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1IntroductionA family business refers to a company where the power to vote lies majorly in the hands of thecontrolling family i.e. in the hands of the founder and his successors who are supposed to handlethe business in the future. In the case of family business, the tasks are managed and controlled bymore than one member of the same family. Owning a family business is a matter of concernmore than a casual entrepreneur as it becomes very important to ensure that not only yourcompany survives but also manage to do good for the sake of the future generations to come andtake the hold. While some perceive it to be a home-based business, others relate it to thecommunity business, and for the rest, it is a traditional business. Important resources that everyfamily business must possess are- human resource- when the expertise of different familymembers are synchronized with clear division of labor, the probability of succeeding increases,social connections- networking capabilities and other external relationships must conform to theowner’s expertise set, financial resource- in the form of equity funds, as well as debt financing- acordial relationship between the investors as well as the owner, reduces the danger of liquidation,the family business’ owners should try to reduce the cost of security systems, policy manuals tothe minimum possible level by creating trust with the employees.Accumulating an organizing these family resources and allocating them in a well-synchronizedmanner improves the business chances of success (Davis, P.,1983).Advantages of family business1)Stability- Family business has predetermined list of who all people of the family will bemanaging the business thus ensuring the long life of leadership that indeed lead to overallstability in the organization itself. Moreover, generally, leader stay intact to that position
2for years to come until any circumstances like illness or death or retirement force them tosurrender.2)Accountability- The families as the business owner show the highest dedication sincethey have to earn profits to be reinvested for the long-term growth of the business to beovertaken by their descendants. So many family members work harder to get certainother additional benefits also such as a better understanding of the industry, maintaininghealthy consumer relationships and learning better marketing strategies.3)Cost effectiveness- Unlike the outside workers, family members working in the companyare willing to serve for their own expenses for durable success of their organization. Thisinvolves contributing for the capital investments or taking a pay cut. This is beneficialspecifically during the hard times of the company i.e. during the economic challengingperiod and phases of the downturn.Disadvantages1)Disputes within family- Family conflict can happen at any time. Quarrels and fightsover principle decision-making issues can be the most common reason for a conflictto get serious. Since family members are indulged, it becomes more difficult to solvethe issues and lead to difficult conclusions of the split.2)Informal Governance- Since most families run their business by themselves, there isusually very less interest in setting well-articulated code of conduct and norms to befollowed by the employees. Governance problems relating to a hierarchy in thecompany and loose- form of rules can gravely affect the business as it expands andmany inefficiencies may creep in (The Australian, 2017).