Strategic Mergers in Kenyan Organizations: A Case of ICEA Lion Group

A Research Project Report by Kamwaro Nelly Resian, Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement of the Degree of Masters in Business Administration (MBA)The general objective of this study was to explore the strategic mergers of business organizations in Kenya. The study was guided by the following specific objectives: To assess the factors that contributed to the successful merger of ICEA LION Group insurance companies in Kenya; to determine the challenges faced by the ICEA LION Group merger of insurance companies in Kenya, and to analyze the benefits of the ICEA LION Group merger of insurance companies in Kenya. The researcher employed exploratory research design. The target population was limited to two branches, (Kenyatta Avenue and Westlands, Nairobi County) since information from these branches was similar to the rest of the branches. The target population was selected according to the proximity to the researcher, time, cost and availability of the respondents. The target population was composed of both men and women of 22-60 years of age. The researcher carried out a census as it was the most appropriate method considering the number of respondents. Questionnaires were given to all the employees working in the two branches who total 120. Eighty eight percent of the respondents actively participated in filling out the questionnaires. According to the study, majority of the respondents agreed that at ICEA LION Group merger success was contributed by the human resource, effective communication process and strategic fit. This was confirmed by the mean ranging between 3.2 to 3.7 falling at the neutral to agree on the Likert scale used in the study. This confirms that human resource, communication process and strategic fit are factors that contribute to the success of a strategic merger. The study further revealed that at ICEA LION Group merger faced the following challenges; turnover of key employees, keeping the new realism and meeting merger objectives. This was confirmed by the mean of the responses ranging from 3.6 to 3.8 with the highest dispersion of 0.76954. The highest percentages of the responses strongly agreed that the above factors were among the challenges faced by the merger. Therefore, the above data confirms that meeting merger objectives, turnover of key employees and keeping the new realism are challenges faced by a strategic merger. Additionally, the research revealed that the respondents agreed that the benefits enjoyed by ICEA LION Group merger were synergistic efficiencies, market development and cost reduction. In conclusion, the study found out that mergers indeed carried out in the right way, by taking care of human capital, ensuring effective communication process from the start and ensuring strategic fit, aids in achieving the set merger objectives, retaining key employees and painting the right picture of the new realism leading to success. The success of a strategic merger therefore comes hand in hand with synergistic efficiencies, market development and cost reduction. Strategic mergers are complex activities that should be carried out with effective planning prior to the start, a monitoring and evaluation should be carried out at every stage to ensure the goals are met. This enables the top managent to create a clear picture of the expectations that are communicated to the organization. Management should anticipate challenges that affect mergers and stay prepared for any unforeseen circumstances relating to the merger. The study recommends that organizations should measure the success of a merger in a microeconomic perspective providing a more objective approach to examine the financial statements pre and post- merger, and for a company in the stock market, one can compare the stock prices before and after the merger finalization. The study also recommends the need for organizations to establish a list of the most popular benefits enjoyed by most organizations as part of their goals. This helps an organization to map out effective strategies that leads to the success of strategic mergers, building a competitive advantage that can be sustained in the long run