Tri- PR-OM

Strategic Integration Plan 1

SOUTHERN BANK ACQUISITION: STRATEGIC INTEGRATION PLAN

Name : Mohan Chandra Chebathini

Id : W19046970

Professor : Michelle Littlemore

Coursework Title : Strategic Change Project Plan

Module Code Number : KB7033

Strategic Integration Plan 2

Contents

Executive Summary ................................................................................................................................ 4

1.0 Introduction ....................................................................................................................................... 5

2.0 Macro and Micro Environment Analysis ............................................................................................ 6

2.1 SWOT Analysis of the US Banking Industry .................................................................................. 7

PESTLE Analysis of the US Banking Industry ................................................................................... 11

2.2 Drivers of the Integration Process ................................................................................................ 13

3.0 Stakeholder Mapping, Network Analysis and Engagement ............................................................... 15

3.1 Stakeholder Mapping ................................................................................................................... 15

3.2 Stakeholder Network Analysis ..................................................................................................... 17

3.3 Stakeholder Engagement Strategy ................................................................................................ 18

4.0 Merger and Risk Analysis ................................................................................................................ 21

5.0 Conclusion ...................................................................................................................................... 29

6.0 References ....................................................................................................................................... 30

Strategic Integration Plan 3

List of Figures

Figure 1: Drivers of Integration ............................................................................................................. 13

Figure 2: Stakeholder Analysis .............................................................................................................. 16

Figure 3: Stakeholder Network Analysis ................................................................................................ 18

Figure 4: Stakeholder Engagement Matrix ............................................................................................. 19

Figure 5: Risk Impact and Probability Matrix ........................................................................................ 28

List of Tables

Table 1: SWOT Analysis of the US Banking Industry .............................................................................. 7

Table 2: PESTLE Analysis of the US Banking Industry ......................................................................... 11

Table 3: Risk Assessment Table ............................................................................................................ 21

Strategic Integration Plan 4

Executive Summary

The following is a strategic integration planning that will guide Southern Bank and Northern

Banks during the merger process. Strategic integration planning important as it ensures that the

merger process is successful. The proposed integration plan was developed to ensure that the

Northern and Southern Banks transition smoothly into a new entity. The first part of this

document contains an analysis of the macro and macroeconomic environment through a SWOT

analysis that has scanned the US banking industry for its strengths, weaknesses, opportunities,

and threats. The second part of the plan has identified the key stakeholders and they have been

ranked in order of importance. A stakeholder engagement strategy has also been developed to

ensure proper stakeholder engagement based on their level of interest and influence on the

merger. The plan also contains a network analysis that shows existing, new, and informal

relationships that will be formed after the merger. A risk analysis has also been conducted based

on the banks’ key decision during the merger. Individual risks have been identified as well as

their impact on the overall process and ways to mitigate each risk have been proposed. The final

part contains a summary of the plans key points.

Strategic Integration Plan 5

1.0 Introduction

The majority of organizations involved in mergers struggle to achieve the anticipated

synergies envisioned when the deal is first proposed. The main reason why banks and financial

institutions opt for mergers is to improve returns from services, however higher staff costs often

offset this increase (Mowlay, 2020). The goal of acquisitions is to restructure the acquired

bank’s loan portfolio through improved lending policies that result in higher profits.

Several factors contribute to the success of integration. These include choosing the right

partner, experience from previous mergers and acquisitions, due diligence and good valuation,

strategic fit, organizational and cultural fit, calculation and realization of synergies, the economic

state at the time of the acquisition, legislation enabling the merger or acquisition, etc.

(Cantarella, 2019). This proposed strategic acquisition plan will attempt to answer the question

of how quickly the Northern and Southern merger activity can be implemented and the overall

expected impact. A six-month integration plan will be developed with the following strategic

goals:

Exponential Growth. This is a major reason for a firm to opt for acquisition or a merger.

M&A mostly result in increased market share due an increase in the customer base hence the

potential for growth.

Increased customer base. Ideally, a business gains the whole customer base of the

acquired firm. This may not always be the case but the ultimate result shows a substantial

increase in the consumer base.

Increased control in the market. When two businesses merge the resulting business

entity has increased market control because of the combined capabilities of the two businesses. A

Strategic Integration Plan 6

merger leads to an increase in the total market share of the resulting entity (Tanna and Yousef,

2019). This will allow the resulting business to have increased control in the market.

Competitive advantage. The new will gain a competitive advantage over competitors

through the combined capabilities of the two organizations.

The first section of the plan will contain an analysis of the banking economy, including

the internal and external environments. M&A literature has revealed that it is important to scan

these environments to identify the main strengths, weaknesses, opportunities, and threats to the

integration process. Secondly, the plan will identify, map, and rank the stakeholders associated

with the acquisition in terms of their power, and interest along with the political and emotional

factors that could impact the business strategy. Third, an effective stakeholder engagement

strategy will be prepared depending on the aforementioned analysis. This strategy will make sure

that all stakeholders are kept informed of progress during the change process. Fourth, the plan

will contain a critical analysis of the business decisions regarding the integration, as outlined in

the Project Brief file and offer conclusions of which decisions will derive the most value and

why. Fifth, the plan will identify the major risks of the decisions made and assess the effect on

resources (physical and human) and the governance/culture of the organization. The final part

will contain a summary of key ideas of the plan.

2.0 Macro and Micro Environment Analysis

The macro and micro environments are important as they determine the success of the

acquisition process. Hence, this analysis will help the business establish the strengths to build on,

weaknesses that should be resolved, opportunities for exploitation, and threats that should be

avoided. The Southern Bank accepted the initial offer without any intermediary intervention.

Strategic Integration Plan 7

Both parties signed the acquisition agreement on 12th October. The value paid will be based on

the Northern bank share stock market value, which was at 1.18 billion on October 11th. This

implied a premium of 80 million over the value of the Southern shares paid that day.

2.1 SWOT Analysis of the US Banking Industry

Table 1: SWOT Analysis of the US Banking Industry

The Strengths of US Banking Industry

The US banking industry is the country’s

oldest industry. Industries are rapidly changing

their structures due to technological

advancements. The banking industry is no

exception. The US banking industry has stood the

test of time to become one of the most widespread

and widely acknowledged industries. The industry

plays a key and essential role in society. For

example, the industry is responsible for

inculcating the habit of saving by individuals. The

industry also provides customers with financial

aid such as loans for business start-up (Bodner

and Capron, 2018).

The country’s financial stability. The US

banking industry contributes significantly to the

economic growth enjoyed in the country as well

as financial stability. Banks help citizens to

manage their resources responsibly through

savings and investments. Hence they contribute

significantly to local and global international

economic growth.

Financial Instruments Provider. The banking

industry offers a wide variety of financial

instruments to consumers. Some of these include

fixed deposits, insurance, bonds, savings accounts

Strategic Integration Plan 8

and stocks. To increase its reach the industry

incorporates digital technologies in their services

in order to reach a wide range of customers

(Kanas and Molyneux, 2018).

Financial assistance during calamities. The US

banking industry is known to offer financial aid to

individuals to help them get back on their feet

after natural and man-made disasters such as

hurricanes, attacks, etc. As a result, the banking

industry has a good reputation amongst the public.

Diversified services. The US banking industry

offers its customers a wide assortment of services.

These include insurance, loans, and investment

services. Hence, consumers can obtain a wide

variety of services from the same institution

(Kanas and Molyneux, 2018).

Shift from the traditional position of simple

savings and credit facilitator. Traditionally,

banks were known for the provision of savings

and credit services. In today’s world, the priorities

of the banking industry have changed from simple

savings and credit facilitation to incorporate asset

quality improvement, customer focus

enhancement, and digital convergence

concentration. As a result, the banking industry is

able to compete with non-banking institutions that

offer similar services to avoid losing their

customers.

Weaknesses of the US Banking Industry Non-Performing Assets (NPAs). This is the main

weakness of this industry. Typically, NPAs refer

to non-recoverable loans. This results in financial

losses to the banks, inevitably. NBAs can have a

debilitating impact on the banking industry and

the country’s economy as a whole. NPAs slow

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down economic growth due to lost funds (Kanas

and Molyneux, 2018).

Limited coverage in rural areas. The US

banking industry tends to focus majorly on urban

areas leaving out non-urban areas. This is another

major weakness of the US banking industry. Rural

areas host a significant proportion of the US

population. The Northern Bank must try to

venture into these markets in order to capture new

customers and grow its customer base.

Opportunities for the Banking Industry Technological advancements. Service provision

in the US banking industry has long been based

on technology. Banks offer most of their services

based on technology. However, technology keeps

on evolving with new innovations every now and

then. Hence there is a need for the banking

industry to keep abreast with these advancements

by continuing to adopt the latest technologies in

the market. The needs of the consumers also keep

changing, hence the banking industry should

continue to put out newer goods and services to

fulfill these new needs (Carmona, Climent, and

Momparler, 2019).

Opportunities for rural growth. This is a major

opportunity for the US banking industry. There is

a limited presence of the banking industry in rural

areas. By expanding into rural areas, the industry

can increase its customer base by attracting new

customers.

Societal Evolution. Human society is fast

evolving, both economically and culturally. The

demands and needs of customers may even

change further due to increasing levels of income.

Therefore, there is a need for banks to adjust

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accordingly in order to keep abreast of these

changes. This will enable the industry to

strengthen its position in the future through the

provision of better services.

An increase in the private banking sector.

Across the world, the regulation of the banking

industry is fundamentally a responsibility of the

public sector banks and the respective central

banks (Carmona, Climent, and Momparler,

2019). Due to the emergence of private sector

banks, the banking industry in the US is

experiencing functional and structural shifts,

mainly because of the employment of new

technologies and increased rivalry, thus profiting

end consumers.

Threats to the US Banking Industry Lack of Proper Cyber Defense. In this digital

era, the banking industry relies heavily on the

cyber-space for its activities including monetary

transactions, data storage (Burks et al., 2018). All

this information is stored digitally. As a result, the

banking industry is a major target for attackers

who exploit weaknesses in the digital

infrastructure of banks in order to steal from

customers. Hence, banks should take appropriate

cybersecurity measures to ensure information is

well protect their data to mitigate this threat.

Stiff Competition. The US banking industry

faces stiff competition. Usually banks compete

amongst themselves and also face competition

from other non-banking organizations that offer

several services offered by banks and others not

offered by all banks (Burks et al., 2018). This

leads to a loss in the consumer base for banks

when customers shift to other institutions to

Strategic Integration Plan 11

acquire the services.

Worldwide Economic Uncertainty. The world

keeps fluctuating. The banking industry across the

world is affected by protectionist policies, trade

wars, and economic downturns. If these

conditions do not change, the banking industry’s

future will be bleak.

Recession. This poses a major threat to a

country’s financial system. Currently, the US

economy and that of the world as a whole have

been negatively affected by the Covid-19

pandemic which has seen the collapse of several

businesses.

PESTLE Analysis of the US Banking Industry

Table 2: PESTLE Analysis of the US Banking Industry

Political Factors Affecting the Banking Sector. Government involvement and

regulations. Political influence plays a key role in

the banking industry. The government has set

regulations that banks must adhere to (Brandao-

Marques, Correa, and Sapriza, 2020). Financial

analysts and critics however argue that this

intervention by the government is unnecessary

and interferes with the performance of banks.

Dual Banking. The federal and state governments

have power over the US banking industry and use

the dual banking system for the regulation. The

financial crisis of 2008 saw the introduction of the

Dodd-Frank and the Consumer Protection Acts.

These Acts were designed to minimize risk in

several areas in the industry. Hence, several

government agencies were tasked with the

Strategic Integration Plan 12

management of the compliance.

Dodd-Frank Act. This Act has been fiercely

criticized because it is too restrictive and has

lowered the competitiveness of US banks.

Economic Factors Affecting the Banking

Industry.

Banks and the Economy. The US economy and

banks are interrelated. A prospering economy has

a positive effect on the financial and banking

industry and vice versa (Khan, Bose, and Johns,

2020). Foreign and local investments are good for

a country’s economy because they create

employment for citizens.

Social Factors Affecting the Banking Sector. Socio-cultural Trends. Due to people’s

changing choices and preferences businesses have

to change their brand strategies and planning.

Impact and changes. The 21st Century came

with a lot of changes and transformations. For

example, millennials prefer customer service and

convenience. Hence, the banking industry offers

several different packages to their customers.

Technological Factors Affecting the Banking

Industry

Online banking. Online banking is now popular

due to technological advancement. The majority

of customers today transact through banking (Del

Gaudio et al., 2021). Online banking and

technology have made services much easier for

customers. All banks have mobile applications

that can be used to pay bills or transfer funds.

Privacy and Security. Technological

advancements and online banking have led to

serious issues including security, privacy,

confidentiality, and trust. Banks have to make

sure that their customers are well protected to

prevent possible attacks.

Environmental Factors Affecting the Banking All businesses have a responsibility of ensuring

Strategic Integration Plan 13

Industry that their operations do not harm the environment.

Today most banks are striving to go paperless.

Legal Factors Affecting the Banking Industry Each has its laws and regulations that govern the

banking industry. The US has several laws that

regulate the banking industry (Bordo and Duca,

2018). These include the Dodd-Frank Act, Federal

Reserve Act of 1913, Glass Steagall Act, etc.

There are also other laws introduced to protect

and safeguard customers.

2.2 Drivers of the Integration Process

Synergies play acrucial role in every deal and are anessentialprerequisite for value

creation. Deep functional integration leads to the generation of synergies. For the Northern and

Southern bank merger to succeed there is a need to integrate deeper. Integrating core functions

fully may be challenging but will yield higher synergy results. The following recommendations

are offered (Lock, 2020). First, the target operating model of the two banks should be designed

as early as possible. This will guide all functional integration operations and maximize

Figure 1: Drivers of Integration

Strategic Integration Plan 14

acquisition benefits. Second, there is a need to think of how value can be created through the

deep integration of the two banks. This will increase the chances of realizing synergies to the

fullest. Finally, it is important to keep synergies focused by actively managing and monitoring

them until set targets are reached.

Speed of Integration

Speeding up the integration process will help the banks to benefit from the positive

effects of the acquisition and return to normal business quickly. An integration process that takes

a long time will leave workers feeling frustrated. Research for an integration to succeed it should

be completed within a year. The following recommendations are offered to speed up the

integration process (Lock, 2020). First, the integration should be planned early. Second, the

banks should be ambitious with an integration timeline of six months. Finally, there is a need to

determine the optimum speed of integration. This usually depends on the type and scope of the

deal.

Culture and Change Management.

These are the most unpredictable factors that determine the success of the integration

process. Each organization has a different culture and employees may find it hard to adapt to a

new culture (Lock, 2020). The banks will make sure that this change is managed effectively to

ensure that all employees fit into the new organizational culture. They should be motivated and

engaged throughout the integration process through frequent communication.

Project Governance

There is a need for strong project governance to ensure that the process is successful. For

the banks to realize their synergy targets and attain their expectations there is a need to have

Strategic Integration Plan 15

robust project governance in place. To establish effective governance there is a need to pay

sufficient attention to strike an appropriate balance in decision-making and steering committees.

3.0 Stakeholder Mapping, Network Analysis and Engagement

3.1 Stakeholder Mapping

Stakeholder analysis is important as it helps to identify the actors and relationships that

influence the outcomes of projects. The analysis helps in identifying the level of influence of the

respective actors, what is important to them, and the required level of engagement that should be

awarded each. Stakeholders determine the success or failure of a merger depending on their level

of influence in the organization (Vizcaíno-González and Navío-Marco, 2018). It is therefore

important to ensure that the right stakeholders are engaged by building, cultivating, and

maintaining project-based relationships throughout the integration process.

Strategic Integration Plan 16

Figure 2: Stakeholder Analysis

The above analysis shows that 47 percent of the identified stakeholders are major players

in the merger process. Of these, 77 percent are in support of the merger process. 26% of the

mapped stakeholders are highly interested in the merger and also have a significant level of

influence. Such stakeholders should be handled carefully. Additionally, they should be kept

satisfied throughout the process. Two of the identified stakeholders, who account for 11%, have

a high level of influence over the acquisition. The American banking authority is able to delay or

stop the acquisition process if the applied strategy breaches or does not satisfy regulations of the

banking sector. The marketing department will be required to create effective valuable

campaigns targeting existing and merged customers. The marketing campaigns should also target

new consumers in order to grow the customer base. If the campaigns fail to generate the

Strategic Integration Plan 17

expected returns, the growth of the Northern bank could potentially slow down. Additionally, the

bank could lose some of its customers to its competitors who offer better services. The remaining

16% of the identified stakeholders possess less interest and reasonable influence.

3.2 Stakeholder Network Analysis

The above stakeholder analysis will form the basis for the stakeholder network. Dealing

with stakeholders can be a challenge because of conflicting interests. Since stakeholders are

interdependent it is important to develop a network that will help to understand their

relationships based on their needs and interest as well as the level of influence in the process. A

stakeholder network is also important as it facilitates their management. A stakeholder network

goes beyond listing them. A stakeholder network entails understanding their individual needs

and goals (Guo and Kapucu, 2019). Identifying their individual needs and goals helps to

identify their interconnectedness in order to harmonize these goals and needs and develop a

strong partnership. It also helps to facilitate communication and to obtain buy-in and

engagement.

Strategic Integration Plan 18

Figure 3: Stakeholder Network Analysis

3.3 Stakeholder Engagement Strategy

Stakeholder analysis and networks form the basis for stakeholder engagement.

Stakeholder engagement should begin early as it will facilitate the success of the integration

process (Eugenio-Vela, Ginesta, and Kavaratzis, 2020). Stakeholder engagement is key

because it enables the identification of concerns, issues, and expectations of individual and group

stakeholders.

Key stakeholders who will be involved in the integration process are those who have

shown high interest in the merger and also have a high level of influence on the process. The

stakeholder analysis has found that 47 percent of the identified stakeholders are key players in

the merger. Of these, 77 percent are in support of the merger process. Generally, 26 percent of

Strategic Integration Plan 19

the identified stakeholders have a high interest in the merger and also have a significant level of

influence.

Each of the identified stakeholders has a unique perspective regarding what should be

done to ensure that the integration process is successful. The opinions and insights of external

stakeholders are particularly important during the early planning stages as they offer useful

insight into the operating environment, and to a vision of the company’s future. To create and

support continuous engagement of stakeholders throughout the acquisition process, the following

three important things will be considered.

Communication

This is the first rule of stakeholder engagement. During the integration, process

information should be shared in a purposeful and consistent manner. Key stakeholders will need

Figure 4: Stakeholder Engagement Matrix

Strategic Integration Plan 20

to be aware of the organization’s core purpose (Eugenio-Vela, Ginesta, and Kavaratzis, 2020).

External stakeholders should understand the value the organization hopes to provide to its

customers. Internal stakeholders will have to understand the organization’s direction in order to

align their work with those goals and directions. To accomplish this there will be a need to utilize

all available communication channels including meetings, emails, newsletters, electronic

messaging, posters, etc. This communication should be consistent and should show the

stakeholders how they fit into the integration process.

Actively involve stakeholders in the process.

Stakeholders should give their input regarding the integration process during meetings. It

is important to include representatives of stakeholder groups during meetings rather than leaving

all responsibilities to the top level of management only. All stakeholder groups should be

involved to ensure that the integration process goes smoothly. Better understanding results

inbetter ownership. Stakeholders should be asked to constantly offer their feedback regarding the

incorporation of ideas into the process (Eugenio-Vela, Ginesta, and Kavaratzis, 2020).

Make all stakeholders are aware of the integration process and where they fit in it.

Keeping stakeholders engaged throughout the integration process will help to build

ownership within the organization. Stakeholders who are not directly involved in the merger

should be told where they fit into the plan and how they can contribute to its achievements. It is

impossible to remain engaged and move in the right direction without fully understanding the

process (Stocker et al., 2020). It is important to develop measures that show them how they can

contribute during the merger and give feedback regarding these measures regularly. It is almost

impossible for the process to succeed without goals, a roadmap, and organizational commitment.

Strategic Integration Plan 21

Without goals, the organization will not be able to align organization to a common desired

outcome. A roadmap will articulate the available options to help in the integration process.

Organizational commitment will ensure that the process is successful.

4.0 Merger and Risk Analysis

There are several factors that should be taken into consideration during the consolidation

of risks and influencing factors during a merger including timescale, customer base, scale,

legislation, etc. Risk management can be defined as the process that helps to understand and

manage individual risk events and overall risk proactively, optimize success by maximizing

opportunities and minimizing threats. This risk analysis will break the merger down into separate

sections and then into separate risks (Juranek, Nilsen, and Ulsaker, 2021). Therefore, it will be

possible to efficiently analyze the individual factors that affect the individual risks in order to

know to best mitigate them to ensure the merger process is successful. By showing and planning

how each risk plays out, can impact the acquisition and how to effectively mitigate it will be of

strategic importance during the merger process. Over the last few years, systemic risk potential

seems to have increased and will factor into risks that will affect the merger.

Table 3: Risk Assessment Table

Description of Risk Potential Impact Possibility Risk Mitigation

Percentage of

managers laid

off (35%)

Managers who will be laid

off will be dissatisfied with

the decision

(D1)

Possiblechallenges

around HR when

implementing the

merger

medium Make sure that

the

compensation

scheme

information is

communicated

early.

Make known

Strategic Integration Plan 22

Description of Risk Potential Impact Possibility Risk Mitigation

intentions to

continue

working with

Southern bank

shareholder’s

(Patrick)

recruitment

agency

Retained managers will

experience stress due to new

working environment

(D2)

Potential issues

around HR during

merger

implementation

High Offer managers

adequate

support

throughout the

merger. Ensure

all managers are

informed of all

important

dissensions and

potentialchanges

alongside

opportunity to

air their

concerns

Percentage

employees laid

off (35%)

Employees who lose their

jobs will also be dissatisfied

with the decision

(D3)

Potential impact

on the

productivity of

remaining workers

because of the

departure of

colleagues

High Make sure that

knowledge of

the

compensation

scheme is

provide early to

employees and

also

communicate

intention to

work with

Strategic Integration Plan 23

Description of Risk Potential Impact Possibility Risk Mitigation

Southern bank

shareholder

(Patrick)

recruitment

agency

Retained employees will

experience stressbecause of

a new working environment

(D4)

Minimal impact

because staff

should quickly get

accustomed to the

new environment

Low Offer sufficient

support to

retained

employees

throughout the

integration

process. Keep

them informed

of key

dissensions and

potential

changes

Human

Resource

Function

(Rationalize)

Significant changes to both

Northern bank and Southern

practices

(D5)

A few challenges

may be expected

but staff should

adapt to changes

quickly

Low Make sure that

all changes are

highlighted and

communicated

early enough

Dissatisfaction from SB HR

Director Elaine

(D6)

Southern Bank

HR director has

already expressed

concerns

regarding the

merger.

Since she is has

just assumed her

Medium Make sure a

plan to combine

HR practices is

set out early to

accommodate

any issues that

may arise during

the stipulated

time for the

Strategic Integration Plan 24

Description of Risk Potential Impact Possibility Risk Mitigation

role she could

seek to make a

statement by

proving that her

concerns are valid.

merger

Dissatisfaction from NB HR

director

(D7)

Northern Bank

HR director

played a key role

in developing the

banks HR

practices and may

be resistant to

change

High Ensure NB’s HR

director is fully

involved in

decision-making

processes

involving HR

practices.

There is need

for collaboration

between NB and

SB leaders to

ensure the

merger is

successful

Branches

(Rationalize)

The decision to close NB

branches and not SB

branches may not augur well

with SB shareholders

leading to problems.

(D8)

Dissatisfaction

and resistance

from SB CEO and

other SB

stakeholders

because of higher

number of SB

closures

High Provide

information

showing that the

best branches

are retained

regardless of

belonging to SB

or NB

Employee (NB+SB)

Dissatisfaction due to

closure of branches

(D9)

HR issues from

contract

termination and

Low Ensure

compensation

plan is presented

as soon as

Strategic Integration Plan 25

Description of Risk Potential Impact Possibility Risk Mitigation

employee

dissatisfaction.

possible to the

affected

employees.

Product

Portfolio

SB and NB will have to

adapt o and learn new

portfolio structures

(D10)

Employees should

learn about new

products that will

be offered fast and

assistone

anotherto learn

from past

experiences.

Medium Employees

should be

informed of

changes early

enough and

ensure a mix of

NB and SB staff

to support each

to understand

the new

products.

Resistance from opposing

stakeholders

(D11)

Products will be

retained hence,

there exists only

minimal risk of

lost work

Medium Make known

that all products

will initially be

retained so there

will only be few

changes

Resistance from Patrick (D12)

Concerned that his

custom products

may bealtered.

This could

possibly cause

him to stop

trading with the

bank after the

merger

High There is need to

continue

offering

customized

products to

Patrick’s

company

Loan Approval

Process

Changes in the loan approval

structure

(D13)

There will be

Low Ensure a mix of

NB and SB

Strategic Integration Plan 26

Description of Risk Potential Impact Possibility Risk Mitigation

(Replace) significant

changes to SB’s

operating style.

Low-ranking staff

will have to admit

more

responsibility.

This could

possibly result in

stress amongst

these workers

employee to

help each other

throughout the

process while

SB staff adapt to

NB practice and

viceversa.

Enough support

should be

offered to ensure

smooth

transition

Resistance/Dissatisfaction

from Patrick as a large SB

investor

(D14)

Changes to the

loan approval

process will a

major concern to

Patrick due to his

custom products

High The new entity

should continue

offering custom

products to

Patrick’s

company while

slowly

introducing the

new products to

them.Sudden

change may

cause him to

stop his

partnership with

the bank.

IT Systems

(Rationalize)

Ivan Taylor’s inexperience

with large IT projects and

his narrow view regarding

issues

(D15)

His inexperience

could lead to

missed deadlines

hence delaying the

integration

High Regular

meetings should

be held with

Ivan to check on

work progress

Strategic Integration Plan 27

Description of Risk Potential Impact Possibility Risk Mitigation

process causing

trading issues.

Resistance from staff as they

will have to learn a new IT

system

(D16)

Will slow down

trading and delay

business while

trying to adapt to

new system

High Potential

disruption

should be

communicated

to employees to

give them

enough time to

adjust

accordingly.

Bank Name

(Retain)

Dissatisfaction from SB

customers

(D17)

Possibility of

losing these

customers to

competitors

Low Communicate

the merger early

enough to the

general public to

address any

arising concerns

on time

Assure

customers that

their

investments and

savings will be

safe throughout

and after the

merger.

Strategic Integration Plan 28

Figure 5: Risk Impact and Probability Matrix

Strategic Integration Plan 29

5.0 Conclusion

Strategic integration planning is important as it ensures that the merger process is

successful. It also ensures that all functions are well-coordinated and can work as quickly and

efficiently as possible. The proposed integration plan was developed to ensure that the Northern

and Southern Banks transition smoothly into a new entity. The macro and macroeconomic

environments have been critically analyzed through a SWOT analysis that has scanned the US

banking industry for its strengths, weaknesses, opportunities, and threats. This analysis offers

great insight into the strengths that the new entity can capitalize on in order to grow. The banks

should also exploit the identified opportunities in order to gain greater market control and gain a

competitive advantage in the market over their competitors. The plan has also identified the key

stakeholders and they have been ranked in order of importance. A stakeholder engagement

strategy has also been developed to ensure proper stakeholder engagement based on their level of

interest and influence on the merger. Stakeholder engagement is important as it will determine

the success of the process. The plan also contains a network analysis that shows existing, new,

and informal relationships that will be formed after the merger. A risk analysis has also been

conducted based on the banks’ key decisions during the merger. Individual risks have been

identified as well as their impact on the overall process and ways to mitigate each risk have been

proposed.

Strategic Integration Plan 30

6.0 References

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Evidence from deregulation in the banking industry. Review of Accounting Studies, 23(4),

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Cantarella, A., 2019. Entreprise Risk Management and the Strategic Integration Process on

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and ICT diffusion affect the banking industry? An empirical analysis. European

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Eugenio-Vela, J.D.S., Ginesta, X. and Kavaratzis, M., 2020. The critical role of stakeholder

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Strategic Integration Plan 31

Guo, X. and Kapucu, N., 2019. Examining stakeholder participation in social stability risk

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Vizcaíno-González, M. and Navío-Marco, J., 2018. Influence of shareholders’ support over

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pp.228-239.

Strategic Integration Plan 33

Appendices

Appendix.1

Source: https://images.app.goo.gl/gETEkSraLBmNvcs87

Strategic Integration Plan 34

Appendix.2

Source: https://images.app.goo.gl/DfL31FBzePFDn8V56

Strategic Integration Plan 35

Glossary

Source: https://images.app.goo.gl/SeD7mjoH7G9Lnfie6