Christian Audigier: The founder of the famous Ed-Hardy fashion brand:

Christian Audigier was born in 1958 in a modest family in a small village in France called Avignon. His professional pathway is a real success. From scratch and in a very short period Christian Audigier has become a famous billion-dollar businessman.

The life of Christian is how he calls it: “the continuation of my dreams”.

He has been working all his life in the fashion industry. At the age of 14, he left school and because he did not have the legal age to work in France he started to work for a clothing brand cleaning the windows and hovering alleys. At the age of 16, while working in the store he discovered a passion and a talent for designing and drawing clothe and he then became a designer for some of the biggest brands in France such as Naf Naf, Levis or Liberto. Chrisitan then created a successful company, which he sold for 200,000 euro, which add 10 employees. The fact he was working with clients all around Europe gave him the idea to go live in the U.S to achieve the “American Dream”.

Christian then started as a designer in Los Angeles like he did in France. It is after the meeting and the collaboration with Paul Guez that this young stylist achieved a phenomenal success. He created original and fashion designs for a range of trendy brands, which was going to be worn by celebrities all around the world, from Britney Spears to Mickael Jackson Madonna etc…

After two years, Christian left the company to fly with his own wings and created Ed-Hardy after he had seen and loved the drawings and the tattoos Don Ed-Hardy an artist living in LA. The business really took off because one day he was walking in the streets of LA wearing a custom made cap he made from scratch. As he was walking, he saw Madonna on the streets followed by paparazzi and ran after her to place the cap on her head. The next day, the trendy magazines around the states had the photo of Madonna wearing his cap and it created a huge buzz for Christian who then had a rapid success.

In 2007 the Christian Audigier Empire was present in 72 countries and was realising a turnover of 115 million dollar. All the family members of Christian are now involved in the business to some extend. He has a daughter of 18, which is currently designing some of the Ed-Hardy Collection.

As probably some of you have experienced, having our parent’s blessing, and more specifically, our DAD’s blessing is very important.

Below is a summary of the very interesting article i found about that subject. Take a quick look and if you’r interested click in the link at the bottom for the full article.

____________________________________________________

One of the least understood and most overlooked issues within family businesses is having Dad’s blessing or approval. One has only to go back to the Bible to learn how important this issue can be.

To a son working in a family business, nothing is more important than the knowledge that Dad approves of you and has given you his blessing. Money, power, titles… none mean as much to a son as hearing Dad say, “ I am proud of you. You are an outstanding business person.” Before women start accusations of sexism, let us explain that mothers generally give love and approval unconditionally to their children, so when Mom is boss this is not so much an issue. The need for Dad’s approval is present when a daughter works for her father, but it is not as strong a force as with sons.

Children know of the difficulties and struggles that were encountered in making the business a success. They worship their father - Dad is a hero to his children. Since he is such a hero, nothing is more important than having his approval. Further, there is a certain competition which exists between fathers and sons. The young man wants to believe he is as good as or maybe even better than Dad. Obtaining this approval is a motivating force that will be a factor in every family and business decision until it is resolved. Do not underestimate the lengths to which children will go to get Dad’s blessing. The child may say it isn’t important, but don’t believe him. In most cases, it is vitally important.

Three Ways To Attain the blessing

There are three ways children generally respond to this need for Dad’s approval.

• The first is the “defiant child.” Usually seen in the first-born, the child challenges Dad frequently to show that he is equal to the “old man” and therefore worthy to receive the blessing.

• The second approach is to be the “compliant child,” willing to do whatever Dad wants, even if the child doesn’t think it’s the right path.

• The third approach is the “escape artist.” This child, for whatever reason, decides that he cannot compete with his father and siblings in the family business arena and win Dad’s approval, so he finds a field in which he can compete and excel.

Approval Must Be Earned

Many entrepreneurial parents have difficulty expressing affection and praise to anyone. It isn’t their nature, and because they don’t need or crave praise themselves, they don’t understand children who do.

Fathers are often reluctant to tell sons how proud they are of them believing that too much praise might spoil the child or cause him to “ease up.” Quite the opposite is true. When sons no longer have to worry about whether or not dad approves of them, they are finally free to focus on other, more important issues.

By Wayne Rivers

Click for full article

Delta was founded in 1961 by Rui Nabeiro. In a small warehouse of 50m2, with two 30kg capacity roasting balls and three staff mark the start of this brand. In 1994 it became the market leader in coffe production in Portugal with a share of 42%. Have 41 000 direct customers and 3,000 employees.

Since its inception, Delta Cafés always maintained the philosophy of - A Friend A Client, and is also recognized as a mark of Human Face, where values such as Honesty, Loyalty, Humility, Total Quality Management, Solidarity and Citizenship have a prominent role in this organization.

SA 8000 gave Delta Cafés the first distinction in Portugal for Social Responsibility.

For  9 consecutive years, Delta Cafés is a trusted brand in the European Most Trust Brands studies from the Reader’s Digest.

Nowadays Delta employees 60% of the population of Campo Maior, the city where the company is headquartered.

The family is now on its third generation with the grand sons of the founder Rui Nabeiro already involved in the management.

Below is the family tree:

The grandsons of Rui Nabeiro are involved in the business. Rui Miguel is the general manager of Delta, Rita is encharge of marketing, and Ivan manages daily operations in the factory in Campo Maior. The curious thing is that the business passed almost directly from the founder to his grandsons, as the sons of Rui Nabeiro (founder) did not have much influence and involvement in the company.

Click to see how their coffee is made

Click to see the story of Delta in a nice video (portuguese)

Click to see a nice Delta coffe Ad

Hey guys,

I stumbled upon a very interesting article. An article that actually refers to me a lot, and of course to you. How will/should we be compensated in the future in our family business.

I’ve cut some boring parts of the article, below you can find the most interesting ones:

Article:

Believe it or not, the way we share money and allowances with our children when they’re young can influence their adult spending habits as well as compensation expectations when they join the family business. For example, how did you determine how much allowance to give your kids when they were young? If they spent their periodic allowances, did you give them more money to get through the week, or did you make them wait for next week’s allowance?

Many family business owners struggle with how to fairly compensate their children who work for them.

Overcompensating children in the business can lead to an exaggerated sense of self worth and encourage family business children to lose touch with the economic value of a dollar. Especially if their job responsibilities are not proportionate with their high compensation, the children can suffer from a devastating loss of confidence and a feeling that they’re still on an umbilical with Mommy and Daddy providing their life support.

Undercompensation is just as damaging potentially. Many family business owners purposely undercompensate their children to teach them the value of hard work and thrift. Their rationale is one day the business will belong to the kids and they must be thrifty to make money; besides they’ll have their turns at bat to enjoy affluence and the accumulation of wealth. This “carrot and stick approach” is very common, but it’s not fair to the children to expect them to work 60 trying hours a week for low wages while their peers who work for non-family employers enjoy the benefits that growing incomes provide.

To assure a high probability of family harmony in the business, compensation plans should be based on responsibility, productivity, and what you would expect to pay non-family members.

Click to see the entire article here

____________________________________________________________________________

Now I believe it would be nice to have your own opinion on how do you see yourself being compensated in the future, in you family business.

Why not treat your family members as well as you treat your dog?

People usually love and treat their dog better than to anyone else. The article suggest that people should treat their family members as well as their treat their dogs.

There are some lesson that the article explain to do that:

1: Pet them frequently: Everyone needs love, affirmation, and time. Your family members are no different. Spend time with them not just in the business, but interacting as family.

2: Stay in the yard: Don’t make family members “leave the yard” to find the acceptance, fulfillment, or support they want and need.

3: Feed them regularly: Provide opportunities for family members to learn and grow professionally and personally. The more you feed them, the more all of you grow.

4: Throw them a bone: Treat family members to an unexpected bonus

5: Listen to their barking: When family members “bark,” you should pay attention and be responsive

Just as your dog gives you unconditional love in return for your attention, you might be pleasantly surprised by similar results from family members.

http://familybusinessinstitute.com/index.php/volume-5-articles/treat-your-family-members-like-a-dog.html

The article suggest that parents should be careful on the way the refers to their family business. The marketing they do about the FB usually influence their children decision into going or not going to continue in the business .Parents should  pay attention to the signals that their children receive about the business. It is important to do not make it too romantic or too difficult.

These are 7 seven suggestion to avoid influence in a negative way your children:

1. Tell them the story of how you (or your predecessors) started the business.

2. Take them to work with you

3. Make time to explain to them what you do, who your customers are, and how they use your products or services.

4. Be careful how you talk about the business.

5. Be careful how your spouse talks about the business.

6. Give your children the chance to work in the business.

7. Form a Family Council.

http://familybusinessinstitute.com/index.php/volume-3-articles/will-your-children-follow-you.html

Managing Conflict in a Family Business

Why is family business conflict so extreme, so intractable, and so difficult to manage? There are a wide range of conflict management tools, techniques and resources available, but these must be carefully chosen and applied to be effective. Often, conventional dispute resolution techniques, which seem logical and correct, have unfortunate outcomes when applied to family business conflicts.

Indeed, they may even make matters worse. The reasons and forces underlying the conflict must be well understood by the advisor so that he/she may be able to apply the appropriate conflict management approach in the proper sequence. In addition, it is crucial that the ongoing relationships among stakeholders be considered throughout the conflict management process.

Family business conflict is often more extreme than conflict in non-family businesses because for stakeholders in a family business, it is not simply about a ‘job’ or ‘shares’ or ‘money’. Management roles and ownership often strike to the heart of the stakeholder’s identity and needs. At the other end of the spectrum, stakeholders may perceive their role or ownership in the business as the ultimate safety net and without it, their future in terms of job and career is jeopardized. In either extreme, roles and ownership in a family business may not be as negotiable as they might otherwise be in a non-family enterprise.

Conflict in a family owned and managed business is also extremely difficult to manage because it is systemic in nature and is often not merely about individual, easily identifiable disputes. Moreover, the potential for conflict is inherent in family businesses due to the overlapping roles and systems involved–each with its own set of priorities, goals and resources. It is crucial in any approach to managing conflict in family business, therefore, that the advisor fully understand the complex business, family and ownership system that he or she is addressing.

Conflict in a family business includes disputes over economic interests, power and control, as well as issues concerning the relationships among stakeholders. Some families may be close and able to reach compromise, while others may not feel that their family is much of an interconnected economic and social entity. They may not be able to reach compromise easily.

1. Underlying reasons and triggers for conflict

To understand which approaches work best in managing family business conflict, it is important to first understand what causes conflict in these systems. There are generally very self evident reasons for conflict– differences over economic issues; related issues of power and control; clashes of personality and values; and, historical family impasses. These differences and clashes by themselves, however, may never actually escalate to significant conflict. Significant conflict must be triggered by another factor. That factor is power. When Power is exerted by one stakeholder over another in such a way that it is considered illegitimate or inappropriately used by the target, conflict can be triggered. Advisors to families must be alert to where power is held and how it is exerted in order to best manage conflict.

2. Approaches to Managing Conflict

Economic issues, and related issues of power and control, can often be addressed by conventional dispute resolution approaches. Direct negotiation and mediation are effective methods to achieve a mutually agreeable solution within defined parameters. Arbitration and litigation can also be used to force an outcome on the stakeholders– typically to the advantage of one over the other. Such use of a forced outcome can often exacerbate conflict. The relatively new practice of collaborative law may provide a useful and manageable compromise between litigation and mediation, as each stakeholder would have an advocate, but one which is precluded from serving if the conflict escalates to outright litigation.

Emotion laden issues, such as personality clashes, differences in values, and family history, however, do not respond to negotiation or litigation. More importantly, they cannot be ignored in a family business where the ongoing relationships matter. Attending to these relationship issues first is crucial because improved relationships, and relationship skills, may enable more effective negotiation and discourage brutal litigation.

In addition, evaluating the structure, policies and procedures regarding the business and ownership systems may reveal the need for structural improvements. The result can be better managed conflict.

A collaborative team of specialists (e.g. business consultants, mediators, coaches, trust and estate planners, accountants, and attorneys) can address the full range of issues underlying the conflict. They may range from helping individuals develop better communication skills to making structural improvements through organizational analysis, estate planning, and establishment of improved business practices and procedures.

3. Conclusion

Managing conflict in a family business often benefits from the use of a collaborative team which can understand and address all systemic issues. From conflicting business goals (e.g. compensation, title, authority, mission) to addressing old grudges and clashing values and personalities, different sources of conflict require different approaches and, often, different professionals. Business consultants, mediators, psychologists, trust, estate and contract attorneys, accountants, coaches and even litigators, may all be part of a team needed to successfully manage conflict in a family business. The timing of each intervention must be well planned and its impact on the important continuing family relationships needs to be well considered (Baumoel, 2010).

In my own opinion, I emphasise on three important things. First, the degree of centralisation of family business should be maintained at an appropriate level, which can utilise positive effects of task and process conflict while avoiding the negative impact of relationship conflict. Second, direct communication should be encouraged, which can gradually ease the conflicts and even completely remove it. There are many factors in family business that hinder the direct communication. For example, the content may be rather awkward. Another case in point is family members live together for a long time and they may think they understand each other well and don’t need to spend time on further communication. Therefore, family firms should create an atmosphere for face-to-face communication between family members. Third, the exit mechanism for the family members should be built. When the conflict can not be reconciled, the only calm way to solve the conflict is for someone to exit the business. However, due to a large cost, family members are generally reluctant to do so. Therefore, family firms must establish a viable exit mechanism, offering an appropriate compensation for family members who withdraw.

Baumoel, D. (2010). ‘Managing Conflict in a Family Business: An Introduction’. http://continuityfbc.com/blog/?p=1

’

While doing research for my portfolio, I found a useful YouTube video that may be helpful for others. Click here for the link.

Nelson Davis interviews Andrew Keyt on succession planning. It is an interesting discussion, despite the fact that it is very staged, for Andrew Keyt gives three key phases an owner must do in order to ensure that succession onto the next generation runs as smoothly as possible.

• Ownership transition and their financial future.
• Management transition - how to prepare the successor to run the business.
• Psychological transition - what does their future look like without being the business owner.

“Fact 1: Almost half of family offices invest in hedge funds; 48.9% of them allocate to this asset class.

Fact 2: They want more. While the average allocation to hedge funds is currently 14%, the average target asset allocation is a bit higher, at 16.1%

Fact 3: More is better. The average family office is invested in 10 hedge funds, both directly and through funds of hedge funds.

Fact 4: They’ve been at it for a while. The average family office in North America has been using hedge funds for 15 years.

Fact 5: They tend to stay local. Eighty-six percent of family offices in North America prefer hedge funds on their own continent. Fifty-two percent like global hedge funds, and Europe, emerging markets, and Asia come in at 14%, 12%, and 8% respectively.

Fact 6: Diverse strategies are the norm. The fund of hedge funds approach leads with 53%. Long/short equity follows at 28%, and macro is next with 27%. Distressed and arbitrage strategies are toward the bottom, with 11% and 10%, respectively.”

click article for more info..

Businessman, Fernand Van Assche (55) from Waasmunster (Belgium) has been put behind bars on a charge of having paid a hitman in order to kill his brother and ex-associate. They were having a row for quite some time.

For some considerable time, the two brothers, Fernand and Eric Van Assche were arguing concerning the continuation of the family business.

Three years ago, Fernand Van Assche stepped out of the family business, through disbursment of his part of the shares. At that moment the company had 120 employees.

His younger brother, Eric, continued the acitivities of the family business. Eric wanted to put an end to the quarrel and tried to solve it. Nevertheless, Fernand could not accept this action and wanted to take revenge on his brother Eric.

Investigation shows that Fernand had approached a profession assassin and paid him an advance of €8000 to kill his brother. After the job was done, the hitman was promised to receive €50,000. The job was ordered several times over three years and was confessed by Fernand Van Assche. The reason was related to conflicts within the family business.

After the first death traits, Eric immediately brought in the police and soon it appeared that the hitman was not an unknown to the police.

The brothers had very different characters but nobody would have imagined that the quarrel would lead to such a dramatic story. Fortunately, Eric was not killed because of the quick intervention of the police. Although the exit of his brother was correctly arranged, Fernand could not deal with the success his younger brother.            

Tuesday 3th November 2009, “Het nieuwsblad”

http://www.nieuwsblad.be/article/detail.aspx?articleid=8G2HFAAU

Delta was founded in 1961 by Rui Nabeiro. In a small warehouse of 50m2, with two 30kg capacity roasting balls and three staff mark the start of this brand. In 1994 it became the market leader in coffe production in Portugal with a share of 42%. Have 41 000 direct customers and 3,000 employees.

Since its inception, Delta Cafés always maintained the philosophy of - A Friend A Client, and is also recognized as a mark of Human Face, where values such as Honesty, Loyalty, Humility, Total Quality Management, Solidarity and Citizenship have a prominent role in this organization.

SA 8000 gave Delta Cafés the first distinction in Portugal for Social Responsibility.

For  9 consecutive years, Delta Cafés is a trusted brand in the European Most Trust Brands studies from the Reader’s Digest.

Nowadays Delta employees 60% of the population of Campo Maior, the city where the company is headquartered.

The family is now on its third generation with the grand sons of the founder Rui Nabeiro already involved in the management.

Below is the family tree:

The grandsons of Rui Nabeiro are involved in the business. Rui Miguel is the general manager of Delta, Rita is encharge of marketing, and Ivan manages daily operations in the factory in Campo Maior. The curious thing is that the business passed almost directly from the founder to his grandsons, as the sons of Rui Nabeiro (founder) did not have much influence and involvement in the company.

Click to see how their coffee is made

Click to see the story of Delta in a nice video (portuguese)

Click to see a nice Delta coffe Ad

As probably some of you have experienced, having our parent’s blessing, and more specifically, our DAD’s blessing is very important.

Below is a summary of the very interesting article i found about that subject. Take a quick look and if you’r interested click in the link at the bottom for the full article.

____________________________________________________

One of the least understood and most overlooked issues within family businesses is having Dad’s blessing or approval. One has only to go back to the Bible to learn how important this issue can be.

To a son working in a family business, nothing is more important than the knowledge that Dad approves of you and has given you his blessing. Money, power, titles… none mean as much to a son as hearing Dad say, “ I am proud of you. You are an outstanding business person.” Before women start accusations of sexism, let us explain that mothers generally give love and approval unconditionally to their children, so when Mom is boss this is not so much an issue. The need for Dad’s approval is present when a daughter works for her father, but it is not as strong a force as with sons.

Children know of the difficulties and struggles that were encountered in making the business a success. They worship their father - Dad is a hero to his children. Since he is such a hero, nothing is more important than having his approval. Further, there is a certain competition which exists between fathers and sons. The young man wants to believe he is as good as or maybe even better than Dad. Obtaining this approval is a motivating force that will be a factor in every family and business decision until it is resolved. Do not underestimate the lengths to which children will go to get Dad’s blessing. The child may say it isn’t important, but don’t believe him. In most cases, it is vitally important.

Three Ways To Attain the blessing

There are three ways children generally respond to this need for Dad’s approval.

• The first is the “defiant child.” Usually seen in the first-born, the child challenges Dad frequently to show that he is equal to the “old man” and therefore worthy to receive the blessing.

• The second approach is to be the “compliant child,” willing to do whatever Dad wants, even if the child doesn’t think it’s the right path.

• The third approach is the “escape artist.” This child, for whatever reason, decides that he cannot compete with his father and siblings in the family business arena and win Dad’s approval, so he finds a field in which he can compete and excel.

Approval Must Be Earned

Many entrepreneurial parents have difficulty expressing affection and praise to anyone. It isn’t their nature, and because they don’t need or crave praise themselves, they don’t understand children who do.

Fathers are often reluctant to tell sons how proud they are of them believing that too much praise might spoil the child or cause him to “ease up.” Quite the opposite is true. When sons no longer have to worry about whether or not dad approves of them, they are finally free to focus on other, more important issues.

By Wayne Rivers

Click for full article

Hey guys,

I stumbled upon a very interesting article. An article that actually refers to me a lot, and of course to you. How will/should we be compensated in the future in our family business.

I’ve cut some boring parts of the article, below you can find the most interesting ones:

Article:

Believe it or not, the way we share money and allowances with our children when they’re young can influence their adult spending habits as well as compensation expectations when they join the family business. For example, how did you determine how much allowance to give your kids when they were young? If they spent their periodic allowances, did you give them more money to get through the week, or did you make them wait for next week’s allowance?

Many family business owners struggle with how to fairly compensate their children who work for them.

Overcompensating children in the business can lead to an exaggerated sense of self worth and encourage family business children to lose touch with the economic value of a dollar. Especially if their job responsibilities are not proportionate with their high compensation, the children can suffer from a devastating loss of confidence and a feeling that they’re still on an umbilical with Mommy and Daddy providing their life support.

Undercompensation is just as damaging potentially. Many family business owners purposely undercompensate their children to teach them the value of hard work and thrift. Their rationale is one day the business will belong to the kids and they must be thrifty to make money; besides they’ll have their turns at bat to enjoy affluence and the accumulation of wealth. This “carrot and stick approach” is very common, but it’s not fair to the children to expect them to work 60 trying hours a week for low wages while their peers who work for non-family employers enjoy the benefits that growing incomes provide.

To assure a high probability of family harmony in the business, compensation plans should be based on responsibility, productivity, and what you would expect to pay non-family members.

Click to see the entire article here

____________________________________________________________________________

Now I believe it would be nice to have your own opinion on how do you see yourself being compensated in the future, in you family business.

Lead team:

MOB: PierLuigi, Philipp, Kitty

Introduction

Situation:

1- Noren Discount Stores: How could the death of the company been avoided?

- declining sales and profits at the end

- terrible management atmosphere

- Fights and legal troubles within the management

- low cash flow forces the family to sell

2- Consultant report recommendations.

3- Disagreements between shareholders and management.

Agenda

Ice breaker. (5 min)

Summary Case. (2 min)

Annual Shareholder meeting (20 min)

Conclusion (3 min)

Total time required 30 minutes

Roles

Each team will represent the main roles for the annual shareholders’ meeting.

-Team MEP: Joel Noren (son)

-Team MOB: Sam Hershman (COO)

-Team X: Max (CEO/COB) and Sarah Noren

-Team David’s posse : Leo Aaronson (COB)

-Team 1: Sam Hershman VP & COO

-Ed: Art Grossmann Sr. VP. Admin.

You have now been engaged with learning about Family Businesses and related concepts for 9 weeks.

Below please embed 1 concept map which captures the essence of Family Business for you. Capture all your learning about the various themes, issues, topics and their respective sub-categories into ONE MAP…not multiple Maps

That is 1map/individual...make sure you identify yourself as the map creator- by including your name in the central bubble. This is not optional as it will be considered by Azam Ali and myself as part of your Individual learning portfolio.

Below is sample of a concept map that I have derived from my lecture slides about FB..ie from the lecture on ‘Definitions’ and the lecture on ’succession’…this is just the start.

Ψ Yours needs to look more like the second Concept Map on the subject of Innovation.

You are required to provide comprehensive and rich (pictures, colours, etc) maps such as the second sample that depicts your understanding of the weekly themes and sub-themes. The key themes could form your initial parental branches and then sub-themes branch outwards, etc, etc. Please make sure you embed the images here….this map will also be included in your individual learning portfolio submission.

Below the maps I have provided links to MindMapping sources (free software)- do not feel obliged to construct your maps by using the software- feel free to hand draw, scan and embed:

Useful Concept Mapping Freeware- you do need to sign on for some:

1. Freemind

2. Mind42

3. You also have a great mapping tool called Inspiration available through the college’s Citrix applications resource.

4. You can see last year’s efforts here- we expect more elaborate maps this year given the benefits you have of the previous years’ content and experience

Majella Mark

Maddy Jones

Anthony V.

Philipp K.

Ralph-Steven Petang

Kitty

Alejandra Abilahoud - Concept Map Portofolio

Enejo Oruma

Annabel

Othmane Benzit

Abhishek Kapoor: -

Veronica

The Werhahn KG – a 160 years old family business with 9.100 employees and 2.5 billion Euros turnover anually.

Over more than 160 years, Werhahn has developed into a corporate group with diverse activities in Germany and abroad. A close relationship with their markets and customers, reliability and social responsibility are the values of the mid-sized family-run business.

The family orginially made its money with Oil and flour mills, that turned into a diversified conglomerate.

Wilh. Werhahn KG is decentralized in its structure. The companies belonging to the Group, legally independent as a rule, and are organized into six corporate divisions. Their flat management structure, with short and non-bureaucratic decision-making channels, provides room for maneuver. This enables the requirements of the market to be fulfilled rapidly and flexibly – to the benefit of our customers. For each individual employee, this means a high level of motivation as well as individual responsibility.

Central corporate management functions are performed directly by Wilh. Werhahn KG. Among the areas which this covers are those of long-term strategic orientation as well as the financing of individual companies and the review of their performance. With the aim of continuously safeguarding and further developing the Group, organization is directed towards an economic and structural balance between the corporate divisions in the interests of risk distribution.

Wilh. Werhahn KG is a company for entrepreneurs, a family-run business which places great value on a relationship of mutual trust with its customers, business partners and employees. The corporate culture which is based upon this is the vital foundation for our success.

Today, the Werhahn family is according to manager-magazin the seventh wealthiest tribe in Germany. The group is current led by Anton Werhahn.

http://www.werhahn.de/en/home.html

http://de.wikipedia.org/wiki/Wilh._Werhahn_KG

Family firms can enjoy substantial longevity. Ironically, however, they are often imperiled by

the very process that is essential to this longevity. Using the concept of managerial discre-

tion as a starting point, we use a human agency lens to introduce the construct of successor

discretion as a factor that affects the family business succession process. While important

in general, successor discretion is positioned as a particularly relevant factor for produc-

tively managing organizational renewal in family businesses. This study represents a foun-

dation for future empirical research investigating the role of agency in entrepreneurial action

in the family business context, which consequently can contribute to the larger research

literature on succession and change.

Based on interviews with top executives in 1,606 family companies from 35 countries, these are the top causes of ‘some’ or ‘a lot of’ tension:

• Discussions about the future strategy of the business (44%).
• Performance of family members actively involved in the business (36%).
• Failure of family members actively involved in the business to consult the wider family on key issues (31%).
• Decisions about who can and can’t work in the business (31%).
• The role ‘in-laws’ should or shouldn’t play in the business (26%).
• The setting of remuneration levels for family members actively involved in the business (26%).
• Decisions about the reinvestment of profits in the business versus the payment of dividends (26%).

SOURCES:

http://www.fbn-i.org/dec-10/article3.html

Mr. Dhirubhai Ambani, One of the leading Indian businessmen was born on December 28, 1932 in Gujarat, India. He headed The Reliance Industries, India’s largest private enterprise. Mr. Dhirubhai started off as a small time worker with Arab merchants in the 1950s and moved to Mumbai in 1958 to start his own business in spices. After making modest profits, he moved into textiles and opened his mill near Ahmadabad. Dhirubhai founded Reliance Industries in 1958. After that it was a saga of expansions and successes.

His journey of real rags to riches, took off in 1958 when he, with his cousin and a capital of Rupees 15000 (£200 approx.), started The Reliance Industries. He loved taking risk, because of which his company achieved many milestones thereafter. He had a new style of management, which was really successful & earned him the confidence of nearly 1.2 million investors by 1985. Later the business tycoon established such a big business house that every body in India and abroad was envy of the progress. It was in 1977 when Dhirubhai Ambani took initiative for first IPO. In 1993 the IPO of Reliance was the largest IPO of India at that time.

It was in 1981, his elder son Mukesh Ambani (left in the picture) joined the business. He then initiated Reliance industry’s backward integration journey from textiles into polyester fibers and further into petrochemicals, petroleum refining and going up-stream into oil and gas exploration and production. Followed by his younger brother Anil Ambani (right in the picture), who joined the company in 1983, as the co-chief executive officer and is credited with pioneering many financial innovations in the Indian capital markets.

This incredible rise and growth in the business was so enormous that by 2007, the combined fortune of the Ambanis was 100 Billion dollars. In 1992, Reliance became the first Indian company to issue Global Depository Receipts in global market. Later in 1999-2000 followed by the establishment of world’s largest integrated grassroots refinery in Jamnagar.

Another major milestone was the launch of the CDMA mobile telephony in India, in 2002. This was when the mobile communication actually entered the revolutionary era. The famous 500 Rupees (£6) mobile offered by the company, this brought mobile phones to every nook and corner of India. From CEOs to auto rickshaw drivers, every body was laced with mobiles! The high growth figures and innovations of company made it the first Indian private sector company to enter Fortune’s Global 500 list.

This was when, a great visionary, who loved to dream big and to attain them, passed away on the 6^th of July 2002 in Mumbai, without providing a succession plan for such a giant corporation. It may be because he never thought that even such huge empire would fall short of the aspirations of his two little Ambanis. He failed to understand the strategic importance of planning the succession in advance and in the year 2004 the split and sibling rivalry in reliance became the most talked story in the business world, which also affected badly on the stock markets

Result After Split:

Step 1: Split the Ambani family stake in RIL in the 30:30:40 ratio among the two

Brothers and Kokilaben (Dhirubhai’s wife). Anil Ambani to relinquish control to Mukesh, who gets full control of Reliance Industries’ core oil and gas business.

Step 2: Create a special purpose vehicle to house RIL’s stake in Reliance Energy and

Reliance Capital. Anil Ambani to continue heading the two firms.

Step 3: In lieu of Anil giving up control in RIL, Mukesh Ambani transfers part of his

45% stake in Infocomm to Anil, who now gets to run the venture.

Reliance split is a burning case presenting the biggest challenge for any family indulged in business. Just after the split the company slipped in Forbes list. Even if the reliance do not suffer severely, it certainly devalues the status of the family in the society and trust of the customers and the shareholders. If Mr. Dhirubhai Ambani had planned a business envisioning the inherent conflict it could have been another story altogether, where both the siblings would have complemented each other with their unique skills and have consolidated the empire created by their father into a well established and cared family business not just another business.