Home Literature Review Literature Review on Mergers and Acquisition

Literature Review on Mergers and Acquisition

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1. Literature Review

This chapter will explore the concept of Project Management and its role in driving success in merger and acquisition and will establish a link with how can university mergers be made successful by integrated Project Management. Role of project management in Pre-Merger and Post-Merger situation will be thoroughly debated on how to make the process successful.

1.1 Defining Mergers

As explained in the work of Ravenscraft and Scherer, (2011) mergers is the amalgamation of more than two organization into a singular organization in which one of the organization take the identity of the other firm in many cases usually it is the larger firm that secures the identity. Mergers as a result may create a new organization or they may retain the identity of the original organization. Mergers have seen continue and comparatively a common happening in the corporate sector. In case of higher education in United Kingdom, in the last two decades the sector has experience two phases of merger, the first period was from late 1980s to 1990s and second one was from late 1990s to 2000s. Besides the recession and in response to other local political pressure, UK expects to take place a new phase of mergers according to latest indications.

There are many examples of successful education mergers that have some certain factors that make them more likely to be successful than others. It is observed that mergers of two organizations are a tremendously costly in terms of resources, money and the uncertainty of benefit or to be any gain in both short term and long term. Mergers require a longer period to develop take form of a successful and effective organization furthermore, the process requires extensive planning, coordination, communication and monitoring and control to successfully implement the process. The new institution and its human and cultural elements need to be made a priority after the mergers has been occurred.

There are also significant challenges in merging of two organizations both in human and technical aspects to bringing together at a single institution. These are considered to be more common challenges that two similar organizations coming together and form a new organization to achieve the success and competitive advantage in the current dynamics of organization. Mergers have many advantages whereas also have some issues like the struggle for power as the member of both organizations seeks to charge the control over new organization. Mergers have the first option to maintain their status quo and make sure the selection of best option (Hitt et al., 2012).

1.1.1 Types of Mergers

According to (Kaviraj et al., 2012) There are several types of mergers that define the organizations with new strategic alliances. But some of the most common types of mergers are given below:

Vertical merger

A vertical merger is considered to be the most common type of mergers. A vertical merge occurs when a company merging with the customer or supplier to extend the supply chain. Vertical merger make relationship with supplier or dealer first, then change it into partnership by internalize all the transactions between a manufacturer that provide the various ways to monitor and improve performance. Vertical mergers change the pattern of industry behavior rather than to reduce the total economic entities operating at single level of market (Kedia et al., 2011).        

Horizontal mergers

According to Farrell, Joseph and Shapiro, (2010) it is the type of merger that involves companies in direct competition among each other. It is the merger between companies for the same and identical product of the market in same or different market. Horizontal merger is the type of merger in which competitor may offer the same product in the same market. There are fewer firms with horizontal mergers in the market era. 

Horizontal mergers are mostly considered as hostile in which a bigger company takes over the smaller one. It raises some basic problems like the competition among the merging organizations, unification of the merging organizations, rising competition in the related market.

Conglomerate merger

Conglomerate merger is merger between organizations that are in different, unrelated activities. There is no relationship in the type of businesses of both companies but it is only when a merging company desires to grow his financial wealth. As a result of merging the resulting conglomerate gains a profit in many types of industries. Generally conglomerate has two types: pure and mixed conglomerate merger. Mixed conglomerate merger involves those firms that seek to look for product or market extension while pure conglomerate mergers have nothing in common (Lindahl and L, 2012).

Conglomerate mergers can supply or demand a market for firms with a key inducement to form new firm. Basically, horizontal mergers ranging from joint ventures to complete mergers. It provides different opportunities for firms to minimize the capital cost to achieve the other efficiencies.        

Market Extension Mergers

Market extension merger is that type of mergers in which the merging companies produce the same type of goods. It is similar to horizontal mergers but the companies are not in the direct competition with each other. The firms in the market extension merger compete in different areas and sell product in their specific areas such as one selling in South America and other in china. The new merger company will have greater access to sales and profitability increase as a whole be merging.

Market extension merger focuses on their main purpose to make sure that merging companies can target the bigger market and that will be client base.      

Product extension mergers

According to Fauli‐Oller, Ramon and Mesa‐Sánchez, (2014) it is the type of mergers in which combined firms sell the similar product in the same market to extend their offerings and ensures that they earn high profit. These mergers allow the merging firms to group together the products and target the larger set of customers.   

1.1.2 Aspects of Successful Mergers

Merging decision requires a strong educational basis and shared vision with a clear strategic fit between student and leadership. It also requires a through planning that is effective in addressing all the required areas to ensure successful implementation of the resources. Furthermore it need to address issues like student issues, staff issues and cultural issues must be addressed in the process.

Merger institutions have to realistic and estimate the costs of process undertaken in the merging and also overestimate the potential savings. There are the greater chances of success when merger institutions have same missions and cultures and by this the benefit realization has to be actively managed.     

  • The factors that lead to successful merger projects are:
  • Clearly defined goals and objectives
  • Well defined project management process
  • Collaboration among institutions
  • Clear understanding of role of project management

There are seven major features identifies as success for the mergers including vision, strategic fit, better structure, due diligence, pre-merger planning, post-merger planning and external environment. The poor performance in any one of these determinants can cause the failure of mergers (Calipha et al., 2010).   

1.1.2.1 Communication

The better communication is very important tool for a successful merger. The accurate, timely, clear and consistent communication with all stakeholders can’t be overemphasized. Mergers should have the potential to generate and massive amount of run over, uncertainty, misinformation and anxiety. Good communication can do more to restructure the circumstances and should be keep in mind that people’s needs and want their values and interest. Good communication strategies can achieve the trust of stakeholders including students, employees and suppliers and special attention should be paid to them to relieve the fears and anxieties.

People issues considered the main issues in the takeover failure and communication is the key essential to the people issues. According to different researchers management of people side of mergers is the most important key to maximize the value of deal. Employee communication is very important for successful merger and it is the most important issue that is emerging in all aspects of mergers.

Internal communication is considered to be the most important in merger success but its id identified as the hardest to achieve, with this customer issues are also extremely badly resourced. The success of the mergers mostly depends on the employees regardless of vision and fit in the merger. Internal communication is the link that keeps the employee’s attitude positive toward the restructuring undertaken by the mergers and there is the need of sufficient investment in internal communication system.

The certain change as a result of merger may be creating fear for employee, uncertainty and doubt. This type of environment will harm the skills of employees and employees not only have to work continued but they also flourish. Improvement in the communication channels and system broadly is the one way to help to alleviate anxiety. Merger should have clear path for employees from which they get answers throughout the merger process. Merging organizations even should do every possible thing to enable and encourage the communication across the organization (Cheng, Sophy and Seeger, 2012).                 

1.2 Mergers in Education Institution  

Higher education sector is reforming throughout the world and it is observed the increasing number of mergers. It is also observed that many of the mergers were forced instead of voluntary merging. The probability of conflicts was high if there were led top-down in the merging process. The success of mergers in educational institutes depends upon the employees that how they perceive the merging change along with the culture is proceeding. Some processes like communication and transparent change are considered to be the most important processes for merger success. It is revealed in researches that mergers are frequently failed to achieve the objectives of top decision makers because of insecurity and uncertainty people feels (Saarti, Jarmo and Juntunen, 2011).    

Discussing the case of United Kingdom and mergers there have been relatively a low number of university mergers. There are some examples in the recent time of university merger but there has been missing the factor of integration. The merger of University college of London with Imperial College of London, University College Cardiff with University of Wale, and Manchester University with UMIST etc. are some examples.

The important factor that needs consideration is that merging institution are not undergoing a simple combining of departments and other resources rather it a complex process that involves more than the tangible resources currently in use by a university. The research advocates the culture of the university is an important determinant that decides the success or failure of a merger. The culture is an important factor as it defines the political forces right from the governing bodies to the functional level (Ishii and Xuan, 2014). Now when undergoing the merger the question arises that who form the combining institutions will lead the newly formed university and from where the board members will be selected hence it bring increasingly high opposition from the parties who have a fear of losing current position without gaining some thing in exchange. The anxieties will prevail both the parties involved since it is to be understood it is quite possible that no adjustment is available for the all the involved members (Goyal and Joshi., 2012).

Many researchers have explored the problem of mergers through themes such as culture, stress, anxiety, politicking and justice. There is interest in identifying the former organization with the new organization and to build a new merging organization. Trust is the main concept considered in mergers with reputation, in the absence of trust and mutual cooperation the merger results can’t be achieved.

Stakeholders also play a vital role in the successful institutional mergers such that students, employees, alumni and they also perceive the reputation of the organization. The universities or college of higher education that are lacking in reputation and new in field without a track record can generate reputation through association with other educational institutes as a merger.                 

1.2 Project management of mergers in educational institutes

To achieve the higher efficiency level with combination of a mutual goals and objectives, requires accentuating on vision, strategy and also requires as well as commitment to sharing, trust and mutual cooperation across organizations that can be achieved via incorporating project management principles (Very, Metais and Hourquet., 2013). Senior management of organizations involved must be having a strong conviction for commitment to the purpose throughout the implementation and execution of the project. The project team must comprise of skilled personnel that are capable of take on challenges and locating creative solutions to the problems. Success is more likely where there is the environment of collaboration and organizations spend particular time in partnership.

Government has decided to initiate shift from mergers in number of countries that deal amid problematic situations toward enterprise associations or mergers and promotes to proceed with a clear set of strategic/long-term goals and aims. Project management education has been developed to educate project managers in order to manage and to overcome the problems in the projects. Project manager will coordinate with all internal departments to make sure that all issues are properly identified and analyzed in the organizations papers.  

Despite of the approach adopted in the merging process, the project manager of the merger process has to set up the areas according to the guidelines and then set task teams to do work in that area. The task teams made by the manager will be the representatives of the institutions that are involves in the merger of two institutions and should provided them timelines and work briefs for their tasks in each stage of the task. It is the responsibility of the merger manager to ensure the tasks are tackled in the appropriate manner, tasks teams are coordinating with the activities and work is done according to the overall established framework. Ensuring the progress in the development of plans should be the responsibility of merger manager, where the task teams are not allow to work independently of one another as there are many areas of overlap.

To consider the merger as a project, will be a possible and well suited approach to handle with the complexities of the issues. High level planning, key stakeholder groups for consultation, identification of key decisions and critical issues, allocation of responsibilities and lines of reporting will be the advantages of this and project management allow for all these. Project management also allow to broken down the overall merging project in to sub projects to appoint the task teams upon them with clearly identified work-streams. Each stage that lies within work-streams can be embarked upon and it and make enable to clearly assess of each work stream. It is very important in merging plan to ensure correct sequencing of plans, actions and decisions to ensure the compliance of merger plan with legal requirements at different stages of the process. For example the configuration of library is not possible until the clear location of new unit of new institution and IT platforms can’t be provided until decision to be made how data is reconciled. It will be possible to embark on the planning for future actions if the cycle of actions is dependent on completion of other (Meredith, R. and Jr, 2011).

Some activities can be begin in the in the pre merger phase while other activities may be dependent on the decision making power of acting council. In early stages of the process, in most cases planning for work stream activities can begin.                                    

1.2.1 Pre-merger Scenario and Project Management

Pre-merger scenario proved to be successful for the employees as they lack the future information. Pre-merger is the phase when institutions are required to fulfill the legal requirements for the organization of mergers and to start the work to facilitate the implementation phase. Some activities begin in the pre-merger phase while other activities depending on decision making power of the mergers. The planning activities for the work-stream can start early in the process.

Task teams for the work-stream of information system and library services should establish as soon as possible with minimum resources of employees with a library director and one or two members from the existing libraries. The initial task of the pre-merger scenario is the audit of the required components of the libraries and then delivers it to appropriate person. It should be from basis of the planning and it provides the audit of existing libraries and its essential data and profit of each library. The new institution with the provisional vision statement is essential at the early merger and implementation process. In the impossibility of this, the common goals and objectives should be established in the merger planning and implementation process. Task teams are the responsible for the good communication channels used. Employees and library staff should be kept informed at all levels of merger process to encourage their performance in the process.

The alignment of library should be according to the academic structure that is critical factor for the merger success. Library is the tool to keep fully informed about developments in the academic configuration and input in the merger process. There should be close mutual interaction and relationship between task teams to get the competitive advantage. It is very essential that there should be outsets to ensure the task teams have representation on all major merger plantings (Drowley et al., 2013).         

1.2.2 Post Merger and Project Management

The post-merger stage is considered to be the period of full implementation begins with the office establishment of the new institution and appointment of the employees to the required management positions. The process of full merging of all activities and units takes place in this stage. The post-merger phase could extend over three to four years before the completion of merger process unlike the earlier stages.     

Poorly managed post deal integration is the major cause of the failure to expectations of mergers. The major reasons of the failure are absence of suitable preparation, pitiable policy and administration. Some of the other reasons of failure considered being nonexistence of open interaction and a strong visualization and number of individual’s cultural disputes.

The team works and consensus were established to handle with the common threat of the new organization and with the cultural clashes emerged at the time of post-merger integration. There should be focus on both the students and employees retention as a result of the restructuring. The previous experience of the institutions may be major factor of success in the post merger integration. There are also some other factors of the failures but most critical factor of merger failure is post-merger integration in which most organization fails due to poor planning (Lundqvist and Siw, 2012).

Finally, the post-merger strategy must include a commitment to address the two key factors in every aspect of post merger integration: customers and employees. Post merger integration determines the impact of every decision on customer and employees. These strategies including integration strategy also are vital to post merger success. If employees are not prepare to implement the well conceived and well articulated integration strategy then it will fail and customer are not liable to give their business to other company. The retention of employees and customers is also vital for the merger in whole integration process for the merger success. Merger strategy must be carefully developed to implement the strategy for the merger, also for the execution of the strategic vision and strategic fit for the merger decision.            

1.2.2.1 Success Drivers of Post Merger In Project Management:      

Researchers have described the five drivers of success in post-merger scenario and failure in any one of the factor can cause the failure of the whole process. The failure of the process can be control by careful design, planning and implementation (Lundqvist and Siw, 2012). Post-merger stage can provide the super opportunities for cost-effective growth. To achieve the long term goals and success companies need to take great care on these five factors of success. Otherwise the merger will fail and the value of shareholder will be worthless.

The details of five drivers of post-merger are given below:

Coherent Integration Strategy

Coherent integration strategy reinforces that there is the mergers of equal rather than that of acquisitions and it focus on organizations should have the well-articulated strategy for this. Coherent integration strategy determines how the mergers will be integrated. It has essential implications for all employees and reflects different sets of precedence in the integration process. Coherent integration strategy provides an opportunity to implement a strategy in the decision making process of newly structured organization. Most of the organizations prefer to begin with the open mind in structure designing process and not be forced by the previous structure of the company.             

The coherent approach should continue in the whole post-merging integration including the selection of systems, processes and planning practices. The decision of the merging process should be made on the basis of the neutral objective decision making process. The decisions must considered the solutions used in the previous organization and other alternatives for cost effective strategies. In mergers decisions the selection must not be on the basis of power struggle but the candidates should judge on the basis of equal standard and on the basis of merit. If mergers adopted the name of one merging organization than they have to made large extra efforts to target the customers of other company in a manner so that customer can understand the importance of the new organization. 

Technical decisions in mergers require more careful consideration as there is the issue of preference of one organization’s applications. The technical decision must be based on the sound technical information of previous background rather than the organizational politics. The organizations that fail to consistently follow the implementation strategy face different kind of problems that damaged the merger value.

Strong integration team

Structure, leadership and composition of the merger team are the key factors to successful post mergers integration. The team of mergers must do full time functions with sufficient resources and leadership. Project management approach should be followed where the merger project teams are separate from the core business. The managers should make ensure that the teams should be balanced from both of the merging organizations and its team members should dedicate full time in the merging process. The leader of post merger integration must be confident and ambitious. The problematic leadership caused the failure of the process and the executives of the merging organization fail to communicate with each other throughout the whole process.

Another important fact of mergers is to make sure the merger process is according to the needs of the customers. Customer feedback must be used to adapt the new organization strategy in the relevant field where required. To eliminate the cultural clash in the merger is the responsibility of the merger team. The results would be disastrous in case if the culture is not well integrated and leadership undermined the importance of culture clashes. Difference in compensation system and decision making may also cause conflict between the senior management of the organization while lower employees have issues on working hours and others. The merger team must focus on the culture issues of the organization.       

Communication

Communication from and with the senior management must be constant and consistent during the post merger integration and at the beginning of restructuring. The better communication builds confidence in the merger and strengthens the goals and objectives of the merger and also provides the vital response to stakeholders concerns. The flow of information must be target to each consistency with the overall company message that explains his role in the merger. Employees need a very high level of communication in the whole process because they have high level of concerns with this process. Good communication is one of the powerful elements of success in post mergers.

Communication is also the most important driver of success in human resources. Quick and disseminated information about the new employee in the selection process is very helpful and vital for new firm. Training is very important when the employees know about their roles and responsibilities in the organization and it is the responsibility of mergers to advise any training necessary for them. The eliminated employees should be informed of decisions rapidly, treated with dignity and also assist them in finding new employment.

Communication with customers is also vitally important, who must be apprised of the new direction of merger and how it will affect their relationship. The combination of strong communication and performance are the best reassurance from the customer perspective. Poor communication can confuse investors, employees, customers, stakeholders and undermine processes.

Speed in implementation:

Speed is very essential for a successful post merger integration, and fear, risk and uncertainty can be hurdles to a rapid decision. Early completion of the merger process can permit the earlier realization of integration benefit. Agreement is very essential for the rapid post-merger to immediate planning and design. Before the merger announced publically, the majority of the planning should be complete. At the time of announcement, the timeline should be highly compressed with the goal in mind to integrate the operations in the shortest period of time. Many organizations even set the merger program that includes making a bigger goal for speed of implementation.

Organizations that have slow integration process face a number of threats and numerous problems. As a result of slow pace employees may pursue to rival firm where the situation is more stable. If the visible aspects of mergers are not seen rapidly, customers may feel instability and seek competitor’s products.

In post-merger integration of technical side, slow pace may stop the process of innovation and it may stop the company’s synergies vital for the merger strategy. The focus on the speed rather than on perfection, typically 80 percent solutions accepted. There is a significant relationship among speed and merger success but its importance is underestimated in the merger success.     

Aligned measurements:

Mergers need clear identification of driver of success, how they will be achieved and what are the appropriate measures of the success to achieve the merger success. Post-merger integration requires the planning and processes that meet with the merger strategy and vision for the success. Sophisticated tracking system must be created to monitor the progress throughout the firm along with the targets and milestones for the measurements of synergies. There must be communication among integration team, business units and functional area to create the matrix for the mergers. The team leaders in a merger setup of business units and functional areas seek to present a consistent set of priorities that are consistent with organizational goals and relevant to employees.             

The researchers reveal that investors and employees expect satisfaction in every major part of the business. Business leaders must be informed to financial and non financial measures to measure the performance. The information is consists of both past performance and prediction of future performance. The cost savings and revenue synergies can impact the tangible sense of merger’s process on both employees and investors.                                                          

1.2.3 Leadership in project management of mergers in higher education

Role of leadership is very important at the time of the merger. The employees and organizations from different cultures, cultural clash, and employee’s retention in merger, team work and consensus are considered the common threat in merger and leaders have to deal with them.   

Many researches indicate that skill of newly appointed top managers’ matter a lot and the ability of the manager are significantly correlated with the success of the mergers that positively influence the internal working environment. A leader has a broad array of behavioral and management technique from which to choose the objectives of the merging process and high quality initiatives that fit the conditions and environment (Greco, 2014). 

At the time of merger there should identify group leaders in the restructuring organization, it is the responsibility of the leader to clarify roles and responsibilities and encourage the communication channels and have to create the environment in which all barriers are removed to find information. Leader should make sure the information is published and easily available, so that employees are enabling to attain the quick information.

Leader is responsible for driving the project, and institutional leadership ensures that process is not brought to halt over issues in high level contestation. When conflicts rose in the merger in a critical situation and can’t be solved internally, so they should be referred to director of merger group or get facilitation from the external facilitator to enable progress and movement to be sustained.

It is observed that leadership can play a vital and clearly defined role in the merging organizations. Customer and employee retention is a challenging task for a leader in a different cultural scenario. It is the responsibility of the leader to make sure the retention of both employee and customer in the merger institution. A leader has to manage the different aspects of mergers like the speed of decision and implementation and to examine the major aspects of success. A good leader should manage the each and every aspect of the merger process.

Leadership also plays a vital role in supporting cultural integration. The newly developed leadership programs developed by organization played in supporting in organizational merger. Cross functional and new global leadership may support the objectives, design and style of merger. It is observed vital outcomes from leadership: that are managing the change proactively, meet clear objectives that are aligned with the organization’s strategic objectives. Leadership also meets the needs of the customers and employees also and also maintaining the senior management support (Gardiner and Paul, 2013).           

1.2.3.1 Merger manager as a leader for project management

Merger manager is a person appointed by the management of the merger institution to take the responsibility of the overall management of the merger, who will communicate with the merger unit of ministry and also report on progress to the councils and senior management of the institutions. Merger manager together with the institutional leadership should be responsible for driving the process. Merger manager also responsible for identify overlap, measuring the broad perspective on objectives and their outcomes and ensuring the proper sequencing of activities (Gelves, Alejandro and Heywood., 2013).

Three types of leadership is considered to be essential in order to ensure that merger of universities is beneficial for those within the universities.

Visionary leadership

It is the type of leadership in which the existing myth on which universities based and believes their validity in current era is overlooked. Visionary leadership brings about the new self understandings along with demands of society and the need of academics. Identify building is very important process, and poor career structures and mechanistic assessment can threaten this process so that visionary leadership is very important in this scenario. The merger university should be visionary and should be capable of think more by reinforcing the university capacity to think ahead.

Informed leadership

It addresses the issues of integration of strong leadership with a wide consultation structure. Lengthy decision making routine without a clear structure and sometime may inclusive, might have led by the collegial decision making bodies. The idea of inclusion in new ways would have to recreate by informed leadership.

Creative leadership

Creative leadership is essential for the university merger in a sense to interact with the relative elements and structures in the environment in order to shape and control the universities. When creative and flexible internal institutional environments are provided, the potential radius of action can be widened within the limits imposed by the universities environment. Creative leadership is the idea of rebuilding niches within the organization that don’t follow necessarily criteria imposed from the external sides.

These were the few aspects of leadership in Merger University and clearly explores that universities have a certain capacity despite of obligations to develop the still needs to be fully exploited.

As a conclusion of leadership in the project management of educational mergers, vice chancellors as a supreme leader of educational institutes need to create a supportive environment in which more people have to prepare to take the responsibility of converting ideas from words into action in activities.             

1.3 Effectiveness of PM in Mergers of Educational Institutes

Successful reforms outcomes depends upon the ability of state and institutions how to negotiate the mergers and incorporation for common benefit. There occur always a danger of equal partnership in mergers and governance of the mergers phase must pay careful attention to this. Councils should carefully assess the due diligence of mergers in which they involve. Mergers plan and memorandum of agreement should be developed in the premerger phase, as these are the key frameworks for the mergers governance (Adomako, Gasor and Danso, 2013).

Institutions must take into account the specific circumstances of their mergers for the selection of the preferred model for the mergers. Conscious attempt to plan, implement and monitor institutional development is require for the process of establishment of institutional culture for the governance and the council of mergers institutions must exercise its accountability in this respect. Decisions in the mergers institutions must be driven by a defined vision and missions of mergers and should be taken only once that is in place. Multi campus governance models should be evaluated in term of their likely effect on effective operational and academic integration as well as on the institutional culture of merged institutions.

It is very essential to determine the role of project management arrangements and management bodies need to be engagement with the senior management. Management should know what type of relations is suitable for the institutions, the evidence that need to be made the right decision and what process should take place to manage the project (Stephenson, 2011).                     

1.4 Roles and Responsibilities Of Institutions

Merging educational institutions are themselves responsible for implementing the policy, planning and legislative framework in the mergers. The process of merger should be consultative and inclusive through using the existing government structures for this purpose as the principle of inclusivity and stake holder participation. The stake holders are including students, senates, student councils, employees and institutional forums. Institutions would do their best to consider the particular contribution that made by the merging firms in the merger process with their various constituencies, especially students and staff.

Both of the merging organizations make sure their particular performance in the process, and ensure the issues in the process solved by the merging organizations on their own behalf. Merging organizations seems to solve their conflicts internally by both of them and refer to merger unit in case of insolvency (Kolfschoten et al., 2012).

Institutions are too strongly advised to make a memorandum of agreement of merger before the date of merger that will base for the relationship and negotiation. The issues between the merging institutions can be solved with the help of this agreement. Institutions may use the expertise to amongst their own staff for the better gathering of information, planning and subsequent implementation. Institutions also ensure that the quality of teaching and learning should not disturb during the period of change and upheaval. The mechanism among institutions also be set to ensure the mutual consultation and review has taken place and information communicated between merging institutions at a wider scale. The better sense of relationship among institutions can overcome the complexity of merger.                   

1.4.1 Mergers and The Role of Institutional Collaboration

Higher education system has used a variety of different models and mechanism to enhance the level of collaboration among institutions and to achieve the restructuring. The important drivers of these efforts have been pressures to increase efficiency and effectiveness in coping with the substantial and rapid growth of the student number in institutions (Cooper and Finkelstein, 2010).

 In most of the cases merging efforts is integral part of the major expansion and small systems of higher education have been moved to the mass higher education. Sound collaboration, competent management and transparent institutional quality processes are the most important agendas of the European university leaders today. They have to cope with the major restructuring challenges which higher education institutions facing across the Europe.

1.4.1 Effect of Mergers On Higher Education

Different researches have revealed that there are more successes than failures among higher education mergers and it is not a record that can commend merger universally. The institutional mergers take initiatives more of broad public higher educational policy than of corporate strategy, which choosing to merge for reasons of economy.

The educational mergers and new funding frame work had a profoundly negative impact on higher education. This is because of neglect of basic infrastructure, increased fee in institutes and decrease in the revenue from research outputs and investment in flowing to higher education. There is threat to quality of teaching and research as a result of alienation in the corporate style of institutional management. There is also increase in the teaching, supervision and administration workload of the academic staff. Mergers are often challenged by insufficient communication and ineffective decision making process. Basic infrastructure is neglected in higher educational institutes due to decline in funding. The negative outcomes of higher education institution merger are reported as: disrespecting of institutional autonomy, potential lack of trust and commitment is also observed, unhealthy competition amongst the employees, mission with no clear image, lack of interest in each institute and lack of participation from many groups of people also observed (Puusa, Anu and Kekäle., 2013).   

Despite of negative effects of mergers, there have more positive reactions to the mergers. The systems have become more responsive and relevant by marketing. The mergers of high educational institutes have increased their skills and their capacity to find and target the new market. The merger of educational institutes led to significant increase in student graduates and enrolment.

Positive outcomes of the high educational institutes are reported: increase cohesion, standardization and access of education with high quality programs offerings, sharing and reduction of administration and overhead cost. There are also other outcomes also seen as the sharing of resources and expertise, chance of greater access to programs and services, different opportunities for skill building, diffusion of best practices and mobilization in higher education for planning and control have also been reported.

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