Bilevel Programming Merger Analysis in Banking

Abstract

In modern organizations, component elements members are mutually dependent on a common set of finite resources.¹ These organizational resources include funds, personnel, time, effort, and information.² As a result, organizations have been described as large pools of scarce shared resources, for which component elements (subgroups) compete.³ MEI, a global provider of trade promotion management solutions, surveyed 52 consumer packaged goods (CPG) manufacturers in May 2011, finding that ‘Trade promotions budgets do not grow and IT budgets are still clamped down, yet these organizations somehow need to improve promotion effectiveness. They are no longer concerned with streamlining the deduction reconciliation process, but they do want better visibility into where their scarce dollars are being spent.’⁴ Due partly to pressure from competition and shareholders, many corporations, including banks and other financial institutions, seek ways to rearrange their organizational structure and to widen their geographical reach and product variety. These changes often aim to improve efficiency through potentially higher economies of scale and wider scope. This chapter aims to examine how such merger performance is gauged in the presence of scarce shared resources, using a banking organization as an example. In this evaluation, we concentrate on the within-firm competition for the common resources.