A merger occurs when two or more organizations decide to join forces and become one organization. One or more organizations must dissolve for this to happen. Sometimes all involved organizations dissolve and take on a completely new name. Sometimes one organization survives, and keeps their name, while the dissolved organization(s) must fall into the surviving organization's business structure. In the for-profit sector, this latter situation would be considered an "acquisition". However, in non-profit organizations, there are no owners. Therefore, since the ownership of another organization cannot be acquired, legally it would be considered a merger (Strategic Restructuring).
There are two types of mergers: horizontal and vertical. A horizontal merger is one that occurs when two or more organizations with similar goals, missions or interests merge together to create one organization. A vertical merger is one that occurs when two or more organizations with different missions come together. Usually, the services they offer can work together in some complimentary way. Horizontal mergers are more common in the non-profit sector (An Itch To Get Hitched).
The overall goal of a merger in the non-profit sector is to create synergy. This means that as a whole, the merged organizations will work more efficiently or with greater quality than the sum of its part did separately. Other goals for mergers may include strengthening services, pooling resources, reducing duplication, lowering costs, and establishing a larger geographical presence. Under the right circumstances, a merger could be very beneficial to a non-profit organization, and to the individuals they serve.
Probably the best reason to partake in a merger is to reduce duplication. There are currently close to 1.4 million non-profit organizations in the United States. It is difficult to believe that each organization has a different and unique mission. For that reason, it makes sense for some of these organizations to merge in order to help more people, and to prevent competition amongst each other. Competition is not a force that should be present in the non-profit sector, since the missions of each non-profit are designed simply to help people. Unfortunately, in order to do that, all non-profits need funding. While it is difficult, especially for smaller organizations to raise money, it is even more difficult to raise it if they are competing for funds with another non-profit. This causes both organizations to miss out on the potential to help more people (Commentary: Nonprofit mergers could help more people).
Mergers are being called a "hot-topic" right now in the non-profit sector.
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
Being identified as a nonprofit, doesn’t necessarily mean it will be a charitable organization. Though the term has been applied to most nonprofit organizations, the fact is most nonprofits is structured using the economic model. The economic model is based on the traditional model of management designed to deal with the complexity of managing an organization (Bradshaw & Hayday, 2007, p. 4). This model acquires funding from multiple sources such as; individuals, government grants, corporations, and foundations. Though an nonprofit organizations may be identified by the Internal Revenue Service (IRS) as tax-exempt, it may use the same economic model and framework as a for-profit organization. According to Brainard & Siplon, (2004), the nonprofit economic model often mimics that of the private sector by using organized professionals to help determine the goals and vision of the organization (p. 439). It is widely believed that most nonprofits use the economic model along with an aggressive...
The nonprofit sector in America is a reflection some of the foundational values that brought our nation into existence. Fundamentals, such as the idea that people can govern themselves and the belief that people should have the opportunity to make a difference by joining a like-minded group, have made America and its nonprofit sector what it is today. The American "civil society" is one that has been produced through generations of experiments with government policy, nonprofit organizations, private partnerships, and individuals who have asserted ideas and values. The future of the nonprofit sector will continue to be experimental in many ways. However, the increase of professional studies in nonprofit management and the greater expectation of its role in society is causing executives to look to more scientific methods of management.
Non-Profit organizations are a major mold in society in general, and they continue to help advance many of the social causes of our time. From the description, we know that employee and volunteer morale is quite low, and that is the fault of the senior management. In an organization, it is important that each individual knows that they are contributing to something larger than themselves. In many cases, employees seek to work somewhere where they can earn a living, but also where they can become a member of a team, and feel a sense of purpose. When they are not treated with respect or given the ability to make their own decisions, they lose engagement and become stagnant in their work. Volunteers look for much of the same thing; they are, after
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
I wish to look into the Health Care and in this case I need to look into FTC Universal health facilities. The merger is intended to take place between it and another health care providing institution known as Psychiatric Solutions. The acquisition of the organization was estimated to cost close to $ 3.1 billion and it would have been the best thing to do in running of the organization (F.T.C, 2011). Merging the two organizations would be very effective in reducing the competition between other organizations that provide psychiatric services to patients especially in Delaware, Las Vegas, Nevada and Puerto Rico.
The Meaning of Vertical and Horizontal Integration Horizontal integration is where an organisation owns two or more companies, on the same level of the buying chain. An example of this is the First Choice Group; they own First Choice Travel Agency and First Choice Hypermarket, both of which are on the same level of the buying chain. The advantage of horizontal integration is that it can increase the company’s market share. Another good example of this type of integration is when EasyJet purchased the airline Go from British Airways. Now EasyJet and Go both operate under the company name of EasyJet.
The type of merger between Electronic Data System (EDS) and AT Kearney is called Forward vertical merger. Forward vertical merger is when two or more companies combines together in the same industry but different field or when two companies producing goods and services for a product. Electronic data system, the US information technology group, brought AT Kearney, the global strategy consultancy firm in a deal worth $96m. Electronic data system was firm involving producing information technology equipment’s bought AT Kearney an IT consultancy firm.
Firstly, the need for achievement is met by understanding that people strive to master difficult situations, endeavors or challenges. This idea works on both an organizational level, as well as an individual level. From an organizational level, it is well known that a merger of this magnitude had never been attempted. With that brings a great challenge to succeed, and lets the leadership work in new and innovative ways to make such a merger successful. McClelland’s theory states, in regards to need for achievement, that people strive “To excel one’s self…to rival and surpass others… to increase self-regard by the successful exercise of talent” (Kreitner & Kinicki, 2010, p. 215). By this definition, the merger would motivate leadership to excel in the face of a challenge, and to increase their professional self-regard in their success in doing so. On an individual level, you are asking the performers and employees to recognize both economic and social climates, and to come together in action to save both their careers, as well as their passion in life. Such a merger would only embolden self-worth and perceived achievement, because they would be part of a much larger organization more adverse to risk and future change, and they would easily be able to look at other similar organizations and realize they were part of an organization who accomplished something never before attempted.
Nonprofit and for-profit businesses have multiple similarities and differences. For-profit organizations are very different from non-profit organizations because the driving goal of a for-profit organization is increasing its revenue whereas a non-profit organization will not go out of business if it suffers financial loss or does not have a bottom-line. The marketing process also differs, with the biggest differentiating factor of profit marketing is to encourage customers to buy and while the nonprofit marketing purpose is usually to encourage people to give. This means that the return on investment differs between the two. Although the principles of marketing remain the same, some of the methods must, of necessity, be different. Because of the intense involvement in the community as well as support from government, agencies non-profit firms should not compete in the same markets as for profit companies nor in anyway position their organization in any way to give the impression that their efforts could be commercial based (Nelson, 2002).
Horizontal mergers are likely to create value for shareholders because they combine firms in the same industry, thus the opportunity for synergies is very high. As competition decreases, market share and pricing power increase. Horizontal mergers often create economies of scale, allowing companies to offer the same product at a lower production cost.
Conflict seems to inevitable when trying to merge two companies. Conflict is described as the “Process which begins when one party perceives that the other has frustrated or is about to frustrate, some concern of his” (Kumar, 2009). Synergon’s CEO uses a “take no prisoners” approach and would fire most of the management team within 12 months of taking over a company using an approach they call neutron bombing. In cases where both companies are successful like in the case of Synergon Capital and Beauchamp you add even more conflict. The managers of Beauchamp are used to operating in a positive way that has produced profits for the company and you add Nick Cunningham a manager of Synergon who is used to restructure management in newly acquired poorly ran
They also use these networks as a marketing strategy to advertise for everyone using the network. A non-profit organization is an organization that gives back to the community. Engaging and connecting with their audience allows for the organization to get more personal with the needs of the community. By using social media, you can pose questions about what can certain organization execute further to carry out their mission.
Horizontal integration is the process of acquiring or merging with industry competitors (ex. acquisitions and mergers) to increase market share.
‘Horizontal Merger’ is when two companies with similar products join together. ‘Vertical Merger’ is two companies at different stages in the production process. ‘Conglomerate Merger’ is when two different types of companies join together. ‘Market extension merger’ is between two companies who produce the same product but sell in different markets. ‘Product Extension merger’ is between companies with related production but they do not compe...