Please describe how family businesses may affect your company.

Added on - Sep 2019

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Please describe how family businesses may affect your company. (2pages)During this class, I have learned several useful concepts which allowing us tobetter organize a family business structure in the future. We have saw thatseveral shortcomings of Chinese family business. However, in the class, wealso saw several successful cases of Asia family business. Among thesesuccessful cases, I saw one crucial common factor, fairness.In the last assignment, we were actually trying to set up a businessstructural which took into considered both ownership succession plan andmanagement structure for a family business. Forownership structure, I think in the ownership should be equally divided to thenext generation, which includes female as well. Equally divide the shares tothe children will generate a sense of fairness among the family, resulting aharmony family. Besides, considering the shares among each family memberwill eventually be different, I think only the family member who work in thefamily business can elect and be elected to the business board member asfamily representative. This is also considering to be fair to all the familymember. The one who join the business board should not be the one whohas the most shares among the company, but the person who is mostfamiliar with the company, so to make better decision for the company. Also,in the board, we should maintain 30-40% of independent board member, togive professional suggestions to the company. The independent boardmember should be acquired by 50% of votes from the shareholders,preventing people from controlling the board. Also, in any case that a familymember want to sell their shares, they can only offer to sell to other familymembers. For such mechanism, it provides a protection for the familybusiness from being taken from outsiders.For the management succession of the family business, we suggest that allfamily members should be evaluated by their will and capability. The mostimportant issue is a person’s goal and passion, since that will motivate aperson to keep improving. Therefore, we should put the family member tothe department which they are interested in. For example, if a familymember is passionate about marketing, we should arrange him to start fromentry level of marketing department, and evaluating their performance andcapability. Then, we should track each family member’s performance,evaluating their ability and attitude, so to decide which family member arequalified to promote to a higher level of the management team. Also, in themanagement succession plan, we think the family member should becompared with normal employees in the company. In other words, familymembers should be evaluated with outsiders. This measure will be a strongincentive
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