Marketing bán hàng - Chapter 14: Background subsystems

Copyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenSpecial Topic: Family BusinessesPatterns of Entrepreneurship Management5th Edition, Chapter 14Family Businesses – Different and ImportantChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationPresentation OutlineEconomic ImportanceSystem Theory and CategoriesChallenges - Succession Planning/Hiring - Building a Legacy - Professionalization - Family Dynamics - FundingGovernance StructuresUnique Family ContributionsReputational Capital in the MarketCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. Warren Global Economic RelevanceSample DataCountry% of Family Businesses% of Workforce Employed% of Stock MarketGNPGDPBelgium70-80  55% Brasil90  65% Canada4550  45%China90    Finland80-9040-45 40% France6040-50 >60% Germany60-8050-60 55% Greece80    India9575 65% Italy7350-70   Japan957542  Mexico95 46  Netherlands7440 54% Poland50-80  35% Singapore80-90    South Africa80    Spain75  65%65%Sweden80    Turkey90    United Kingdom65>50  40%USA80-90606040%49%Chapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenFamily Business CharacteristicsOwnership and control of the organization are firmly intertwined with a family system.Family members are involved in the strategic directions of the firm and/or day-to-day decision-making.These firms are shaped by a dynastic motive and plan for multi-generation involvement and leadership. Chapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenThe 3 Subsystem ModelBusinessFamilyOwnershipFamily firms can be modeled as having three overlapping, interacting and interdependent subsystemsChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCategoriesTypeKey AttributesAdvantagesDisadvantagesFamily DominantPriority is the family and the family goals.Employment is a birthright.Family members are expected to work for the firm.When family members are interested in the business finding people to take over the business is easier.Owners are likely to involve family members early in their lives.Perception of nepotismNegative perceptions from non-family members.Difficult to maintain when family members are not interested in the business.Pressures family members to be involved even when they are not interested.Management/Business DominantPriority is the business subsystem.The goal in these family businesses is to have a well managed firm that grows. Promotes the education of family members who want to join the business.Focuses on skills and abilities of employees and not last name.Perceived as fair by non-family employees.Focuses on hiring practices that promote qualifications and not associations.Family members are often discouraged from joining the business, which makes intra-family succession difficult.No commitment to family succession in management.Ownership DominantPriority is the shareholder.The focus is on the economic returns to shareholders. Promotes processes that will help the organization be efficient and effective. Focus on efficiency can hurt human processes.Can hurt family dynamics because owners that are not involved in the management can guide decisions.Focus on economic returns can hurt the long-term continuity of the family business.Chapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenTypes of Family BusinessesKey AttributesFamily DominantPriority is the family and the family goals.Employment is a birthright.Family members are expected to work for the firm.Management/Business DominantPriority is the business subsystem.The goal in these family businesses is to have a well managed firm that grows. Ownership DominantPriority is the shareholder.The focus is on the economic returns to shareholders. Chapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChallenges:Succession PlanningChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationTrans-generational Failure Rate in Family BusinessesCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenFactors Influencing SuccessionIndustryCharacteristics of the IndustryCompetitive StructureRegulations of the IndustryFamilyFamily dynamics (i.e., harmony, unity, collaboration, trust between family members, and level of conflict) Influence of the family in the business decisionsInterest and commitment of family members to be part of the businessFamily policies in relation to membership/ownership in the businessSocialCultural expectationsSocial normsEthicsReligionLawsFinancialTax burden during successionInsufficient financial resources to buy-out family membersInadequate financial resources to hire highly qualified employees in managerial positionsOpportunity costs associated with raising additional capitalBusinessFormalization of the business and ownership structures.Change in business performanceLoss of key customersInadequate strategic planningKey non-family employees relationships with the successorProcess Previous succession experiencesLack of planningRelationship between incumbent and successorPoor communication regarding expectations, roles, and performance of successor and incumbent IncumbentReluctance/inability to transfer leadership in the firmPersonal fears (i.e., to lose control, power, status, or identity)Mistrust of othersResistance to changeUnexpected loss of incumbentSuccessorLow ability of successorLack of motivation of the successorCommitment towards the businessChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenFactors Influencing SuccessionChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationIndustry – Characteristics & RegulationsFamily – Dynamics, policies, & interest of membersSocial – Laws, Cultural expectations, NormsFinancial – Financial Resources and PoliciesBusiness – Professionalization & PerformanceProcess – Planning & past experiencesIncumbent – Individual characteristicsSuccessor – Ability and MotivationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChallenges - Helping the TransitionChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationOvercoming the Personal Fear of Losing a Dominant Part of One’s Life by Transitioning Control to the next generation can be helped by: Acceptance of the Necessity for HandoverAcceptance of Changing RolesPersonal Commitment to its SuccessSharing Information OpenlyActive, Energetic Mentoring over a Long TimeCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChallenges - Building a LegacyChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationFamily Businesses focus on building a legacy by:Transferring Control to Later GenerationsCelebrating TraditionsInvolving Employees Personally and Financially in the Success for the FirmEspousing Family ValuesInvolvement in the CommunityPhilanthropyCharitable EndeavorsChallenges - ProfessionalizationCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationGrowth and long-term survival demands shifting from a family run business to a professional organization that can compete against all other firms. Attention must be given to:Defining Clear Governance StructuresDefining Clear Ownership Structures and RightsDefining Explicit Roles and ResponsibilitiesUsing the Subsystem Model to Define Interactions, Emphases, Agendas and Balance between the Three Categories of InfluenceSpecifying Human Resources Processes and Incentives to Attract, Train and Retain Top Non-family ManagersSpecifying Policies for the Employment of Family MembersDeveloping a Financing Plan for GrowthChallenges – Family DynamicsCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationEvery Family has a unique emotionally driven culture that can impact a family business, both positively and negatively. These factors influence decision making in the firm. Managers must be aware of:Structural issues:Composition and generational historyEducational background of family membersResidential Location of key family membersAny explicit rules governing relationships.Tacit relationship issues:How the Family functionsFamily ClimateFamily Cohesion or lack of Cohesion, Family FactionsFamily Conflicts can seriously damage a company and managers must monitor and mitigate dangerous family influences as they arise.Challenges – Funding GrowthCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationFamily Businesses have limitations when accessing funds for growth. Equity based methods are not attractive to investors or employees. Strategies that are employed include:BootstrappingBank financingFamily Member FinancingEquipment LeasingFactoringPublic Markets using Preference Voting SharesCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenGoverning the FamilyChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationFamily CouncilAddresses family issues separately from the business.Provides a structured forum to communicate concerns and have input in issues that deal with the family and the business.Provides a place to have a dialogue about the interest of the family in the business.Helps to determine the representative(s) of the family to the board of directors.Helps develop policies that deal with the intersection of family and the business issues.Helps articulate non-economic goals, vision, and family values.Not a Legal Body Serves as a board of directors for the family.Family AssemblyVehicle to educate family members about their rights and responsibilities in relation to the business.Helps elect members of the family council.Votes on issues about family employment and compensation policies.Helps communication, and renewal of family bonds.Forum of discussion for all family members.Used primarily in large multigenerational families. Annual family gathering. Family OfficeAssists family owners in their duties/responsibilities.Help with joint family investment, family philanthropy, family private equity, tax and legal issues.At the intersection of family and ownership. Governing the OwnersCopyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationBoard of Directors (BOD)Protect the interest of shareholders and owning familyAssist in the development of the strategy for the company.Ensure the ethical management of the business.Mitigate conflicts between shareholdersServe as a source of information and feedback for top management.Assist in the succession process.Help with the recruitment of Board MembersLegal Entity In family firms, BOD can include family members, non-family members that work for the firm, and/or external advisors.Ownership CouncilHelps develop good governance procedures for the owners.Provides a vehicle to educate the owners regarding the rights and responsibilities of ownership.Establishes policies to govern ownership procedures.Critical as ownership involves more family members.Helps maintain common interests between owners as the number of owners increase.Explain ownership structure and transfer policies among owners.Creation of buy/sell agreementsDetermine and communicate dividend policiesSimilar to a family council but focuses exclusively on ownership issues.Annual Shareholders MeetingCommunicates information from the ownership council.Company presents a report on information that is important to shareholders regarding performance and strategy.Legal Entity depending on country.Copyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenGoverning the BusinessChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationTop Management TeamHelp establish, implement and assess goals for the firm.Articulate the expectations and roles necessary to achieve organizational success.Communicate values and expectations to help achieve firm goals.Develop policies that will facilitate the implementation of organizational strategy.Help implement and evaluate processes for organizational goals.Establish and follow the procedures and expectations to run day-to-day operations of the firm.Asset management and support.Create opportunities for the organization.Highest level executives responsible for the organization.Copyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenFamily Capital Chapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationHuman capitalAcquired knowledge, and skills leading to superior performance. Human capital within the family enables transfer of tacit knowledge.Social capital  Goodwill and resources that are made available through the networks of relationships between individuals/organizations. Family firms can benefit from the embedded, available, and derived connection that family members possess. Patient financial capital Family firms are able to pursue more creative and innovative strategies because the family often has the financial means to invest thinking about long term, and not having to worry about short-term success.Survivability capital Personal resources that family members are willing to loan, contribute, or share for the benefit of the family business especially in hard timesGovernance structure and costs capital Structures and family bonds reduce governance costs.Family Social CapitalConnections between family members enable the development of strong relationships characterized by trust and solidarity. This form of capital allows members to work together as a team.Reputational capital Perceptions that external stakeholder have about the family firm. Family firms can access resources beyond those of non-family firms:Copyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenUse of Reputational CapitalChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputation“Family” has connotations that can provide competitive advantagesIt conveys trust, honesty, longevity, attention to quality, pride in products and services, etc.Family values can be implied via: - Company Name: “Wilkin and Son” - Tag-lines: “we are a family-owned business” “run by the 3rd generation of Smiths” - Company Image and Statement Copyright 2015 Jack M. Kaplan, Isabel C. Botero and Anthony C. WarrenFamily TraditionChapter 14BackgroundSubsystemsChallengesGovernanceFamily CapitalReputationWilkin & Sons have not changed their label much over the last century.Family Tradition can express subtle values. Then Now