Family Business: Structures, Advantages, Disadvantages, and Conflicts

This report provides an overview of family businesses, exploring their unique structures and operational dynamics. It begins by defining family businesses and outlining how they differ from other organizational models, with an emphasis on the relationships between family members and their roles within the company. The report then delves into the advantages of family businesses, such as enhanced dedication, trust, and a unified vision among family members. However, it also acknowledges the disadvantages, including potential conflicts, especially those related to succession and the involvement of multiple generations. The report concludes by highlighting the importance of managing these complexities to ensure the long-term success and stability of the business. References to supporting literature are included to provide a basis for the analysis.

family business

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Table of Contents
Introduction.................................................................................................................................................2
Family businesses........................................................................................................................................2
How family businesses affect the company?...............................................................................................2
Advantages of family business................................................................................................................3
Disadvantages of family business............................................................................................................3
Conclusion...................................................................................................................................................3
References...................................................................................................................................................5

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Introduction
Family businesses are considered as those businesses which are unique in shape and structure
and are run by people having different personalities, knowledge, values and relationships but
who are members of the same family.
Family businesses
Family businesses are generally structured and operate in any of the following ways;
1. Owned and operated by only a single individual who is known to be as the founder. It is
possible here that the other family members are later employed by the company.
2. Owned and run by many family members, but operated only by the one selected family
members.
3. Owned by many family members who may or may not be involved in the management of
the business.
How family businesses affect the company?
It has been observed that the interest of the family members sometimes go contrary to the interest
of the company as a whole and this often creates an issue. This issue generally requires both the
understanding as well as an ongoing communication between the members in order to bring a
balance between their personal interest and the interest of the company as a whole (De, 2014).
It is worth noting that the family businesses usually involve many combinations of different
types of relationships that exist in a family, for example, parent-child relationship, siblings,
husband-wife relationship, and these family members may also be involved in the board.

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It has been observed that the family businesses have many advantages for the company, but
simultaneously it has certain disadvantages as well.
Advantages of family business
Having relatives in the business at different levels of management hierarchy has many benefits.
The most important benefit is that when a company is owned and run by the family members
only then they these family members tend to be more dedicated towards the achievement of the
common goal of the company, and also they do not show any hesitation when it comes to
sacrificing for the achievement of the targets of the company. Also, it has been observed that
when close relatives work together in business for achieving a common goal, a strong and firm
foundation is being created for the company as their presence provides a feeling of support,
comfort, and trust (Ward, 2016).
Disadvantages of family business
The family businesses affect the company in a negative way also as it involves the issue with
regards to the succession which may give rise to conflicts in the relationships. It has been
observed that sometimes the older generation of the family does not allow the younger
generation of the family to take risks and thus does not give them room to develop and grow.
This sometimes creates conflicts among them which hamper the overall operations and working
of the company.
Conclusion
There are number of advantages that are offered by this form of business but at the same time it
has also been observed that operating a family-owned company is generally faced with many
complicated issues that may arise from rivalries between a father and his son, or brothers, or

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other family members who are holding some kind of position in the business, or have been
deriving income from it. These issues if not resolved by the principal properly by facing up to
their feelings of hostility, then it is possible that the business will suffer or may even die.

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References
De Massis, A., & Kotlar, J. (2014). The case study method in family business research:
Guidelines for qualitative scholarship. Journal of Family Business Strategy, 5(1), 15-29.
Ward, J. (2016). Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.