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1
STRATEGIC PLANNING FOR FAMILY BUSINESSES FOR CONTINUITY
Presented by:
Dr. Sami T. Salman
2
SPECIAL CHALLENGES OF FAMILY FIRMS
Inabilityof family CEO
to “let go”In time
Sibling rivalries, non-acceptance
of chosen successors
Poorestate planning,inability of next
generationto pay
death duties
Inability to attract and retain senior
non familyprofessional
managers
Inability to attract and
retain competent and motivated
family successors
Lack of abilityto create
appropriateCultural
congruity
Finding capitalfor growth without
dilutingfamily equity
Conflict betweenfamily’s vs.
Business’ needFor cash
3
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
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Family businesses have built-in conflicts due to the intersection of tow worlds which are governed by different values and logics*
FAMILY BUSINESS: THE ULTIMATE PARADOX?
Family word
• Mutual cooperation
• Loyalty
• Unity
• Permanence
• stability
Business word
• Competition
• Opportunities
• Diversity
• Impermanence
• Instability
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CULTURAL DIFFERENCES
Emotional focusMemoriesCharacter development“Who you are”Prepares individual for future
FAMILY
Fact focusFutureSkills development“What you do”Does not prepareIndividual for futureAfter the business
BUSINESS
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Conflicts are inevitable in family businesses
The potential for conflicts increases
In an environment of change
Destructive
Conflicts
Constructive
Conflicts
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“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
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SUCCESSFUL FAMILY BUSINESSES
1. Have excellent
management development systems.
2. Train the family on ownership
responsibilities From an early age.
3. Treat their employees fairly and with loyalty
4. Have a high sense of
responsibilities to society.
5. Emphasize value for money and quality.
6. Quick decision making.
7. Take a long term strategic perspective.
8. Are innovative and entrepreneurial.
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Table 1-2: Three-Circle Model
Structure Board of Directors
Structure Mgmt.
DevelopmentPlan
Structure Family Council
Plan 1
Plan 2 Plan 3
Plan 4
Plan 5
Plan 6
Ownership
Family Business
PLANS1. Share Holders Meetings2. Family Plan3. Mgmt. Development Plan4. Strategic Plan5. Continuity and
Contingency Plan6. Estate Plan
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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%
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Figure 1-5: Overview of the Family Business Strategic Planning Model
F A M I L Y
Constitution
Succession Planning
Vision+
Mission
ConflictManagement
SurvivalStrategy
PersonalFactors
Family Factors
EconomicalVs
Financial
Technology
Vision+
Mission
Partnership
SocialVsHR
PoliticalVs
Marketing
Environment
B U S I N E S S
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Figure 2-5: Family Factors in the model
F A M I L Y
Constitution
Succession Planning
Vision+
Mission
ConflictManagement
SurvivalStrategyPersonal
Factors
Family Factors
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Figure 3-5: Business Factors in the model
B U S I N E S S
EconomicalVs
Financial
Technology
Vision+
Mission
Partnership
SocialVsHR
PoliticalVs
Marketing
Environment
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Figure 4-5: Family Assessment for Case Study No. 1
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Figure 5-5: Business Assessment for Case Study No. 1
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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
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END OF PRESENTATION