Organisational change
A Dixons Group case study

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Page 3: Acquisition

As a method of development, acquisition makes sense, particularly in markets which are relatively mature. Acquisition enabled Dixons to take over a large company which already existed in the electrical market-place (Currys) and also to acquire a developing organisation with a bright future (PC World).

Dixons Group 4 Diagram 2Mastercare was part of Currys when it was acquired by Dixons. A key benefit from acquiring Currys was that Mastercare would help Dixons to develop a lead in the area of ‘service’. PC World was not a major competitor when it was taken over. At the time it only had four stores serving largely niche markets. However, Dixons recognised that PC World had uncovered a formula which could provide a successful platform for further development in the field of computer sales. Each of these organisations, except for Mastercare, broadly represented horizontal level integrations which involved the addition of similar products and services to complement the existing Dixons’ portfolio, whilst at the same time helping to increase market share.

There were many benefits from these acquisitions. The ‘group’ concept enabled Dixons to develop its business across a horizontal plane which provided growth and at the same time enabled it to stay close to its expertise in electronic and electrical retailing. Acquisition provided Dixons with the opportunity to take over a major competitor and rapidly increase its market share. The fusion of resources across the business allowed a larger Dixons to gain from economies of scale and improve its commercial efficiency.

Acquisition also allowed Dixons to benefit from synergy. The synergy equation 2 + 2 = 5 signifies that a portfolio of businesses is much more valuable than each business as a standalone entity, because of the influence of the ‘group’ as a whole in areas such as purchasing, product development, management, channels of distribution and customer care and service.


Dixons Group 4 Image 1Currys and Mastercare were a particularly good choice for the Dixons portfolio in 1984 because they enabled the Group to stay close to its expertise in electrical and electronic retailing. Dixons and Currys were then managed together to gain economies of scale and competitive benefits from buying in volume and reduced overhead costs. The Group then developed the ‘out of town’ concept for Currys Superstores and began to close Currys in the High Street. With this change in market positioning it was decided in 1994 to separate out the management of Dixons and Currys for Marketing and Sales (not Buying or central support) so that each Chain would have the freedom to develop its own market and customer focus.

PC World

At the time of the acquisition, PC World had just four stores. With a rapidly increasing market for personal computers and related products, the acquisition of PC World was viewed as a way of increasing Dixons product authority. The sales of PCs were likely to move on from businesses to consumers and Dixons needed to develop its entry potential into consumer markets still further. The growth of PC World is not simply reflected by the growth in the number of stores from four to 53 under the ownership of Dixons, but is better represented by its massive turnover in the computer marketplace which today is £572 million, an increase of 23 per cent over the last year. PC World has become a talking point in the industry as well as in towns and cities where each new store is located.

Dixons Group | Organisational change