Fwdc It Strategic Planning Part 2 5 Business Continuity Planning
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STRATEGIC PLANNING FOR FAMILY BUSINESSES FOR CONTINUITY Presented by: Dr. Sami T. Salman 1
SPECIAL CHALLENGES OF FAMILY FIRMS Finding capital for growth without diluting family equity Conflict between family's vs. Business' need For cash Inability of family CEO to "let go" In time Sibling rivalries, non-acceptance of chosen successors Poor estate planning, inability of next generation to pay death duties Inability to attract and retain competent and motivated family successors Inability to attract and retain senior non family professional managers Lack of ability to create appropriate Cultural congruity 2
POSITIVE CORRELATES OF BUSINESS CONTINUITY PLANNING 1. Size of the business 2. Level of the strategic planning 3. Level of the perceived family harmony 4. % of outsiders on board 5. Age of owner manager 6. Degree of internality of owner-managers Locus of control 3
FAMILY BUSINESS: THE ULTIMATE PARADOX? Family businesses have built-in conflicts due to the intersection of tow worlds which are governed by different values and logics* Family word Business word • Mutual cooperation • Competition • Loyalty • Opportunities • Unity • Diversity • Permanence • Impermanence • stability • Instability 4
CULTURAL DIFFERENCES FAMILY Emotional focus Memories Character development "Who you are" Prepares individual for future BUSINESS Fact focus Future Skills development "What you do" Does not prepare Individual for future After the business 5
Conflicts are inevitable in family businesses The potential for conflicts increases In an environment of change Destructive Conflicts 6
"If there is any secret of success, it lies in the ability to get The other person's point of view and see things from his angle as well as from your own". Henry Ford 7
SUCCESSFUL FAMILY BUSINESSES 1. 2. 3. 4. 5. 6. 7. 8. Have excellent management development systems. Train the family on ownership responsibilities From an early age. Treat their employees fairly and with loyalty Have a high sense of responsibilities to society. Emphasize value for money and quality. Quick decision making. Take a long term strategic perspective. Are innovative and entrepreneurial. 8
Table 1 -2: Three-Circle Model Ownership Structure Board of Directors Plan 1 Plan 6 Structure Family Council Plan 2 Family Plan 4 Plan 5 Structure Mgmt. Development Plan PLANS 1. 2. 3. 4. 5. 6. Share Holders Meetings Family Plan Mgmt. Development Plan Strategic Plan Continuity and Contingency Plan Estate Plan 3 Business 9
Table 2 -2: Personal Factors that Motivate Offspring to Join Family Business Motivating Factor Frequency Make money 67% Like the business 50% Good career opportunity 45% Family influence 40% Help the family 39% 10
Figure 1 -5: Overview of the Family Business Strategic Planning Model Economical Vs Financial Constitution Family Factors Succession Planning Vision + Mission Survival Strategy Personal Factors Environment Political Vs Marketing Technology Vision + Mission Social Vs HR Conflict Management Partnership FAMILY BUSINESS 11
Figure 2 -5: Family Factors in the model Constitution Family Factors Vision + Mission Personal Factors Succession Planning Survival Strategy Conflict Management FAMILY 12
Figure 3 -5: Business Factors in the model Economical Vs Financial Technology Environment Political Vs Marketing Vision + Mission Social Vs HR Partnership BUSINESS 13
Figure 4 -5: Family Assessment for Case Study No. 1 14
Figure 5 -5: Business Assessment for Case Study No. 1 15
CONCLUSIONS AND RECOMMENDATIONS Feedback and control and family continuity plan. Exploiting the external environment for growth and change management. Developing a second line of command structure. Monitoring the critical success factors Creating a unified planning approach. Aligning of family vision and mission with that of business vision and mission Identifying the family and business co-relation 16
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