Mar 10

Conflicts (”skit” from Gold team)

Event Time: 2010-03-02 16:00:00
Event Location:
Posted by inga on 03/10/2010 09:58 pm » Last modified by inga on 03/11/2010 04:00 am

Here are points from our skit.

First of all, here is statistics on Conflicts to understand the importance of this issue.

According to a recent study of family business conflict resolution by The Family Firm Institute:

  • 15 percent of respondents left decisions up to the founder of the family firm.
  • 20 percent reported that their families avoided discussing conflicts altogether.
  • 43 percent said their families overcame conflict through time and long discussion.
Some researches identify the following causes of conflicts (”Identifying and addressing the causes of conflict in family business”,Nigel Finch, may 2005):
  1. differing vision (for example, founder’s vision can differ from other family members vision)
  2. succession
  3. jealousy amongst the family
  4. poor communication
  5. poor conflict management skills
  6. introducing a full time role for a family member (often issues start to arise when the second family member joins Family business full-time)
  7. equality in rewards
  8. spillover theory (for example positive spillover involves the spread of satisfaction and stimulation at work to high levels of energy and satisfaction at home which is applicable more to men)

The solutions of conflicts represented in the paper are divided into sections:

External Parties
  • appoint non-executive director
  • establish an independent advisory board
  • external party can aid with prompt resolution of conflict
  • can facilitate meetings
  • can act as a sounding board and provide independent views
  • develop a consensus on the role of external parties

Formalise
  • Agree on rules and procedures
  • Develop job description
  • Develop a family protocol manual for decision making and conflict resolution
  • Develop an equitable reward system

Separate roles
  • Establish clear roles in both business and family
  • Develop a system of makers to differentiate between two environments

succession
  • Resolve conflict now to plan for future succession
  • Fund a retirement plan for founder(s)
  • Redefined boards composition and reaffirm strategic objectives
  • Develop exit plan for siblings

Communication
  • Work to eliminate blocks to effective communication
  • Conduct regular meetings where family and business mattes are discussed

You can see these recommendations in the Carnaval video:

One view portrays it as harmful with the risk of tearing the involved group apart (Wall, Jr. & Callister, 1995; Wall, Jr. et al., 1987). The other view recognizes that conflict can be highly beneficial to a firm’s performance by increasing options, by preventing premature consensus, and by increasing involvement and motivation of family firm members (Tjosvold, 1991; Wall, Jr. et al., 1987).

And the best example for this is real example of Columbia Sportswear Co. Here is the short story.

If mum the chairman of board of directors, and the son — the general director, quarrels are inevitable. In a case with Columbia Sportswear family conflicts have helped to increase cost of the company from $1400 to $1,72 billion.

Tim Boyle and his mother Gertas are argueing 35 years on how it is better to operate company Columbia Sportswear. 56-year-old Tim — the general director of the company. His mother, 81-year-old Gertas, — the chairman of board of directors.

When in 1970 mother and the son inherited the company turnover was only $800 000. Before over the company was managed by Nile Boyle, Gerta’s husband and Tim’s father. Then he died from a heart attack. Then at the head of the company there was mother and the son, but to operate business they were not able. Sales volumes fell to 25 % to $600 000 in a year. Key employees began to leave the company. Without knowing what to do, and being afraid to ruin definitively business, mother and the son spent on work long hours. Both recognise that have made many errors and from time to time in fury shouted against each other.

From the middle of 70s business went better. In the market there was technology Gore-Tex, and Tim before all competitors has started to use this water-repellent breathing membrane in clothes and footwear of the firm. But the disputes between mother and the son came more ad more furious.

But Boyles have thought up how to use the conflicts as an advantage. Family quarrels became a basis for a new legend about Columbia.

In the mid-eighties mother and the son had a new occasion to disputes — advertising and marketing. In 1984 Columbia searched for the new advertising strategy which is distinct from old, which abounded with details about a special cut of pockets and so forth Advertising agency Borders Perrin Norrander tried to think up something especial. “Once in the evening we have asked ourselves a question:” It would be pleasant to us to be subordinate own mother? “— Terri Schneider, the art director of agency Borders Perrin. We have decided to present Gert Boyle in an image of too careful mummy which will not allow that you have frozen or have got wet in its clothes”.

This image became a basis of advertising strategy of the company. New image of the company has attracted not only fans of sports, but also teenagers, and office clerks. In the late eighties and the most part of 90 sales promptly grew. “

The video can be easily found on youtube. There is one:

You are welcome to add more on the Conflicts topic or some video.

Categories: Uncategorized
0
4
Mar 9

How to Choose a Successor

Event Time: 2010-03-09 03:00:00
Event Location: In this case there is a godd expression "don't put all eggs in one basket". It is direct translation from russian, which basically means that if you put all in one basket and lost it, then nothing will be left. This can be applicable to growing family bus
Posted by galinasavitskaya on 03/09/2010 10:31 pm » Last modified by alidhanji87 on 03/11/2010 05:35 am

Hey, guys. I found interesting information about family business succession. Here is the link: http://www.inc.com/guides/choose-your-successor.html

The major issue this article adresses to is: How to choose your replacement, if you are a family business owner?

The article combines several links answering the following questions:

  • How to develop a succession strategy?
  • How to decide, should you hire your kids or not?
  • How to provide efficient succession transition?
  • etc.

You can take a look at them here:

http://www.inc.com/inc5000/articles/20080301/evans.html

http://www.inc.com/magazine/20090701/should-you-hire-your-kid.html

http://www.inc.com/articles/2001/10/23549.html

http://www.inc.com/articles/2001/10/23547.html

Also there are some useful references in the end of the article.
I hope it will be useful and interesting for you.

Guys
I found in emerald an article that examines factors that influencing family business succession. The authors of the article are: Michael H. Morris, Roy W. Williams, Deon Nel

Introduction
“Carsrud (1994) has defined a family business as one in which both ownership
and policy making are dominated by members of an “emotional kinship group”.
Accordingly, family firms violate a tenet of contemporary models of
organization, namely, the separation of ownership from management (e.g. Berle
and Means, 1932; Daily and Dollinger, 1991). This single characteristic results
in a number of operational differences between family businesses and other
firms. Chief among these differences is the manner in which family businesses
handle succession from one generation to the next.
A widely-cited statistic suggests that 30 per cent of these firms survive into
the second generation of family ownership, and just 15 per cent survive into the
third generation (Kets de Vries, 1993; Ward, 1987). The implication is that these
are unusually high proportions, or at least that they should be reduceable. And
yet, while much has been written on the need for succession and estate planning
and for properly prepared heirs, little empirical evidence has been produced
regarding the factors that result in successful transitions.
The purpose of the present research is to assess more comprehensively the
nature of succession processes in family firms and to identify both antecedents
to and performance outcomes from a successful transition. Results are reported
of a cross-sectional survey directed at owner-managers of second- and thirdgeneration
family businesses. Theoretical and managerial implications are
drawn from the findings, and suggestions are made for further research”

By Michael H. Morris, Roy W. Williams, Deon Nel
You can find in emerald several interesting articles concerning this topic

Dimitrios

Categories: Uncategorized
1
28
Mar 1

Conflict in Family Business

Event Time: 0000-00-00 00:00:00
Event Location: Conflict in the Family Business
Posted by shaandewan on 03/01/2010 05:13 pm » Last modified by alidhanji87 on 03/11/2010 05:19 am

Hey guys
I read a book called Family business by Ernesto J. Poza, i think is the book that Edd told us to buy at the beginning of the semester

Conflict management
The author presents several problems that can be addressed in family meetings:
“1) Frustration over alienation or lack of inclusion. This sources of conflict is widespread as a result of the emotional distance between family members who are active in management and those who are not and between members of the powerful current generation and those of the significantly less powerful generation.
2) Anger over the unfairness of hiring practices, promotions, family benefits and other opportunities enjoyed by some but not by others
3) Frustration over dividend and lack of liquidity. By the time a family owned company has begun to hire its third generation of family members the financial needs of the various branched and individuals have become incredibly diverse”         By Ernesto J. Poza 2nd edition

I think it is really interesting guys you should read it (pg 70-71).

For further reading you can find this book at the library

Dimitrios

Hey all!

I have been doing some research into Conflicts in the Family Business and came upon a very interesting book..

Family Wars: Classic conflicts in family business and how to deal with them.
by Grant Gordon

This book discusses various conflicts that have erupted in well known family business such as the Reliance Group and Gucci, it also discusses what, why, how and when these conflicts occured and how in the end they either solved their conflict or ruined the relationships.. I have read a few pages as I have just ordered it so should take a few days to come.. I think it fits well with this weeks topic.

“According to this book, family business stakeholders should revisit the scandals because they serve as extreme examples of what can go wrong in a family enterprise. Exploring the factors contributing to the epic conflicts—which in some cases had their genesis in events that occurred a generation or more earlier—will inspire readers to institute processes for governance and communication that can prevent a feud from festering.” (http://www.familybusinessmagazine.com/index.php?/articles/single/toolbox27/)

Another book that we might want to look at is

Conflict and communication in the family business

By Joseph H. Astrachan, Kristi S. McMillan

I also came upon a few sites that discuss various methods of reducing or resolving conflict <!–[if gte mso 9]> Normal 0 21 false false false DE X-NONE X-NONE MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–>

http://www.businessweek.com/smallbiz/content/nov2006/sb20061129_919406.htm

but the thing is that they all speak of what we have discussed in previous weeks such as;

  • Hold regular family meetings to discuss business issues and settle disagreements.
  • Create a formal, written policy that governs family participation in the business.
  • Performance evaluations

Apparently these three points, which were discussed in earlier points are key to reducing conflict within a family firm, however, I feel that although these are major points to discuss, these points would only come up upon succession. I understand the importance of seperating emotions and business, however I still feel that a family business should remain just that and not resort to these solutions without attempting others first.

I will post the links to these sites, but I also found a very interesting case study on family conflicts on this link;

http://www.mediate.com/articles/noll20.cfm

The links to the websites regarding resolution of family problems

http://www.allbusiness.com/specialty-businesses/family-owned-businesses/1190-1.html

http://businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1073792653

Complementing what Shaan has written about a “written policy” that governs family participation in the business, here is a link to an article that describes what should be stated on these Family Written Policies or also called Family Business Constitutions:

http://www.businessweek.com/magazine/content/08_64/s0804030877251.htm

The article is called

A Giude for Family Businesses, by Ernesto Poza . It claims that every Family business needs a constitution which is a document that spells out the company´s vision and offers guidelines that can prevent disastrous conflicts.

Now I’m reading “Management and organisational behaviour” by Laurie J. Mullins. And there is an interesting chapter about role relationships in the group and role conflicts.

The definition of role conflict is the following: conflict that arises from inadequate or inappropraite role definition and results in a person behaving in a way which may not be consistent with their expected pattern of behaviour.

I think that this type of conflict should be very wide-spread in family business. In fact, family members often have a tendency to replace business behaviour patterns by family ones. It difficult to separate two roles - role of business participator and role of family member (we also could see it doing our Roger Levy Family case Roundtable). And the reason for this, in my opinion, is not clearly defined roles.

The proper solution of this problem, as I think, is clear definition of the roles written in the official document and well-defined structure of the firm. So, it correspondes to the Shaan’s second point describing methods of reducing or resolving conflict.

From your group’s skit on conflict, which was very good, the thing that struck me most was that all the family members were fighting about their connection or ‘piece of the pie’, not necessarily for financial gains, but decision-making power and respect. This connects to a journal i found, called “Feuding Families: When Conflict Does a Family Firm Good” by Franz W. Kellermanns and Kimberly A. Eddleston. I think you might have used this in your skits. The author explains that altruism (doing selfless acts for the sake of the FB) has positive effects on the performance of family firms. However, “In an individualistic family altruism is not necessarily reciprocal. Therefore the likelihood that family members take advantage of another family members’ altruism, especially the founder’s altruism toward other family members, increases (Schulze, Lubatkin, & Dino, 2002a; Schulze et al., 2002b).”  I think this was very apparent in your skit!

To connect this to Galina’s point above, if the father had spent more time to clearly define the roles of each active family member, they could all practice altruism in a positive way as opposed to being “individualistic”.

You can check out this journal here: http://findarticles.com/p/articles/mi_hb6648/is_3_28/ai_n29076556/?tag=content;col1

Chocolates and FB Conflict

Read this series below on a great saga of Family Business Conflict that is resulting in the demise of an empire. Enjoy, ed

Jay Pritzker, Who Built Chain Of Hyatt Hotels, Is Dead at 76

Knives Drawn for a $15 Billion Family Pie

Records Expose Schism in Chicago Family

Hyatt clan share out $1.3bn to end row

Lewis Hamilton severs Formula One ties with father Anthony

http://www.slideshare.net/ppatelmacbook/resolving-conflict-in-fam-bus

Guys, by the way, a specialized magazine for family business is available at this link http://www.familybusinessmagazine.com/. it’s really cool, because it has huge amount of info concerned conflicts as well, but also almost all our topics. Check it!!!

Resolving conflicts in Family Business

<!–[if gte mso 9]> Normal 0 21 false false false DE X-NONE X-NONE MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–> <!–[endif]–>

Conflict http://www.extension.iastate.edu/agdm/wholefarm/html/c4-74.html

is a natural phenomenon in any family business. It can shatter a family into pieces.

Family and business conflicts arise due to difference in opinions between the different family members. In a family, there is more of emotional values, protective bonding and they do not willingly accept changes.  For a Family Business to succeed, change is inevitable.

Conflicts cannot be predicted. A simple conversation between two people can lead to misunderstandings and arguments. The argument can have nothing to do with the topic being discussed, at all. Conflicts in families that are also in  business together are higher then normal families because issues such as money is often based on business.

The family and business conflicts need to be handled differently. When you mix the issues over matters, such as leadership and money, then both relationships suffer a lot.

It is very important to find out the base of any conflict and the way you handle it.

Families that involve themselves in handling the conflict <!–[if gte mso 9]> Normal 0 21 false false false DE X-NONE X-NONE MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–>

http://findarticles.com/p/articles/mi_m1154/is_n11_v83/ai_17405464/

are more likely to succeed in their businesses. Families should build up a family plan which describes how you are going to be in family without your business influence. Businesses should deal with leadership and management plans.

Some of the ways to tackle family business conflicts are:

1.Frequent family meetings to be held to discuss business related issues and settling disagreements.

2.Active involvement in the meetings, have patience, and listen to what the other person has to say.  Remember, we are born with 2 ears and 1 mouth for a reason.

3.Brainstorming:  Gather the solutions to the problem, accepting the ideas and opinions of each individual.

4.Find the solution that has the highest potential.

Unresolved conflicts are harmful and put both the  family and business at risk.

Families and businesses that managing conflict effectively have higher chances to survive and achieve their goals

(http://www.familybusinessbattleground.com/2009/11/resolving-conflicts-in-family-business/)

Another type of conflict which hasn’t beend addressed in this blog is the compensation family members expect to receive. Paul Karofsky in his article “Equal vs. Fair in Family Businesses” explains that when similar compensation rates are fixed for all family members these often thend to create conflict when family members compare their contributions.

So he, Karofsky,  recommends a formula that seems increasingly acceptable, especially to younger generation family members, “is a base salary at fair market value, plus a bonus based on performance quality, plus or minus a yearend “adjustment” because of ownership. (Curiously, family members are actually paid less, on average, than their non-family equivalents because so many opt to reinvest some of that compensation back into the business.)” Taken from

http://www.businessweek.com/smallbiz/content/jan2005/sb20050126_0194.htm

Hey Guys!!

I found an interesting article (i know everyone says that, but this might be true!)

Here are some key points you can extract from it…. have fun!
Managing Human Resources in Family Firms: The Problem of Institutional Overlap

http://www.lgassoc.com/library/articles/108-humresourcesfamily.pdf

Institution Overlap problems which may lead to Conflicts within family businesses:

• Problems of Selection–> relatives feel entitled, threatens effectiveness and survival

• Problems of Compensation and Equity–> implicit affective principles instead of specific value of the work. Compensation ambiguous, a hybrid of family and business criteria. Nepotism may lead to: incompetent employees retained and competent employees let go.

• Problems of appraisal–> difficulties in evaluating performance of close relatives, stressful for founder!

• Problems in Training and Development–> conflict in training, give mebers what they want to do, not necessarily lessons for the business. Investments made for offspring’s development.

Entrepreneurship and Family Business:

Many family business researcher has been interested on entrepreneurship within the family business focusing on succession plans.

Gibb Dyer Jr and Wendy Handler has focused on that fact that family members need to consider many aspects like successions in order to make the business future in a better way.

The reason for such interest for succession plan can be attributed to the fact that succession is indeed a very troublesome problem for entrepreneurs, and there are numerous, high-profile cases such as the Ford and DuPont families where the succession problem deeply affected the business and the family. Moreover, because of the difficulty in resolving the succession dilemma, founders have been more willing to ask for outside help in the form of either research or consulting on the succession question. Thus, entry into the world of family business has often occurred as the entrepreneur contemplates retirement.

http://aede.osu.edu/resources/docs/pdf/D3E57989-B26F-4D12-B7054694F29BA82C.pdf

This graph below shows the differnt steps that needs to be considered by the family:

http://pfp.aicpa.org/NR/rdonlyres/597501EE-4B56-464F-8E14-DDF25083B5E1/0/FFFamilyBusinessSuccessionPlanning.pdf

Categories: Uncategorized
8
195
Mar 1

Family Strategy: Karofsky and Habbershon Readings

Event Time: 2010-02-28 00:00:00
Event Location:
Posted by ppatel on 03/01/2010 03:20 am » Last modified by ppatel on 03/09/2010 10:35 pm

What’s the topic in your heading: succession, conflict, performance, etc….?

Hello Class,

I know we had a good break from Gaga post while it was down, but its now time to pull up our socks and get blogging.

Before the short demise of gaga my team and I performed skits on the Karofsky and Habbershon papers. The links bellow are of the slides we used while presenting. These may help you recall the papers.

From the two readings we felt the idea of “Collective Cognitive” ie. Shared beliefs, was of importance thus this will serve as the theme of this blog.

Please help us in exploring the effects of shared beliefs in the family, is there a difference in the actual and perceived level of unity, how do these all affect the business?

Your responses are welcomed.

Regards,

YELLOW  TEAM.

http://www.slideshare.net/guest1b40983/giving-back-and-gubernatorial-aspirations-p-karofsky

http://www.slideshare.net/guest1b40983/how-family-meetings-lead-to-collective-action-habbershon

Categories: Uncategorized
2
94
Feb 26

Family or Non-Family for Best Advice

Event Time: 2010-02-26 12:00:00
Event Location: Obviously FB professionals will provide you with better advice, for the reason that they have experience and best practice which they use. Whereas non-FB professionals will not account for special issues related to the Family Business. As we already studi
Posted by eddygonsalves on 02/26/2010 01:16 pm » Last modified by haithem on 03/11/2010 12:07 am

Read this FT Article and then offer your take on the issue of who offers best advice in the following groups:

  1. ….FB or non-FB members,
  2. FB Professional versus non-FB professional,
  3. non-professional FBs versus Professional non-FB members

Enter hyperlinks to your sources and evidence- or refer to experiences in your FBs!!

If the link above doesn’t work, here’s the full article or look at Page 4 on sources of business advice in the original in the report:

Families trump bankers as best advisers

By Jonathan Moules

Published: February 19 2010 17:21 | Last updated: February 19 2010 17:21

Accountants and family members are better sources of advice and support to entrepreneurs than the bank or Business Link, according to a survey of high growth businesses.

Delta Economics interviewed 2,120 businesses, with an average turnover of £1.23m, asking them to rank the usefulness of 10 different sources of advice.

Professional advisers were the most widely used, both during the start up stage and later in the company’s development. They were also ranked among the most useful, slightly behind family members, other entrepreneurs and mentors.

But the percentage using banks for advice fell as businesses matured and the information provided was ranked among the least useful, slightly above that given by government agencies, such as Business Link.

Entrepreneurs tend to go to experts such as accountants and lawyers when they need answers to specific questions, such as how to handle redundancies, according to Rebecca Harding, the report’s author.

“People tend to use different types of advice as the business grows,” she said. “They go to networking events, but often to be part of the business community and see if things are the same for everybody else.”

Experienced entrepreneurs are often a good source of advice because they do not expect anything in return, according to Andy Lopata, a business networking strategist. “Experienced entrepreneurs are above selling, so they like to meet interesting people,” he said.

The low ranking of Business Link will give further ammunition to those wanting it scrapped. Mark Prisk, shadow enterprise minister, has said one of his first actions if he were to become small business minister would be to axe Business Link and hand its functions to local enterprise agencies.

David Parkin, Business Link director, defended his organisation’s service, and said it was right that owner managers sought advice from several sources.

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web

Categories: Uncategorized
4
89
Feb 23

ED FACTOR

Event Time: 2010-02-16 17:00:00
Event Location:
Posted by ldjalal on 02/23/2010 04:38 am » Last modified by karan on 03/10/2010 04:04 am

Following the great performance from our contestants, we have attached their lyrics.

Your more than welcome to try to ADD new rhyming words that are relevant to the topic!

Family Ownership as the Optimal Organizational Structure? by Christian Andres

Being based on observations
for many countries, many nations,
most studies find that family firm
comparatively better perform.
And then the issue is a role
of ownership and firm control.
Christian Andres, clever man (dude)
Can he explain? Of course, he can (should)
Results of his investigation
give us simple explanation.
You ask me: what? Ok, relax.
Dispersed shareholder structure sucks.
Family ownership is ideal.
Can help us with any deal.
There is a strong argumentation:
no conflicts, no expropriation.
Further the results confirm
that role of family in the firm
has an interesting effect
that people shouldn’t just neglect.
To make efficiency provision,
enable family supervision.
And that brings us to the conclusion:
stop to cherish an illusion.
If family acts just as shareholder,
you have a lot of troubles to shoulder.

Inside the Family Firm: The Role of Families in Succession Decisions and Performance by Morten Bennedsen, Kasper Nielsen, Francisco Pérez-González, and Daniel Wolfenzon

Family size, gender composition,
All make a difference, on the decision,
To pick the right CEO, so when he is old,
He’s the successor, chosen to be next up,

Depending on what gender of child is born,
We can test the succession and how they perform,
Family CEO’s, make less profit,
And has a direct impact, on how they just lost it,

Families are common large shareholders,
If their publicly traded, their big like boulders,
Most private firms are linked to one family,
They love control and benefits, and apparently,
They can cook decisions, in their own kitchens,
Even if that’s not what the stakeholders are wishing!

If the first born child happens to be a boy,
There’s more chance they let him control and deploy,
But the gender effect isn’t really enormous,
Because its unlikely to affect the firm’s performance,

If the CEO chosen, is not family related,
Their service is valuable, and shouldn’t be negated,
But if the family CEO is one of their own,
Then the firm must be smaller, and not so grown,

If you got more children, Successions keep building,
Offspring are preferred to parents or siblings,
Depending on the CEO’s marital history,
We’ll find out if the child gets to take his seat.


http://www.slideshare.net/guestd224927/harilela-case-study

Categories: Uncategorized
6
184
Feb 9

founding-family ownership and firm performance

Event Time: 2010-02-09 00:00:00
Event Location:
Posted by aggarwalshaloo on 02/09/2010 08:32 am » Last modified by karan on 03/10/2010 04:15 am

hi everyone, based on last weeks “godfather” skit, we’d like to start a discussion on whether people think that founding-family ownership does effect firm performance, if yes, how and to what extent. we concluded from the paper by anderson and reeb, that performance is infact related to founding family ownership. we will upload the slides soon so you can get an idea about their views and opinions in the paper.please find the slides on the following link:

http://www.slideshare.net/guestd26d34/presentation1-for-family-business

do you think there is an effect on firm performance of varying CEOs and family memeber participation at th eexecutive level of the business under various conditions?are there any more authors in the field who have conducted similar research and come up with different and contradicting arguments and theories?

it would also be interesting if you could provide us with examples of family business http://news.bbc.co.uk/1/hi/business/5255626.stm in your country or in the united kingdom with which have managed to fare well with founding-family ownership. reliance is an example to look at in india. amedei is another chocolate family business in italy that somebody can look into.

Argentina Family Business & Succession in Family Firms by Roberto Kertesz and Clara. I . Atalaya


The let’s look at an Argentinean family firm

Which was run by the Gomez for four terms,

This is a tale

About four generations of males

In which the last one fails.

And we can tell

The Tobacco empire began with Manuel.

Jose came next,

in an period where people would rather smoke than rest.

Osvaldo found the perfect expansion solution

By opening 300 more shops for distribution.

Alas the family business was nearing its end

But they brought Gonzalo as the CEO who tried his best to mend.

The last hopes of the company were Fernando and alberto,

But when it came to the business, they both lacked sufficient momento.

Categories: Uncategorized
3
222
Feb 9

Questions and Answers on Skits.

Event Time: 2010-02-07 04:00:00
Event Location:
Posted by lelecosti on 02/09/2010 07:21 am » Last modified by eddygonsalves on 03/08/2010 03:43 pm

Questions on China

1) What environment in Chinese business influences Chinese entrepreneurship? And How does the local government influence entrepreneurs firm in China?

Chinese entrepreneurs are influenced mainly by three sources:

  • The government
  • The institution
  • The culture

The local government in china was a little bit rigid and didn’t allow for Chinese entrepreneurs to fully fulfil their intentions. The government had the ability to monitor all of the firms. It allocated resources and redistributed profits. This weakened the financial aspect of TVE (town villigae entrepreneurs). Moreover, it allocated bank loans and investments. In doing so, it was able to choose which investment to pursue for it’s own interest instead of the firms’. It had also the power to spread the start up risk, by making all of the community absorb the cost of failure.

The institution wasn’t very clear in china. This only helped entrepreneurs to start-up new businesses. In this environment, new firms could exploit the gaps in the systems and they seized new opportunities from it. Moreover they used networking and building as opportunities for exploration and identification. This method of exploiting the systems’ gaps usually generated short-term approaches to business transactions. The negative influence that the institution gave was that there was a bit of political interference and economic experimentation. Also the legacy of a centrally planned economy didn’t’ help.

The culture also influenced entrepreneurs. Culture is an institutional framework in china and it is partially conducive of entrepreneurship if it is analysed on the base of the Guanxi (personal network relationships), which allows the firms to build social capital and to seek for legitimacy. On the other hand, the entrepreneurial values are in contrast with the Chinese culture – creativity, innovation and flexibility are all lacking in the Chinese values. The entrepreneurial characteristics also differ from the chines ones – a positive response to change, initiative and orientation are all in conflict with the Chinese characteristics.

2) How do you think the increase in innovation in Chinese firms will affect the future developments of family businesses?

The increase in innovation will surely help new firms in their growth and expansion. It will also help family firms which can exploit these new technologies to their advantage. I think that an innovation increase will help all entrepreneurial firims because it allows them to be more productive and probably more efficient in their segment. Overall, if Chinese firms upgrade their technology, i think that it will affect future family businesses at the beginning because they have an advantage over them. However in the long run, also the family businesses will be able to acquire and use these technologies for their own purpose.

3) The research done on the Chinese firms was done about 10 years ago, do these conclusions still hold today?

This research paper is based on early studies, when entrepreneurs were just starting to rise in china. It focuses on the past 25 years, from the beginnings of the TVE’s (township villages entrepreneurs) to major dominant players such as SME’s (small and medium sized enterprises). These conclusions stated on the previous questions, about culture, government and institution, probably don’t hold anymore. The government has become much more flexible and creativity is becoming one of Chinas’ strength. Although we don’t have evidence of this on the paper, we can see that China is growing and its business is expanding very quickly at a global level. Therefore we can deduce that there are less cultural and governmental constraints around entrepreneurs.

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0
167
Feb 7

China’s Culture and Nurture - A Boost for Entrepreneurs?

Event Time: 2010-02-06 18:45:00
Event Location: London
Posted by alidhanji87 on 02/07/2010 02:44 am » Last modified by eddygonsalves on 03/08/2010 03:43 pm

After reading the answer’s to all of your questions, how much impact do you think the Chinese Culture has on its entrepreneurial spirit and success?

Do you think the ‘Bamboo Network’ applies to other cultures? Tell us about global entrepreneurial networks from your cultures… Perhaps the ‘Curry Network’ for Indians, or the ‘Vodka Network’ for the Russians…etc.

Small comment: russian love for vodka is a terrible stereotype, we mostly eat icecream in winter=).

Categories: Uncategorized
8
201
Feb 7

Answer’s to your Q’s for (Ali, Djalal, Galina + Haithem)

Event Time: 2010-02-06 18:30:00
Event Location:
Posted by alidhanji87 on 02/07/2010 02:25 am » Last modified by eddygonsalves on 03/08/2010 03:45 pm

Hi everyone,

First of all thanks for all your Q’s. Below are answers to some of them, and we will keep adding more answers. Questions that are repetitive have been consolidated, so don’t feel bad if we didn’t answer your Q. Read the rest of this entry »

Categories: Uncategorized
6
241
Older Entries    
Mar 9

How to Choose a Successor

Event Time: 2010-03-09 03:00:00
Event Location: In this case there is a godd expression "don't put all eggs in one basket". It is direct translation from russian, which basically means that if you put all in one basket and lost it, then nothing will be left. This can be applicable to growing family bus
Posted by galinasavitskaya on 03/09/2010 10:31 pm » Last modified by alidhanji87 on 03/11/2010 05:35 am

Hey, guys. I found interesting information about family business succession. Here is the link: http://www.inc.com/guides/choose-your-successor.html

The major issue this article adresses to is: How to choose your replacement, if you are a family business owner?

The article combines several links answering the following questions:

  • How to develop a succession strategy?
  • How to decide, should you hire your kids or not?
  • How to provide efficient succession transition?
  • etc.

You can take a look at them here:

http://www.inc.com/inc5000/articles/20080301/evans.html

http://www.inc.com/magazine/20090701/should-you-hire-your-kid.html

http://www.inc.com/articles/2001/10/23549.html

http://www.inc.com/articles/2001/10/23547.html

Also there are some useful references in the end of the article.
I hope it will be useful and interesting for you.

Guys
I found in emerald an article that examines factors that influencing family business succession. The authors of the article are: Michael H. Morris, Roy W. Williams, Deon Nel

Introduction
“Carsrud (1994) has defined a family business as one in which both ownership
and policy making are dominated by members of an “emotional kinship group”.
Accordingly, family firms violate a tenet of contemporary models of
organization, namely, the separation of ownership from management (e.g. Berle
and Means, 1932; Daily and Dollinger, 1991). This single characteristic results
in a number of operational differences between family businesses and other
firms. Chief among these differences is the manner in which family businesses
handle succession from one generation to the next.
A widely-cited statistic suggests that 30 per cent of these firms survive into
the second generation of family ownership, and just 15 per cent survive into the
third generation (Kets de Vries, 1993; Ward, 1987). The implication is that these
are unusually high proportions, or at least that they should be reduceable. And
yet, while much has been written on the need for succession and estate planning
and for properly prepared heirs, little empirical evidence has been produced
regarding the factors that result in successful transitions.
The purpose of the present research is to assess more comprehensively the
nature of succession processes in family firms and to identify both antecedents
to and performance outcomes from a successful transition. Results are reported
of a cross-sectional survey directed at owner-managers of second- and thirdgeneration
family businesses. Theoretical and managerial implications are
drawn from the findings, and suggestions are made for further research”

By Michael H. Morris, Roy W. Williams, Deon Nel
You can find in emerald several interesting articles concerning this topic

Dimitrios

Categories: Uncategorized
1
28
Mar 10

Conflicts (”skit” from Gold team)

Event Time: 2010-03-02 16:00:00
Event Location:
Posted by inga on 03/10/2010 09:58 pm » Last modified by inga on 03/11/2010 04:00 am

Here are points from our skit.

First of all, here is statistics on Conflicts to understand the importance of this issue.

According to a recent study of family business conflict resolution by The Family Firm Institute:

  • 15 percent of respondents left decisions up to the founder of the family firm.
  • 20 percent reported that their families avoided discussing conflicts altogether.
  • 43 percent said their families overcame conflict through time and long discussion.
Some researches identify the following causes of conflicts (”Identifying and addressing the causes of conflict in family business”,Nigel Finch, may 2005):
  1. differing vision (for example, founder’s vision can differ from other family members vision)
  2. succession
  3. jealousy amongst the family
  4. poor communication
  5. poor conflict management skills
  6. introducing a full time role for a family member (often issues start to arise when the second family member joins Family business full-time)
  7. equality in rewards
  8. spillover theory (for example positive spillover involves the spread of satisfaction and stimulation at work to high levels of energy and satisfaction at home which is applicable more to men)

The solutions of conflicts represented in the paper are divided into sections:

External Parties
  • appoint non-executive director
  • establish an independent advisory board
  • external party can aid with prompt resolution of conflict
  • can facilitate meetings
  • can act as a sounding board and provide independent views
  • develop a consensus on the role of external parties

Formalise
  • Agree on rules and procedures
  • Develop job description
  • Develop a family protocol manual for decision making and conflict resolution
  • Develop an equitable reward system

Separate roles
  • Establish clear roles in both business and family
  • Develop a system of makers to differentiate between two environments

succession
  • Resolve conflict now to plan for future succession
  • Fund a retirement plan for founder(s)
  • Redefined boards composition and reaffirm strategic objectives
  • Develop exit plan for siblings

Communication
  • Work to eliminate blocks to effective communication
  • Conduct regular meetings where family and business mattes are discussed

You can see these recommendations in the Carnaval video:

One view portrays it as harmful with the risk of tearing the involved group apart (Wall, Jr. & Callister, 1995; Wall, Jr. et al., 1987). The other view recognizes that conflict can be highly beneficial to a firm’s performance by increasing options, by preventing premature consensus, and by increasing involvement and motivation of family firm members (Tjosvold, 1991; Wall, Jr. et al., 1987).

And the best example for this is real example of Columbia Sportswear Co. Here is the short story.

If mum the chairman of board of directors, and the son — the general director, quarrels are inevitable. In a case with Columbia Sportswear family conflicts have helped to increase cost of the company from $1400 to $1,72 billion.

Tim Boyle and his mother Gertas are argueing 35 years on how it is better to operate company Columbia Sportswear. 56-year-old Tim — the general director of the company. His mother, 81-year-old Gertas, — the chairman of board of directors.

When in 1970 mother and the son inherited the company turnover was only $800 000. Before over the company was managed by Nile Boyle, Gerta’s husband and Tim’s father. Then he died from a heart attack. Then at the head of the company there was mother and the son, but to operate business they were not able. Sales volumes fell to 25 % to $600 000 in a year. Key employees began to leave the company. Without knowing what to do, and being afraid to ruin definitively business, mother and the son spent on work long hours. Both recognise that have made many errors and from time to time in fury shouted against each other.

From the middle of 70s business went better. In the market there was technology Gore-Tex, and Tim before all competitors has started to use this water-repellent breathing membrane in clothes and footwear of the firm. But the disputes between mother and the son came more ad more furious.

But Boyles have thought up how to use the conflicts as an advantage. Family quarrels became a basis for a new legend about Columbia.

In the mid-eighties mother and the son had a new occasion to disputes — advertising and marketing. In 1984 Columbia searched for the new advertising strategy which is distinct from old, which abounded with details about a special cut of pockets and so forth Advertising agency Borders Perrin Norrander tried to think up something especial. “Once in the evening we have asked ourselves a question:” It would be pleasant to us to be subordinate own mother? “— Terri Schneider, the art director of agency Borders Perrin. We have decided to present Gert Boyle in an image of too careful mummy which will not allow that you have frozen or have got wet in its clothes”.

This image became a basis of advertising strategy of the company. New image of the company has attracted not only fans of sports, but also teenagers, and office clerks. In the late eighties and the most part of 90 sales promptly grew. “

The video can be easily found on youtube. There is one:

You are welcome to add more on the Conflicts topic or some video.

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0
4
Mar 1

Family Strategy: Karofsky and Habbershon Readings

Event Time: 2010-02-28 00:00:00
Event Location:
Posted by ppatel on 03/01/2010 03:20 am » Last modified by ppatel on 03/09/2010 10:35 pm

What’s the topic in your heading: succession, conflict, performance, etc….?

Hello Class,

I know we had a good break from Gaga post while it was down, but its now time to pull up our socks and get blogging.

Before the short demise of gaga my team and I performed skits on the Karofsky and Habbershon papers. The links bellow are of the slides we used while presenting. These may help you recall the papers.

From the two readings we felt the idea of “Collective Cognitive” ie. Shared beliefs, was of importance thus this will serve as the theme of this blog.

Please help us in exploring the effects of shared beliefs in the family, is there a difference in the actual and perceived level of unity, how do these all affect the business?

Your responses are welcomed.

Regards,

YELLOW  TEAM.

http://www.slideshare.net/guest1b40983/giving-back-and-gubernatorial-aspirations-p-karofsky

http://www.slideshare.net/guest1b40983/how-family-meetings-lead-to-collective-action-habbershon

Categories: Uncategorized
2
94
Feb 26

Family or Non-Family for Best Advice

Event Time: 2010-02-26 12:00:00
Event Location: Obviously FB professionals will provide you with better advice, for the reason that they have experience and best practice which they use. Whereas non-FB professionals will not account for special issues related to the Family Business. As we already studi
Posted by eddygonsalves on 02/26/2010 01:16 pm » Last modified by haithem on 03/11/2010 12:07 am

Read this FT Article and then offer your take on the issue of who offers best advice in the following groups:

  1. ….FB or non-FB members,
  2. FB Professional versus non-FB professional,
  3. non-professional FBs versus Professional non-FB members

Enter hyperlinks to your sources and evidence- or refer to experiences in your FBs!!

If the link above doesn’t work, here’s the full article or look at Page 4 on sources of business advice in the original in the report:

Families trump bankers as best advisers

By Jonathan Moules

Published: February 19 2010 17:21 | Last updated: February 19 2010 17:21

Accountants and family members are better sources of advice and support to entrepreneurs than the bank or Business Link, according to a survey of high growth businesses.

Delta Economics interviewed 2,120 businesses, with an average turnover of £1.23m, asking them to rank the usefulness of 10 different sources of advice.

Professional advisers were the most widely used, both during the start up stage and later in the company’s development. They were also ranked among the most useful, slightly behind family members, other entrepreneurs and mentors.

But the percentage using banks for advice fell as businesses matured and the information provided was ranked among the least useful, slightly above that given by government agencies, such as Business Link.

Entrepreneurs tend to go to experts such as accountants and lawyers when they need answers to specific questions, such as how to handle redundancies, according to Rebecca Harding, the report’s author.

“People tend to use different types of advice as the business grows,” she said. “They go to networking events, but often to be part of the business community and see if things are the same for everybody else.”

Experienced entrepreneurs are often a good source of advice because they do not expect anything in return, according to Andy Lopata, a business networking strategist. “Experienced entrepreneurs are above selling, so they like to meet interesting people,” he said.

The low ranking of Business Link will give further ammunition to those wanting it scrapped. Mark Prisk, shadow enterprise minister, has said one of his first actions if he were to become small business minister would be to axe Business Link and hand its functions to local enterprise agencies.

David Parkin, Business Link director, defended his organisation’s service, and said it was right that owner managers sought advice from several sources.

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web

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4
89
Feb 23

ED FACTOR

Event Time: 2010-02-16 17:00:00
Event Location:
Posted by ldjalal on 02/23/2010 04:38 am » Last modified by karan on 03/10/2010 04:04 am

Following the great performance from our contestants, we have attached their lyrics.

Your more than welcome to try to ADD new rhyming words that are relevant to the topic!

Family Ownership as the Optimal Organizational Structure? by Christian Andres

Being based on observations
for many countries, many nations,
most studies find that family firm
comparatively better perform.
And then the issue is a role
of ownership and firm control.
Christian Andres, clever man (dude)
Can he explain? Of course, he can (should)
Results of his investigation
give us simple explanation.
You ask me: what? Ok, relax.
Dispersed shareholder structure sucks.
Family ownership is ideal.
Can help us with any deal.
There is a strong argumentation:
no conflicts, no expropriation.
Further the results confirm
that role of family in the firm
has an interesting effect
that people shouldn’t just neglect.
To make efficiency provision,
enable family supervision.
And that brings us to the conclusion:
stop to cherish an illusion.
If family acts just as shareholder,
you have a lot of troubles to shoulder.

Inside the Family Firm: The Role of Families in Succession Decisions and Performance by Morten Bennedsen, Kasper Nielsen, Francisco Pérez-González, and Daniel Wolfenzon

Family size, gender composition,
All make a difference, on the decision,
To pick the right CEO, so when he is old,
He’s the successor, chosen to be next up,

Depending on what gender of child is born,
We can test the succession and how they perform,
Family CEO’s, make less profit,
And has a direct impact, on how they just lost it,

Families are common large shareholders,
If their publicly traded, their big like boulders,
Most private firms are linked to one family,
They love control and benefits, and apparently,
They can cook decisions, in their own kitchens,
Even if that’s not what the stakeholders are wishing!

If the first born child happens to be a boy,
There’s more chance they let him control and deploy,
But the gender effect isn’t really enormous,
Because its unlikely to affect the firm’s performance,

If the CEO chosen, is not family related,
Their service is valuable, and shouldn’t be negated,
But if the family CEO is one of their own,
Then the firm must be smaller, and not so grown,

If you got more children, Successions keep building,
Offspring are preferred to parents or siblings,
Depending on the CEO’s marital history,
We’ll find out if the child gets to take his seat.


http://www.slideshare.net/guestd224927/harilela-case-study

Categories: Uncategorized
6
184
Feb 9

founding-family ownership and firm performance

Event Time: 2010-02-09 00:00:00
Event Location:
Posted by aggarwalshaloo on 02/09/2010 08:32 am » Last modified by karan on 03/10/2010 04:15 am

hi everyone, based on last weeks “godfather” skit, we’d like to start a discussion on whether people think that founding-family ownership does effect firm performance, if yes, how and to what extent. we concluded from the paper by anderson and reeb, that performance is infact related to founding family ownership. we will upload the slides soon so you can get an idea about their views and opinions in the paper.please find the slides on the following link:

http://www.slideshare.net/guestd26d34/presentation1-for-family-business

do you think there is an effect on firm performance of varying CEOs and family memeber participation at th eexecutive level of the business under various conditions?are there any more authors in the field who have conducted similar research and come up with different and contradicting arguments and theories?

it would also be interesting if you could provide us with examples of family business http://news.bbc.co.uk/1/hi/business/5255626.stm in your country or in the united kingdom with which have managed to fare well with founding-family ownership. reliance is an example to look at in india. amedei is another chocolate family business in italy that somebody can look into.

Argentina Family Business & Succession in Family Firms by Roberto Kertesz and Clara. I . Atalaya


The let’s look at an Argentinean family firm

Which was run by the Gomez for four terms,

This is a tale

About four generations of males

In which the last one fails.

And we can tell

The Tobacco empire began with Manuel.

Jose came next,

in an period where people would rather smoke than rest.

Osvaldo found the perfect expansion solution

By opening 300 more shops for distribution.

Alas the family business was nearing its end

But they brought Gonzalo as the CEO who tried his best to mend.

The last hopes of the company were Fernando and alberto,

But when it came to the business, they both lacked sufficient momento.

Categories: Uncategorized
3
222
Feb 9

Questions and Answers on Skits.

Event Time: 2010-02-07 04:00:00
Event Location:
Posted by lelecosti on 02/09/2010 07:21 am » Last modified by eddygonsalves on 03/08/2010 03:43 pm

Questions on China

1) What environment in Chinese business influences Chinese entrepreneurship? And How does the local government influence entrepreneurs firm in China?

Chinese entrepreneurs are influenced mainly by three sources:

  • The government
  • The institution
  • The culture

The local government in china was a little bit rigid and didn’t allow for Chinese entrepreneurs to fully fulfil their intentions. The government had the ability to monitor all of the firms. It allocated resources and redistributed profits. This weakened the financial aspect of TVE (town villigae entrepreneurs). Moreover, it allocated bank loans and investments. In doing so, it was able to choose which investment to pursue for it’s own interest instead of the firms’. It had also the power to spread the start up risk, by making all of the community absorb the cost of failure.

The institution wasn’t very clear in china. This only helped entrepreneurs to start-up new businesses. In this environment, new firms could exploit the gaps in the systems and they seized new opportunities from it. Moreover they used networking and building as opportunities for exploration and identification. This method of exploiting the systems’ gaps usually generated short-term approaches to business transactions. The negative influence that the institution gave was that there was a bit of political interference and economic experimentation. Also the legacy of a centrally planned economy didn’t’ help.

The culture also influenced entrepreneurs. Culture is an institutional framework in china and it is partially conducive of entrepreneurship if it is analysed on the base of the Guanxi (personal network relationships), which allows the firms to build social capital and to seek for legitimacy. On the other hand, the entrepreneurial values are in contrast with the Chinese culture – creativity, innovation and flexibility are all lacking in the Chinese values. The entrepreneurial characteristics also differ from the chines ones – a positive response to change, initiative and orientation are all in conflict with the Chinese characteristics.

2) How do you think the increase in innovation in Chinese firms will affect the future developments of family businesses?

The increase in innovation will surely help new firms in their growth and expansion. It will also help family firms which can exploit these new technologies to their advantage. I think that an innovation increase will help all entrepreneurial firims because it allows them to be more productive and probably more efficient in their segment. Overall, if Chinese firms upgrade their technology, i think that it will affect future family businesses at the beginning because they have an advantage over them. However in the long run, also the family businesses will be able to acquire and use these technologies for their own purpose.

3) The research done on the Chinese firms was done about 10 years ago, do these conclusions still hold today?

This research paper is based on early studies, when entrepreneurs were just starting to rise in china. It focuses on the past 25 years, from the beginnings of the TVE’s (township villages entrepreneurs) to major dominant players such as SME’s (small and medium sized enterprises). These conclusions stated on the previous questions, about culture, government and institution, probably don’t hold anymore. The government has become much more flexible and creativity is becoming one of Chinas’ strength. Although we don’t have evidence of this on the paper, we can see that China is growing and its business is expanding very quickly at a global level. Therefore we can deduce that there are less cultural and governmental constraints around entrepreneurs.

Categories: Uncategorized
0
167
Feb 7

Answer’s to your Q’s for (Ali, Djalal, Galina + Haithem)

Event Time: 2010-02-06 18:30:00
Event Location:
Posted by alidhanji87 on 02/07/2010 02:25 am » Last modified by eddygonsalves on 03/08/2010 03:45 pm

Hi everyone,

First of all thanks for all your Q’s. Below are answers to some of them, and we will keep adding more answers. Questions that are repetitive have been consolidated, so don’t feel bad if we didn’t answer your Q. Read the rest of this entry »

Categories: Uncategorized
6
241
Feb 7

China’s Culture and Nurture - A Boost for Entrepreneurs?

Event Time: 2010-02-06 18:45:00
Event Location: London
Posted by alidhanji87 on 02/07/2010 02:44 am » Last modified by eddygonsalves on 03/08/2010 03:43 pm

After reading the answer’s to all of your questions, how much impact do you think the Chinese Culture has on its entrepreneurial spirit and success?

Do you think the ‘Bamboo Network’ applies to other cultures? Tell us about global entrepreneurial networks from your cultures… Perhaps the ‘Curry Network’ for Indians, or the ‘Vodka Network’ for the Russians…etc.

Small comment: russian love for vodka is a terrible stereotype, we mostly eat icecream in winter=).

Categories: Uncategorized
8
201
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