The Effect of Acquisition Strategy on Sacco Performance in Kenya: A Case of Mwalimu National Sacco

Abstract

Several firms have often sought to acquire other firms as a means of gaining competitive advantage. However, the acquisition strategy is not always successful as research evidence shows. Mwalimu Sacco recently acquired the Equatorial Commercial Bank through stakes in June 2014 and subsequently rebranded it to Spire Bank. However, the effect of this acquisition strategy has not been examined for its effects on the Sacco’s organizational performance. The purpose of this study, therefore, was to assess the effects of acquisition strategy on Sacco performance in Kenya with the case of Mwalimu National Sacco. The study was guided by the following objectives: to determine effects of pre-acquisition factors necessitating acquisition of of the Equatorial Bank by Mwalimu Sacco; the effect of performance measures of acquisition adopted by Mwalimu Sacco; and to establish the effect of the acquisition on organizational performance at Mwalimu National Sacco. The study adopted a descriptive research design and drew responses from a total of 73 respondents who were issued with questionnaires. The study established that Mwalimu National Sacco was able to gain market power, enhance innovation, minimize product development risks, reshape their competitive environment, receive financing solutions through growth of assets and customer base, and were also able to revitalize the company through knowledge and skills necessary for survival in the long term. The study recommends that organizations seeking to participate in acquisitions should employ focused leaders who can follow through the change process from start to finish and are capable of creating and communicating an organizational culture. This study was poised to have significance in three main sectors: scholarship, Sacco management and policy making organs by adding new perspectives of effects of acquisitions on non-formal financial institutions