Future proofing business? Sainsbury acquires Argos

Question 2: With reference to the post-acquisition integration matrix (see image below) consider how Sainsbury might best integrate Argos?

In Figure 1 (See the image on the right), the two criteria result in five integration approaches which have important implications for the length of integration period and choice of top management for the acquired company:

• Absorption is preferred where a high level of strategic interdependence is necessary and there is little need for organisational autonomy. Absorption requires rapid adjustment of the acquired companys old strategies and structures to the needs of the new owner, and corresponding changes to the acquired companys culture and systems. In this type of acquisition, it is usual to appoint a new top manager to manage the organisation differently.
• Preservation is appropriate where the acquired company is well run but not very compatible with the acquirer. The high need for autonomy and low need for integration may be found in conglomerate deals. The preservation style depends on allowing old strategies, cultures, and systems to continue in the acquired company much as before. Changes from the acquirer are generally confined to the essential minimum such as adjusting financial reporting procedures for control and carried out in a slow piecemeal fashion. In this situation, it is advisable to retain the incumbent top manager.
• Symbiosis is indicated where there is strong need for strategic interdependence, but also a requirement for high autonomy perhaps in a professional services organisation dependent on the creativity of its staff. Symbiosis implies that both acquired firm and acquiring firm learn the best qualities from the other. This learning process takes significant time and it is often the case that it is best to retain the incumbent top manager in the early stages to stabilise the acquisition before bringing in a new top manager to make far-reaching changes. This is the most complex of the integration approaches.
• Intensive care takes place where there is little to be gained by integration. These acquisitions may occur when the acquired company is in poor financial health and very rapid remedial action is required.16 The acquirer will not integrate the company into its own business to avoid contamination but will impose stringent short-term targets and strategies in order to solve its problems. In more aggressive turnaround cases the incumbent top manager will typically be replaced but otherwise the incumbent is retained for a smoother transition. These businesses may often be for sale.