Partial fulfillment for award of Master of Business Administration

Since the latter part of the 19th century, mergers and acquisitions in the global business arena especially in the financial services sector have increased tremendously. Typically, the principal justification by management for a merger or acquisition is the desire to improve efficiencies and achieve cost savings, thereby increasing shareholder value. However, the history of mergers is abounding with many examples of merger failures. As a result, several studies have been carried out to understand the reasons for the high failure rate. However, these studies tend to focus on the financial aspects of mergers. In this study, it is demonstrated that a merger has implications on the quality of customer service and therefore while the justification for a merger is generally premised on efficiency and cost savings, the underlying customer dynamics, which are often overlooked in the merger process, should be considered. The study is based on a recent bank merger in Kenya and utilizes secondary data obtained over a period of five years through a series of customer service quality perception surveys that one of the banks involved in the merger carried between 2006 and 2010. The service quality perception data for the period before and after the merger was collated and by the use of parametric tests and trend analyses, the study establishes that after a merger, customer service quality and loyalty levels are impacted. Although in the literature reviewed, there is abundant research on the financial and human aspects of a merger, the impact of a merger on customer service quality especially in a bank has not been extensively studied due to a limited amount of data on service quality. This study addresses some of the missing insights into whether a bank merger has any effects on the quality of customer service and loyalty. The study identifies some of the key drivers of customer satisfaction and establishes whether because of a merger, these value drivers are affected in a material way to justify management attention. In doing so, this study provides a basis and justification for greater management emphasis on the customer value chain, especially the aspect of relationship management during the integration phase.