Title:
J. Sainsbury 's has placed an offer in order to acquire Home Retail Group: would that be the right business strategy?
Background of research/context:
J. Sainsbury has approached Home Retail Group (who owns Argos and DIY Homebase) in November 2015 with the intention to formulate an acquisition offer; the bid has been formalised in January 2016 of about 1bn, however it has been rejected by HRG owner as the company has been undervalued, comprises its long term perspectives.
In February 2016, the supermarket chain has made a new offer to HRG for a total of 1.3bn, whilst the group should be announcing the sale of Homebase only to Australia 's Westfarmers, leading to the fact that Sainsbury 's will might acquire only Argos.
The reasons behind …show more content…
It will then be analysed the difference between two major theories on strategy and thus will be explained the SWOT analysis and Porter 's Five Forces analysis. Moreover, it will be explained the various types of generic strategies available and thus to be chosen by a company. Towards the end there will be a focus on Merger & Acquisition strategies and an overview of Sainsbury 's current situation within the acquisition process of Home Retail Group.
1.1 Strategy: According to Porter (1996), a strategy ' 'is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value ' ', whilst Mintzberg (2007) defined strategy as ' 'a pattern in a stream of decisions ' ', thus the first theorist identifies what makes a company unique as a strategy, the latter gives a more generic definition by identify strategy as a model to be followed within the decision making process.
There are several school of thoughts in regard to strategy theories, in particular:
1. the Resourced Based school
2. the Positioning school
1.2 The Resource Based …show more content…
INSERT PICTURE OF SWOT.
Even though the SWOT is acknowledged as an established method for the formulation of strategies (Dyson, 2004), as it simplifies complex issues into manageable tasks, researchers also suggest the use of alternative methods or tools in tandem with SWOT in strategy analysis (Helms & Nixon, 2010), therefore for this reason I am going to utilize Porter 's Five forces analysis outlined in the following paragraph.
1.5 Porter 's Five Forces analysis
Porter identified the following framework, which helps to determine the attractiveness of an industry in terms of five competitive forces:
INSERT PICTURE OF PORTER 5 FORCES
Porter (1997) argues that the framework makes it possible to assess the potential profitability of a particular industry, whereas Rumelt (1991) argues that firm-specific factors are more important to the profitability of a business than industry-wide factors. It has been also criticized that the tool can be regarded as static, even though current business environment is seen as dynamic. Despite numerous critics, the tool is the most powerful in order to analyse current business
J. Sainsbury 's has placed an offer in order to acquire Home Retail Group: would that be the right business strategy?
Background of research/context:
J. Sainsbury has approached Home Retail Group (who owns Argos and DIY Homebase) in November 2015 with the intention to formulate an acquisition offer; the bid has been formalised in January 2016 of about 1bn, however it has been rejected by HRG owner as the company has been undervalued, comprises its long term perspectives.
In February 2016, the supermarket chain has made a new offer to HRG for a total of 1.3bn, whilst the group should be announcing the sale of Homebase only to Australia 's Westfarmers, leading to the fact that Sainsbury 's will might acquire only Argos.
The reasons behind …show more content…
It will then be analysed the difference between two major theories on strategy and thus will be explained the SWOT analysis and Porter 's Five Forces analysis. Moreover, it will be explained the various types of generic strategies available and thus to be chosen by a company. Towards the end there will be a focus on Merger & Acquisition strategies and an overview of Sainsbury 's current situation within the acquisition process of Home Retail Group.
1.1 Strategy: According to Porter (1996), a strategy ' 'is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value ' ', whilst Mintzberg (2007) defined strategy as ' 'a pattern in a stream of decisions ' ', thus the first theorist identifies what makes a company unique as a strategy, the latter gives a more generic definition by identify strategy as a model to be followed within the decision making process.
There are several school of thoughts in regard to strategy theories, in particular:
1. the Resourced Based school
2. the Positioning school
1.2 The Resource Based …show more content…
INSERT PICTURE OF SWOT.
Even though the SWOT is acknowledged as an established method for the formulation of strategies (Dyson, 2004), as it simplifies complex issues into manageable tasks, researchers also suggest the use of alternative methods or tools in tandem with SWOT in strategy analysis (Helms & Nixon, 2010), therefore for this reason I am going to utilize Porter 's Five forces analysis outlined in the following paragraph.
1.5 Porter 's Five Forces analysis
Porter identified the following framework, which helps to determine the attractiveness of an industry in terms of five competitive forces:
INSERT PICTURE OF PORTER 5 FORCES
Porter (1997) argues that the framework makes it possible to assess the potential profitability of a particular industry, whereas Rumelt (1991) argues that firm-specific factors are more important to the profitability of a business than industry-wide factors. It has been also criticized that the tool can be regarded as static, even though current business environment is seen as dynamic. Despite numerous critics, the tool is the most powerful in order to analyse current business