Professional Documents
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CHAPTER 4:3500
CHAPTER 5:2000
Chapter 3: Methodology:
It is with the help of methodology chapter that facilitates the researcher in the endeavor of
deciding on the methods which are adopted by the researcher in the course of the research.
Therefore, methodology portion helps in the determination of the approaches for the collection of
data. The methods are being selected by the researcher which would be in tune with meeting with
the aims and the objectives which are being set by the researcher in the initial chapter of the
research study.
3.1 Research Prepositions:
This research study has been conducted to determine on the effect of merger and acquisition on
financial and profitability performance of banking institutions of UK. The researcher decided on
the most suitable methods for conducting the research study is discussed thoroughlyin this very
chapter. The methods are being selected in order gather data and on the analysis of the same
would enable the researcher in answering all the research questions.
3.2Research Questions:
1.
What are the primary reasons or business motives for which the banking institutions
How will merger and acquisition will helps to improve the competitive advantages for the
banking industry?
4.
What will be the overall impact of merger and acquisition in the financial and
of
Week 2
Week 3
Week 4
Week 5
Week 6
Review
Developing
research
Methodology
Collecting
primary data
Analyzing and
interpretation of
primary data
Concluding and
Recommending
This chapter particularly dealt with the techniques and methods that would be employed to
gather the necessary data and information from the sources and respondents and the manner in
which they would be interpreted to arrive at the findings of the research.
Chapter 4: Data Analysis
The data which are being collected by the researcher in the previous chapter are being analyzed
in this data analysis chapter with the help of statistical tools and graphical presentation. The
different types of data which are being collected in the course of the research in order to
determine the effect of merger and acquisition in the financial performance of the banking
institutions in United Kingdom evaluated and analyzed in the data analysis portion that finally
helps the researcher to meet with the findings of the research. The analysis of the data has been
done in two main portions of the data analysis chapter which is the primary data analysis and the
secondary data analysis and determine with the findings of the research study.
4.1 Primary Research:
The primary research has been conducted to analyze the data which are being collected with the
help of survey conducted among the randomly selected group of professionals who are involved
with the operations of the banks or the banking executives. There a set of quantitative questions
which are being asked to the banking executives in order reflect of the effects of mergers and
acquisitions on the financial performance of the banking business in United Kingdom. Another
set of qualitative questions are also been prepared by the researcher for the purpose to conduct a
face to face interview with the managerial personnel of banking institutions a to gain an insight
of the efficiency of the banking
acquisitions. Therefore, the primary research has been further done in the two main portions in
the following parts of the data analysis chapter.
4.1.1 Survey with banking executives:
Quantitative questions which are being asked to the employees of the different banking
organizations are being analyzed and presented with the help of graphical presentation. In order
to reflect on the overall profitability and financial performance of the banking institutions the
researcher has frames a set of questions to throw light on segmental efficiency of the banking
business that would result in the ultimate development of the financial aspect.
i) Acquisitions or mergers led to better opportunities for skill development and efficiency?
Table 1:
Sl.
Category
No
No
of Total
Percenta
Responde
Number of ge
nts
Responde
40%
29%
19%
9%
3%
Strongly
30
nts
75
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
22
14
7
2
75
75
75
75
Disagree
Graphical Presentation 1:
No of Respondents
Strongly Agree
9% 3%
Agree
40%
19%
Neutral
Disagree
Strongly Disagree
29%
Interpretation:
No
of Total
Percenta
Responde
Number of ge
nts
Responde
Strongly
22
nts
75
29%
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
31
9
8
3
75
75
75
75
41%
12%
11%
4%
Disagree
Graphical Presentation 2:
No of Respondents
Strongly Agree
11%
4%
Agree
30%
Neutral
12%
Disagree
Strongly Disagree
42%
Interpretation:
To enlighten on the fact of the profitability the determination of the pay scale which is offered to
the banking personnel is one of the efficient ways to determine the effect of mergers on the effect
of profitability of the banking organizations. Therefore, the banking employees are being asked
to provide their response on the factor whether merger or acquisition of the banking
organizations have resulted in the augmentation of their salaries. It is evident from the survey
result that most number 43 percent of respondents agreed, that such venture results in the
enhancement of their salaries. Moreover, there are 30 percent of them who shares a same view
with augmentation of their salary while 12 percent of them are neutral, 11 percent of them
disagreed to it and it is merely 4 percent of them strongly disagreed to this very aspect. Hence, it
is apparent that generally such endeavor results in the augmentation of the salary structure while
in some cases it is not so, as reflected from the analysis of data collected.
iii) Mergers with other leading banks have increased the opportunities for professional
growth?
Table 3:
Sl.
No
Category
No
of Total
Percenta
Responde
Number of ge
nts
Responde
Strongly
19
nts
75
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
25
15
12
4
75
75
75
75
25%
33%
20%
16%
5%
Disagree
Graphical Presentation 3:
No of Respondents
Strongly Agree
5%
25%
16%
Agree
Neutral
Disagree
Strongly Disagree
20%
33%
Interpretations:
Generally this has been the case that mergers or acquisitions leads to the increased the
opportunities for professional growth. Therefore, to reflect on the result of the same in case the
banking organizations and respondents are being asked to provide their onion on the same from
their own experience and to determine the practicality. It is evident from the above graph that 34
percent of the respondents agreed to fact of professional growth and 25 percent of the entire
respondents strongly agreed to it confirming the practicality of this effect from the merger and
acquisitions. However, it is further evident that 20 percent of the whole are neutral about this
while less percent of respondents that is 16 percent and 5 percent of the respondents have
disagreed and strongly disagreed to it, respectively. Thus, it would be viable to say that the
mergers and acquisition of the banking institutions dose have a positive impact from the angle of
increased opportunities of the growth prospects.
iv) The merger with other banking organizations has led to a coherent and more productive
work culture?
Table 4:
Sl.
Category
No
No
of Total
Percentag
Respondent Number of e
s
Respondent
Strongly
30
s
75
40%
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
28
11
7
2
75
75
75
75
37%
15%
9%
3%
Disagree
Graphical Presentation 4:
No of Respondents
Strongly Agree
Agree
9% 3%
14%
38%
Neutral
Disagree
Strongly Disagree
36%
Interpretation:
Taking into consideration that coherent and more productive work culture have got a direct
relation with the enhancement of the overall profitability and financial performance of the
business. The researcher has framed this very question to determine the viability of this notion.
On asking the same from the respondents it is apparent from the above graph that 38 percent of
the entire population of the selected group of respondents strongly agreed to this perception and
36 percent also agreed to it. While there are 14 percent of the respondents who are neutral while
the percentage of disagree are very less in this case, as it is only 9 percent of them who disagreed
to it and 3 percent strongly disagreed to it. Therefore, it is quite loud and clear that the mergers
and acquisitions have got a positive impact rendering in a coherent and more productive work
culture in the banking organizations as two baking organizations collaborates the skills and
knowledge of the work force get enhanced resulting into improved productivity and thus the
profitability get affected for better.
v) Mergers have led to conflicts and confusion in the policy making and implementation
adversely affecting the performance of the employees?
Table 5:
Sl.
Category
No
No
of Total
Percenta
Responde
Number of ge
nts
Responde
Strongly
nts
75
5%
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
14
11
27
19
75
75
75
75
19%
15%
36%
25%
Disagree
Graphical Presentation 5:
No of Respondents
Strongly Agree
25%
5%
Agree
19%
Neutral
Disagree
15%
Strongly Disagree
36%
Interpretation:
Taking into consideration the ill effects of mergers and acquisitions it cannot be denied that some
spheres of the business sector has also witnessed harsh outcomes, that mergers have led to
conflicts and confusion in the policy making and implementation adversely affecting the
performance of the employees. Therefore, to determine the effect in the banking organizations of
UK the researcher tried to know the perceptions of the banking executives on this very feature
from their own experiences. However, it is evident from the results of the survey that a
considerable portion of the respondents strongly disagreed to it, as 36 percent of the entire
respondents disagreed and 25 percent of them strongly disagreed to this very thing. Yet, 19
percent of the respondents agreed to it and 5 percent strongly agreed to it and 15 percent neither
disagreed nor agreed to it. Hence, it cannot be ignored completely that merger and acquisitions at
times lead to confusions and conflicts, but as it is apparent from the survey in the banking sector
of UK that the concept of mergers and acquisitions have proved to be blessing for most of the
banking organizations and this has resulted in the enhanced productivity of the banking business
on the whole.
vi) Mergers have led to the inception of more developed business operation systems leading
to individual and organizational efficiency?
Table 6:
Sl. No Category
No
of Total
Percenta
Responde
Number of ge
nts
Responde
31%
33%
12%
20%
4%
Strongly
23
nts
75
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
25
9
15
3
75
75
75
75
Disagree
Graphical Presentation 6:
No of Respondents
Strongly Agree
4%
20%
Agree
31%
Neutral
Disagree
Strongly Disagree
12%
33%
Interpretation:
The efficiency of the overall business is directly associated with the efficiency with which the
work force execute their task and help the business in improving the competence. Thus, in this
respect the researcher to determine the efficiency of the overall banking business and
profitability of the business. Gathered the opinions of the respondents, on the effect of merger in
association with the inception of more developed business operation systems leading to
individual and organizational efficiency and presented in result in the graph above. It is reflected
from the graph that most of the respondents are positive about the same view as 31 percent of the
respondents strongly agreed to it and 33 percent are also agreeing with the same reconfirming the
reliability of the view. While, on the other hand there are 20 percent of the respondents are not
going with the same view and 4 percent of them strongly disagreed and only 12 percent of them
are not taking any side. Thus, in this respect it is evident that the researcher has got a more or
less mixed response but it is also evident that most of the respondents are in favor that merger
results into of enhanced business operation systems leading to individual and organizational
efficiency. Hence, it can be said the merger dose have a positive effect on enhanced efficiency of
the overall business of the banking organizations and thus elevating its financial performance.
vii) Acquisitions and merger have prevented the shut- down of some under- performing
banks?
Sl.
Category
No
No
of Total
Percenta
Responde
Number of ge
nts
Responde
Strongly
18
nts
75
24%
2
3
4
5
Agree
Agree
Neutral
Disagree
Strongly
33
13
9
5
75
75
75
75
44%
17%
12%
7%
Disagree
Graphical Presentation 7:
No of Respondents
Strongly Agree
12%
6%
23%
Agree
Neutral
Disagree
17%
Strongly Disagree
42%
Interpretation:
Liquidations of the of the businesses due to any uncertain economic turmoil or irrecoverable
debts and there are certain banking organizations which had to undergo such harsh phase and
thought of liquidation however it is owing to the acquisitions led the banking business to
continue with its operations. Therefore, to determine the viability of the above fact the banking
executives are being asked this very question. It is evident from the above graph that a
considerable percentage of the respondents that is 42 percent of them agreed that acquisitions
and merger have prevented the shut- down of some under- performing banks. While the same has
been opposed by less percentage of respondents as 12 percent and 6 percent of the entire
respondents disagreed and strongly disagreed with it, respectively. However, there are 17 percent
who are on the fence, and therefore, it is evident that the concept of mergers and acquisitions are
helping the under- performing banking institutions to continue with its operations from
improving the financial performance and profitability of the business.
4.1.2 Interview with Managerial Executives:
The set of qualitative questions are further being set by the researcher in order to conduct a face
to face interview with the managerial executives of the five different banking institutions of
United Kingdom. Thus, to get an insight of the enhancement of the operational aspects as from
the effect of mergers and acquisitions and what are the other consequences which are being faced
by them and on the overall impact of the same on the financial performance and profitability of
the banking business.
1) In what ways have mergers led to better training development of the staff?
On asking the managerial executives on the aspect that how mergers have led to better training
development of the staff, most of them shared a same opinion that mergers lead to collaboration
of two organizational cultures and increased number of work force. Therefore, in this context to
continue with the smooth functioning of the business the executives are being trained further and
lead to the development of the staffs and their skills are further polished to the add to the overall
efficiency of the banking business. The managers stated on the merger of two banking businesses
bring in number of changes and therefore, proficient training development is required and to
achieve the strategic aims of the banking business. On getting into any strategic alliance with
another business makes the nature of the present business more dynamic and therefore, the staff
executives are trained so that they would be able to adapt themselves with the changing
environment and meet with the new opportunities and challenges efficiency without affecting
growth of the business in the adverse way.
2) Have mergers or acquisitions been productive solutions to the problems faced by the
institutions in the management of internal affairs?
When the managerial executives are being asked whether mergers or acquisitions been
productive solutions to the problems faced by the institutions in the management of internal
affairs then out of the five managerial personnel who are being working in the banking sector for
more than five years four of them are positive about the concept of mergers and problem solving
part. From their opinion it is evident that to a considerable extent the mergers and acquisitions
have proved to an effective solution which is encountered by the management while dealing with
the internal affairs of the banking business. They also pointed on the fact that due to the
collaboration of two different names there are certain problems which are being faced by them in
managing their workforce with synchronization. However, it is with the help of interactive
sessions, working in simulated conditions and group tasks have led the managing personnel to
coordinate the entire workforce in the manner which is instrumental with the strategic goals
banking business.
3) Have mergers led to the development of a more efficient technological, management, and
human resource base in the organization?
On asking the above question to the managerial personnel out of the five three are positive about
the positivity of the mergers and acquisitions. They stated that the mixing of two different names
have introduced number of positive changes from the context of the improved efficiency of the
overall business. The changes are been evident to them right from the top level management to
different departments. Therefore, reflecting constructive changes in technological efficiency,
management, and human resource base in the organization and also helped to gain competitive
advantage resulting from the enhanced market access. On the other hand, the two other managers
provided a different outlook, as from their point of view there has been no such considerable
changes noticed by them apart from marginal growth in the profitability and market access.
4) Have there been fundamental problems faced by the organizations after acquisition of
smaller and or unhealthy firms?
In order to reflect on the financial aspects on the banking business resulted from the merger or
acquisitions the researcher asked this very questions to the banking managers. Out of the five
three of them shared the same view that there have been certain problems which are being faced
by them due to the acquisition of smaller and or unhealthy firms, as the most prominent problem
was huge debt and ineffective management of the credit policies of the business. While, the other
two managers stated that to accommodate all the employees of the acquired firm so that none
them let go of their job was quite challenging for them. Yet, despite of such fundamental issues
they have been able to fix all the problems into the place and thus to carry on with the smooth
functioning of the banking business further this has proved to be proficient way of meeting with
higher rate of profitability for the overall business.
5) Have mergers and acquisitions led to positive effects on the financial performance and
output of the banking business?
The impact of the financial performance of the banking business due to the effect of the mergers
and acquisitions is the most important aspect of this research and therefore, this question has
been asked to the managers to get a closer look into the financial matter of banking business. Out
of the five managers four of them are of the opinion that mergers and acquisitions led to positive
effects on the financial performance and output of the banking business. It is owing to the
mergers or acquisitions that render two business houses to enter into a strategic alliance and thus
the assets, liabilities and also the work force and the management of the both the businesses
collaborate in to one single business. Hence, it enhances the market accessibility and number of
customers also enhances due to the existing customers of two businesses.
On the other hand on the efficiency of the entire work force get elevated due to number of
changes and new policy making and implementation in the newly formed business. Thus, this
renders in the better performance of the managerial as well as of the non managerial employees
of the banking institutions having a positive impact on the financial performance and
profitability of the business. Moreover, the five managers who are being interviewed are also the
financial analysts and they stated that from the analysis of the financial information from the
statements of the businesses after and before the mergers and acquisitions. It has been apparent
to them that the ratios have been improved directing on the elevated profitability and financial
strength of the banking institutions.
4.2 Secondary Analysis:
(Studies suggest that the banking sector being one of the most important contributors of the
economic growth and overall financial performance of United Kingdom has been the main centre
of attractions for many financial researchers. Therefore, the study on the impact of the mergers
and acquisitions in the banking institutions in the UK is an interesting research conducted by the
researcher and thus to gain a thorough understanding of the functioning and operations of the
banking sector in the UK.)
The banking sector in UK being a dynamic one there are number of mergers and acquisitions that
took place among the banking institutions. Moreover, the mergers and acquisitions are
considered as one of the essential results of Globalization. Studies conducted earlier, state that
the concept of mergers and acquisitions has proved to be a proficient decision in most of the
business sectors and so for the banking institutions of UK. The rate of mergers and acquisitions
enhanced during the year 2005 from the beg merger of Deloitte group, and the rate of mergers
and acquisitions increased by 24 percent compared to the earlier financial years. Therefore, it is
evident from the growing rate of mergers and acquisitions that such endeavour proves to be
beneficial for a number banking houses. At the same time, the joining of domestic and
international banking organizations as a consequence of Globalizations has nearly fuelled global
financial market making it all the more active. This has rather paved the way for foreign revenue
to enter in the domestic front and influenced the additional growth of the banking organizations
and also of the overall economic system.
The increased rate of such business ventures is itself confirming its success story and its
productivity. From the such ventures the banking organizations are able to experience the best of
both the worlds as the level of skills and knowledge get enhanced due to such collaborations and
thus impacts on the overall productivity and efficiency for better. The financial information
reflects on the performance and therefore, from the earlier researches which has conducted a
comparison of the financial statements before and after the merger or acquisition, it has shown a
growth on the overall financial health of both the businesses which working as one single
business after the merger or acquisition. Yet, one cannot ignore the ill effects of such business
ventures as projected in some cases but on the whole it is the growth and productivity that has
been reflected in case of most of the mergers or acquisitions in the banking institutions of UK.
Chapter 5: Conclusion:
Linking with the Objectives:
Recommendations: