IMPACT OF HORIZONTAL INTEGRATION STRATEGIES ON ORGANIZATION PERFORMANCE

A CASE OF INTERCONTINENTAL BANK AND ACCESS BANK PLC

Abstract

Generally, integration strategies, encompassing a range of approaches aimed at aligning organizational functions, processes, and resources, have emerged as crucial drivers of organizational success. This abstract delves into the theoretical foundations of horizontal integration strategies and their implications for organizational effectiveness and performance improvement. Through an extensive review of literature and empirical evidence, this paper examines the relationship between horizontal (mergers and acquisition) integration strategy and financial performance. The study used bank’s profitability indices – profit after tax (PAT), shareholders’ fund (SHF) and total assets (TOA) data of a period spanning 2005 to 2019 for Intercontinental Bank Plc and Access Bank Plc to investigate the effect of merger and acquisition on the growth and profitability of Access Bank Plc. Between 2005 and 2019, Access Bank Plc, acquired Intercontinental Bank Plc. The performance indices of the studied Banks before and after acquisition and merger, were extracted from the Banks’ Annual Reports, subjected to statistical analysis for paired mean comparison, trend analysis (regression) and coefficient of determination using Microsoft Excel Statistics Toolkit. The study also established the growth pattern and significant differences in banks’ performances before and after the acquisition. The findings revealed that Access Bank Plc had a double benefit from the acquisition of Intercontinental Bank Plc. Mean PAT, SHF and TOA were N11.90b, N128.50b and N644.50b, respectively before acquisition of Intercontinental Bank Plc, whereas they were N50.60b, N325.02b and N2242.23b, after the acquisition. Consequently, Access Bank Plc became bigger with more branches, Automated Teller Machines and customers. Besides, it transformed from its traditional wholesale banking institution to a balance financial service provider.