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Harvard Case - Thelma Cross-Olden Foundation: Re-examining a Merger Proposition

"Thelma Cross-Olden Foundation: Re-examining a Merger Proposition" Harvard business case study is written by Theresa A. Chika-James, Belinda Panganiban. It deals with the challenges in the field of Strategy. The case study is 15 page(s) long and it was first published on : Jul 28, 2020

At Fern Fort University, we recommend that the Thelma Cross-Olden Foundation (TCF) rejects the proposed merger with the National Association for the Advancement of Colored People (NAACP). While the merger presents potential benefits, it poses significant risks to TCF's mission, identity, and operational independence. Instead, TCF should focus on strategic partnerships and innovation to achieve its goals, leveraging its core competencies in education and community development.

2. Background

The Thelma Cross-Olden Foundation (TCF) is a non-profit organization dedicated to empowering underprivileged communities through education and economic development. Founded by Thelma Cross-Olden, a renowned philanthropist and social activist, TCF has a strong track record of success in its mission.

The case study presents a scenario where TCF is considering a merger with the NAACP, a prominent civil rights organization with a long history of advocacy and social justice initiatives. The potential merger is driven by the desire to leverage combined resources and enhance impact. However, the decision is complex and involves a careful analysis of potential benefits and risks.

3. Analysis of the Case Study

To evaluate the merger proposition, we utilize a framework that combines Porter's Five Forces analysis, SWOT analysis, and value chain analysis.

Porter's Five Forces Analysis identifies the competitive landscape:

  • Threat of new entrants: The non-profit sector is characterized by relatively low barriers to entry, making it susceptible to new entrants.
  • Bargaining power of buyers: Donors and beneficiaries have significant bargaining power, influencing the allocation of resources and program design.
  • Bargaining power of suppliers: Suppliers, including service providers and consultants, can exert influence on pricing and quality.
  • Threat of substitutes: Alternative organizations and initiatives can offer similar services, creating competition for resources and impact.
  • Rivalry among existing competitors: The non-profit sector is highly competitive, with organizations vying for funding, visibility, and influence.

SWOT Analysis reveals TCF's internal strengths and weaknesses, as well as external opportunities and threats:

Strengths:

  • Strong brand reputation and community trust
  • Proven track record of success in education and economic development
  • Dedicated staff and volunteers
  • Strong financial position

Weaknesses:

  • Limited reach and impact compared to larger organizations
  • Potential for organizational inertia and resistance to change
  • Dependence on a limited number of donors

Opportunities:

  • Growing demand for educational and economic development programs
  • Increased awareness of social justice issues
  • Potential for partnerships with other organizations

Threats:

  • Competition from other non-profits and government initiatives
  • Economic downturn and reduced donor support
  • Changing demographics and social trends

Value Chain Analysis highlights TCF's key activities and their contribution to value creation:

  • Research & Development: Identifying community needs and developing innovative programs.
  • Program Implementation: Delivering high-quality educational and economic development programs.
  • Fundraising & Donor Relations: Securing resources to support program activities.
  • Marketing & Communications: Building awareness and promoting TCF's mission.
  • Governance & Administration: Ensuring effective management and accountability.

4. Recommendations

Based on the analysis, TCF should refrain from merging with the NAACP and pursue a strategy focused on:

  • Strategic Partnerships: Develop collaborative relationships with other organizations to leverage complementary resources and expertise. This could include partnerships with educational institutions, businesses, and government agencies.
  • Innovation: Invest in research and development to create innovative programs that address emerging community needs. This could involve utilizing technology and data analytics to personalize learning experiences and improve program effectiveness.
  • Business Model Innovation: Explore alternative revenue streams and funding models to diversify funding sources and reduce dependence on traditional philanthropy. This could include social enterprises, impact investing, and crowdfunding.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core competencies and consistency with mission: TCF's core competencies lie in education and community development. The merger with NAACP would dilute these competencies and potentially distract from TCF's mission.
  • External customers and internal clients: TCF's stakeholders include beneficiaries, donors, and staff. The merger could negatively impact the trust and relationships with these stakeholders, particularly if it leads to changes in program focus or organizational culture.
  • Competitors: The non-profit sector is highly competitive. The merger could create a larger organization with greater resources but also increase the risk of attracting scrutiny and competition from other organizations.
  • Attractiveness - quantitative measures: While the merger may offer potential financial benefits, the risks to TCF's mission, identity, and operational independence outweigh these benefits.

6. Conclusion

Thelma Cross-Olden Foundation should prioritize its core competencies in education and community development, leverage strategic partnerships, and embrace innovation to achieve its goals. The merger with NAACP, while seemingly attractive, poses significant risks to TCF's identity and mission. By focusing on its strengths and adapting to the changing landscape of the non-profit sector, TCF can continue to make a lasting impact on underprivileged communities.

7. Discussion

Alternative options considered included:

  • Partial merger: This option would involve a less comprehensive integration, preserving TCF's independence while benefiting from some resources and expertise of the NAACP. However, this option still carries risks of cultural clashes and operational challenges.
  • Joint venture: This option would involve a collaborative effort with the NAACP on specific projects or programs. This approach offers flexibility and minimizes risks but may not provide the same level of resource sharing as a full merger.

Risks and Key Assumptions:

  • Risk of losing donors: Some donors may be hesitant to support a merged organization or may prefer to support TCF independently.
  • Risk of cultural clashes: The merger could lead to conflicts between the two organizations' cultures and operating styles.
  • Assumption of successful integration: The merger requires a smooth and effective integration process, which can be challenging and time-consuming.

8. Next Steps

TCF should:

  • Conduct a comprehensive feasibility study: Assess the potential benefits and risks of the merger in detail, including financial, operational, and cultural aspects.
  • Engage stakeholders: Consult with beneficiaries, donors, staff, and board members to gather feedback and address concerns.
  • Develop a strategic plan: Outline a clear vision for TCF's future, including its core competencies, strategic partnerships, and innovation initiatives.
  • Implement a change management process: Prepare the organization for the transition to a new strategy, addressing potential resistance and fostering a culture of collaboration and innovation.

By carefully considering these recommendations and taking proactive steps to address potential risks, TCF can navigate the complex landscape of the non-profit sector and continue to fulfill its mission of empowering underprivileged communities.

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Case Description

Thelma Cross-Olden Foundation (TCO), a non-profit organization, had supported the settlement needs of migrant women in Montreal, Quebec, for over three decades. However, in 2011, the foundation's revenue declined sharply. By 2018, the foundation was running into debt and had less than CA$50,000 with which to manage its operations and outreach programs. The decline in TCO's finances raised issues concerning the instability of leadership, the mismanagement of funds, and an overreliance on government agencies as a key source of generating revenue. In an attempt to reinstate the financial position of the foundation in 2019, the newly appointed chief executive officer needed to decide whether to reconsider the merger deal proposed by a reputable large global charity or to search for new avenues to generate funds.

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