130 million customers in more
than 18 million households (Chernev 2018)

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 Argos has a sound in store technology which allows the different customers to click and
collect the service, and in addition to this, they are also capable of gaining same day
deliver services which will go a long way in assisting the firm to ensure success.
 Argos also has an access to the in store technology which makes it easier for them to
review the products and make use of their applications in order to track the orders as
well.
Figure 3: The Plans of Argos
(Source: Argos.uk 2019).
Weaknesses
The different weaknesses as faced by the firm can be stated to be as follows:
 The different employees as present in Argos are required to work on Sundays as well
which makes it difficult for them to perform well and this has had an impact on their
overall brand name
 The firm is competing in an extremely competitive market with a limited market share
(Baumgartner and Rauter 2017).

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 The retailers have a less market presence as compared to its competitors globally
Opportunities
The different opportunities to which the firm is exposed to can be state to be as follows:
 As the Argos `s 50% sales is coming from the online stores, Argos can dwell more on this
opportunity and ensure that it will successfully able to attain success.
 The firm can consider expansion plans and extend its operations to the growing
economies to ensure success in the long run (Baker and Saren 2016).
Threats
The different threats which are faced by the firm are as follows:
 The competition is very high and the international expansion of these brands might lead
to a loss on the side of the firm.
 The impact of Brexit and the change in other legislative policies may cause troubles for
the firm
 There exist crucial chances of price wars for the firm (Ansoff et al. 2019)
4.0 Ansoff Matrix/ Generic Strategies/ Porter’s 5 Forces
4.1 The Ansoff Matrix
The Ansoff Matrix can be rightfully defined as the strategic management tool which
assists in providing a framework to assist the different senior managers, executives and the
different marketers for the future growth of the firm (Ansoff et al. 2019). The Ansoff Matrix
generally recommends four different options to the firm out of which they can choose one or a

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combination of the two and go a long way in competing against the different global competitors.
The Ansoff matrix strategy which has been recommended to the firm can be stated to be as
follows:
Market development
The market development strategy can be understood to be the most crucial strategy
whereby a firm can easily expand into newer markets. These newer markets can be in the form of
new countries, geographies and related markets (Frynas and Mellahi 2015). The offerings which
the firm makes use of in the Market development strategy can be stated to be by making use of
existing offerings or by making minimalistic products or service development. Hence, by
making use of this strategy, Argos UK will be able to easily cater to the different customer
segments by plunging into the economies which are comparatively new and show a high scope
of growth. In addition to this, this strategy may also help the firm to industrial buyers for the
products which were only sold to the households earlier. Moreover, the firm might get an
opportunity to expand into new regions as well as areas of the globe where it does not have a
presence in. In this manner they will be successfully able to ensure that they are making a
considerable growth rate which will be suitable for the firm (Argos.co.uk 2019). Lastly, they
may choose to expand in the foreign markets as well which will assist the firm to expand its
operations and take advantage of the growing business trends.
However, in lieu of this the Argos will be required to note that, they will only be able to
adopt the particular strategy if it has a unique technology and can easily leverage in the new
markets. Only if the technology of the firm is strong, will the firm be able to meet the needs of
the new market. In addition to this, the strategy will only be successful if the firm is able to
experience the economies of scale and increase its output (Bagozzi et al. 2018). Moreover,

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Argos also needs to consider the market similarity as well. If the targeted market is similar to the
existing market then, it might be a good decision for the firm to expand its operations. Hence,
Argos can choose this strategy and ensure success for itself.
4.2 Generic strategies
The Generic strategies are also known strategies, which are often adopted by the firm in
order to extend its operations to the different domains and countries as present. These strategies
can be largely categorized to the leadership, differentiation and the focus strategy. The focus
strategy can be divided into two parts which are the cost focus and the differentiation focus
strategy (Hanson et al. 2016). In this paradigm, it is recommended that the Argos UK makes use
of the Differentiation strategy. The cost leadership strategy is not being recommended because,
currently, the Argos does not have the capacity to face the cost competitors as present in the
external environment of the firm and with respect to this, in order to gain a market for itself, it is
advised that the firm makes use of the Differentiation strategy with the help of which the firm
will be able to appear to the targeted audience (Armstrong et al. 2015). Under the differentiation
strategy, the products and services as offered by the firm are offered in a manner such that, the
target market is not considered to be price sensitive in nature and the market is competitive or
highly saturated (Gummesson 2017). In this manner, the customer needs are quite specific in
nature and with respect to this, the firm can make use of its unique resources in order to ensure
that it is successfully able to serve the different customers as per the demands having been made
by them.
In return for providing such a service, the firm will be able to ensure that it is successful
in its overall operations and additionally is able to charge a premium price with its different
customers as well in order to infuse brand loyalty into the particular segment (Hitt, Ireland and