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Critically Assess the Strategy of Argos
Business strategy is a decision a company takes in order to create and maintain value by coordinating business resources and finding ways to develop and capitalise on the organisation’s competitive advantages over a period of time (Grant, 2014). However, these strategies can be affected either positively or negatively with a major decision such as mergers and acquisition or political, social and technological factors. Hence, this essay will critically assess factors affecting the strategy of Argos. Argos’s strategy continues to be building a contemporary market leading retail capabilities and a leading customer base through repositioning its digital business, maintaining a lean and flexible cost base, …show more content…

The reduction of overhead cost by combining operations of the two companies as a single corporate entity could lead to significant cost saving, an increase in profit or revenue per employee (Buckley and Casson, 1996). For example, by the elimination of duplicate resources/branch such as IT facility and integration of some of its stores into Sainsbury outlets. Argos can meet its goal to improve Universal appeal while providing for a lean cost base. The acquisition could lead to faster growth, due to the possibility of broader market network integration (Bodislav and Iovitu, 2014). This may include the ability of Argos customers to benefit from Sainsbury’s food stores at a discounted price and collection of orders made at Argos stores at local Sainsbury stores. Thus, bringing Argos stores into Sainsbury stores will accelerate its strategy for achieving a larger product range, choices, and faster service delivery. In this regard, the acquisition deal is positive as the parent deal shares similar values ‘whenever, wherever they want to shop’. However, such integration resulting from the acquisition could also affect the efficiency of business operation due to differences in organisational structure and culture (Bodislav and Iovitu, 2014). Restructuring can be very expensive, time-consuming, and quite often creates new organisational problems because it takes time for …show more content…

Another way to assess the market for a business is through PEST analysis. Where PEST stands for political, economic, social and technological factors which can influence a business strategy (Grant, 2014). Political uncertainty fuelled by Brexit (the decision of the UK to leave the EU) will affect the immigration status of some employees, with Argo’s risk losing some of its employees. A possible adjustment of trade regulations, federal minimum wage or requirement for permits and licenses will impact Argos operations. For example, if companies must pay considerably to sponsor work-permit for their non-UK employees or must carry-out periodic sustainability assessments (Business.hsbc.uk, 2017). The company will spend a lot of time and money to comply with regulations, ultimately proving ineffective and will affect business aims and objective. However, such regulations could prove useful in shifting manufacturing to the UK and hence a supply chain that is robust and sustainable, leading to a more flexible cost base. In an economic sense, the sharp drop in the value of the GB pound against the US dollars resulting from the knock-on effect of Brexit will lead increase in supply chain costs since UK retail is to a large extent dependent on imports, most of which are purchased in US dollars, ultimately leading to an inflexible operational cost

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