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Designing For a Better Family Business

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Designing For a Better Family Business. Prepared by: Ala’a Istaityeh Aya Aburabie Balqees Falah Supervisor: Dr. Ramiz Assaf. Contents. Introduction. General Background. - PowerPoint PPT Presentation
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Designing For a Better Family Business Prepared by: Ala’a Istaityeh Aya Aburabie Balqees Falah Supervisor: Dr. Ramiz Assaf
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Page 1: Designing For  a Better Family Business

Designing For a Better Family

Business

Prepared by: Ala’a Istaityeh Aya AburabieBalqees Falah Supervisor: Dr. Ramiz Assaf

Page 2: Designing For  a Better Family Business

Contents

Page 3: Designing For  a Better Family Business

Introduction Introduction

Page 4: Designing For  a Better Family Business

General Background• Family Business: Owned and managed by

family itself; the grandfather, the children and grandchildren. (Androf. (2004).)

• Considered as one of the most important pillars of the Palestinian economy, and basic component in the private sector.

• Offer significant opportunities for future generations.

• Give a chance for boldness and speed in the decision-making process.

Page 5: Designing For  a Better Family Business

Percentages of Family Firms Around the World (Anabtawi,

2012)

Page 6: Designing For  a Better Family Business

Problem Statement• In general, there’s ongoing concern that these

firms don’t withstand for more than the 3rd generation in most than %97 cases of the world.

• Specifically, the reason that make this study an important one, is that since more than 90% of firms in Palestine are family businesses, which have a major role in the economic field.

Page 7: Designing For  a Better Family Business

Survival Rates of Family Firms(Anabtawi, 2012)

Page 8: Designing For  a Better Family Business

Objectives

Page 9: Designing For  a Better Family Business

Literature Literature ReviewReview

Page 10: Designing For  a Better Family Business

Literature Review• Family business is a subject of thorny that

a lot of studies around the world discussed it from different sides.

• Great companies in the world are classified as a family business, such as Mars, Siemens, Motorola, Ford, Samsung, Wal-Mart and others.

Page 11: Designing For  a Better Family Business

Author(s) Definition

(Benard,

1975)

An enterprise which in practice, is

controlled by the members of a single

family. (p 42)

(Babacky,

1987)

Is the kind of small business started by

one or a few individuals who had an idea

worked hard to develop and achieve.

Usually with limited capital, growth

while maintaining majority ownership of

the enterprise. (p25)

(Holland &

Oliver, 1992)

Any business in which decisions

regarding its ownership or management

are influenced by a relationship to a

family or families (p27)

(Andrew,

2009)

 

The family owns a majority of the voting

shares or effectively controls the

business .

More than one generation is, or will in

future, become involved in the

business.

Family Business

Definitions in Literature

Page 12: Designing For  a Better Family Business

Success Reasons Failure reasons

Family-Work Balance Lack of Respect

Balancing between Owner-

Member InterestsLack of Trust

Trust & Honest Greed

Morals Selfishness

Education & Training Lack of Leadership

Fair TreatmentDisconnection between

Generations

Respect Lack of Communication

Good LeadershipAssuming Next Generation in

Family Business

Little Debts. to be carried Lack of Planning

External Consulting Lack of Decision Making

Commitment of all

MembersNo governance Practices

Diversification in

BusinessesLack of Using Resources

Frugal in Good & Bad

timesLack of Stress Management

 Unfamiliar Professional Advisors

with Family Business

Success & Failure

Reasons according to

Literature

Page 13: Designing For  a Better Family Business

Methodology Methodology

Page 14: Designing For  a Better Family Business

Methodology• This study was conducted between February and November

of 2013, on industrial and commercial companies.

• Information needed was quoted from:

The 2nd family businesses conference. (Nov.2012)

Visiting the Chamber of Commerce and Industry in Nablus.

Previous studies.

Interviews.

Page 15: Designing For  a Better Family Business

Cont.. • Sample of 16 different companies in Nablus and Ramallah.

• Standard questions to all family firms.

• Interviews showed the urge of discussing and analyzing one of these companies as a case study

.• Analysis included different stages:

Comparing with literature. Finding success & failure Reasons SWOT Analysis. Creating new tools.

• Continuity index tool.• Radar Chart

Solutions for main problems.

Page 16: Designing For  a Better Family Business

ResultsResults

Page 17: Designing For  a Better Family Business

Success Factors according to Owners

0

2

4

6

8

10

12

14

16

18

Success Factors

#of company

Page 18: Designing For  a Better Family Business

SWOT SWOT AnalysisAnalysis

Page 19: Designing For  a Better Family Business

SWOT for Success Companies

Page 20: Designing For  a Better Family Business

SWOT for Acceptable Companies

Page 21: Designing For  a Better Family Business

SWOT for Failure Companies

Page 22: Designing For  a Better Family Business

Our Work….

Page 23: Designing For  a Better Family Business

Continuity Index Rating Tool

Based on Scoring system.The scoring process is from (0-10) : (0 - 3): Collapsed or in the Way to

Collapse. (4 - 6): Average Status or Medium. (7 - 10): Best Continuity Status.

Page 24: Designing For  a Better Family Business

IndicatorScor

e

Entrepreneur.

Guidance

Experimental Learning

Training

Experimental Exchange  

Justice in Delegations  

Trust among

family

members

Confidence of other

capabilities

Aligned Objectives

Skip & forgive mistakes of

others

Administratio

n

Existence of Mastermind

Fairness

Optimal Use of Resources

Adoption of updating and

development

Good Morals

Program for Training

Program for Education &

Retraining

Managem

ent

system

Evaluation System Scor

e

Documentation System

Financial System

Clear Strategy

Organizational Structure

Cope with External

Environment

Non-

Family

Member

Job Security

Bonus & Rewards System

Efficient Communication

Appropriate Work

Conditions

Pride of Workmanship

Page 25: Designing For  a Better Family Business

Position - Cash Matrix

Based on Continuity

Index Rating Tool

Page 26: Designing For  a Better Family Business

Radar Chart

• Applying the average scores of categories

on a sample of the interviewed

sample.

Page 27: Designing For  a Better Family Business

APPLYING OUR TOOLS ON CASE STUDY

Page 28: Designing For  a Better Family Business

Comparing between F & BF

F’s Main Company’s Scores

IndicatorScor

e

Entrepre

n.

Guidance 3

Experimental

Learning

8

Training 4

Experimental

Exchange

7

Justice in

Delegations

1

BF’s Company’s Scores

IndicatorScor

e

Entrepre

n.

Experimental Learning9

Training10

Experimental Exchange8

Justice in Delegations7

Page 29: Designing For  a Better Family Business

IndicatorScor

e

Administrati

on

Existence of Mastermind 2

Fairness 1

Optimal Use of Resources 2

Adoption of updating and

development

1

Good Morals 5

Program for Training 1

Program for Education &

Retraining

1

IndicatorScor

e

Administrati

on

Fairness 8

Optimal Use of

Resources9

Adoption of updating

and development10

Good Morals 9

Program for Training 8

Program for Education

& Retraining4

F’s Main Company’s Scores BF’s Company’s Scores

Cont..

Page 30: Designing For  a Better Family Business

IndicatorScor

e

Mgmt.

system

Evaluation System 9

Documentation System 8

Financial System 10

Clear Strategy 9

Organizational Structure 10

Cope with External

Environment7

IndicatorScor

e

Mgmt. system

Documentation System 1

Financial System 1

Clear Strategy 2

Organizational Structure 0

Cope with External

Environment2

F’s Main Company’s Scores BF’s Company’s Scores

Cont..

Page 31: Designing For  a Better Family Business

IndicatorScor

e

Non-Family Member

Bonus & Rewards

System1

Efficient

Communication1

Appropriate Work

Conditions3

pride of workmanship 1

Indicator Score

Non-Family Membe

r

Bonus & Rewards

System8

Efficient

Communication9

Appropriate Work

Conditions8

pride of workmanship 7

F’s Main Company’s Scores BF’s Company’s Scores

Cont..

Page 32: Designing For  a Better Family Business

Radar Chart for F & BF Company

Page 33: Designing For  a Better Family Business

Successful Family Enterprise

Management SystemClear organizational structureDivide company into quotas

Clear action planClear financial, documentation system

Clear family constitution Clear Recruitment System

Education, Training and Retraining Programs

Trust among family memberSeparation between family and work life

Determine rights and dutiesPeriodically meeting

Mechanism to resolve disputes

EntrepreneurshipExperimental Learning Justice in Delegations

Experimental Exchange

Non family members

Job Security Bonus &

Rewards System Efficient

Communication Appropriate Work Conditions

Pride of workmanship

Solutions for Main Family

Business Problems

Page 34: Designing For  a Better Family Business

Conclusion & Recommendations

Page 35: Designing For  a Better Family Business

Conclusion

• Finally, this is not all about family business and nothing can summarize its whole status.

• In this presentation we took a step to help & support family firms.

• This step is the first step where other researchers can start from.

Page 36: Designing For  a Better Family Business

Conclusion

Page 37: Designing For  a Better Family Business

Recommendations

Page 38: Designing For  a Better Family Business

Cont..

Page 39: Designing For  a Better Family Business

Recommendations from Successful Family Business

Owners

Page 40: Designing For  a Better Family Business

Cont..

Page 41: Designing For  a Better Family Business
Page 42: Designing For  a Better Family Business

Questions were asked to the family business owners:

• What is the scope of your company?• Who’s the founder of the company?• Can you tell us the foundation story of the firm?• What was the motivation?• How did it start?• What was the future vision of the company?• Is the company registered in a formal registration? If not, how is

the distribution of quotas?• Was there a distribution mechanism accoutrements authority

between individuals?• Is there a constitution family includes (responsibilities system,

distribution of profits, and audit within the company)?• Is there a special salary system for working family members?

Page 43: Designing For  a Better Family Business

Cont..• Was there previous generation training?• Was the function of each individual suits his qualification?• Is there any orientation for the next generation to specialize in

special fields relate to the business?• Is there a periodic meeting between company’s family

members?• Is there a separation between private and company’s fund?• What’s the company organizational structure?• Is there any separation between ownership and management?• In your opinion, what are the main conflicts in family business?• In case of quarrels, what is the main reason of conflict?• How did you solve the conflict?

Page 44: Designing For  a Better Family Business

Cont..• In your opinion, do family companies need external

interpose (laws, governmental interfere, chamber of industrial and commerce)?

• How do you satisfy the non-family members? Do they take into consideration their opinions?

• Is there any special way to deal with them in order to increase their loyalty to the family firms?

• As an owner of family member, do you accept to have a qualified person in a management position of non-family members?

• Do you believe in the role of reform committees?

Page 45: Designing For  a Better Family Business

Bibliography

• Abu Baker, M. (2003). The role of the Charter of the Council of the family in the stability and growth of companies.

• Abu-Kharme. (2013, February 7). Interview with a member of Abu Kharme. (B. A. Alaa, Interviewer)• Al Masri, H. (2013, February 5). Interview with CEO of Al masri Company. (A. a. Alaa, Interviewer)• Alby, F. (2011). Methods of Collecting Data: Interviews & Questionnairs in Practice.• Alcon. (1982). Success and Survival in the Family Owned Business. New York : McGraw-Hill.• Amann, B., & Jaussaud, J. (2012). Family and non-family business resilience in an economic

downturn. Asia Pacific Business Review, 203-223.• Andrew. (2009). Understanding Family Business. Institute for Family Business (UK).• Anhui. (2012). The truth of the world's top family business.• Arraiies, S. A. (2004). The restructuring of family businesses.• Astrachan, & Millan, M. (2003).• Babacky. (1987). Consulting to the Family Business. Journal of Management Consulting, 25-32.• Benard. (1975). The Development of Organization Structure in Family firms. Journal of General

Management, 42-60.• Bracci, E., & Vagnoni, E. (2011). Understanding Small Family Business.• Brookline, F. F. (2012). Family Businesses, Succession Planning. • Calabrò, A. C., Cruz, C., Mussolino, D. M., & Voordeckers, W. (2011). Family Business Research.

EURAM.• Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining Family Business by Behavior.• Danes. (2005).

Page 46: Designing For  a Better Family Business

• Fahed. (2013, February 5). Interview with Fahed's Member. (B. A. Alaa, Interviewer)• Hijjawi. (2013, March 10). Interview with CEO of Hijjawi Company. (B. Alaa, Interviewer)• Holland, & Oliver. (1992). An Empirical Examination of Stages of Developing of Family firms . Journal

of Business and Enterpruenership , 27-38.• Kachaner, N., Stalk, G., & Bloch, A. (2012, November). What YouCan Learn From Family Business.• Khalili, A. (2013, February 7). Interview with Al Khalili member. (B. A. Alaa, Interviewer)• Kilani, A. (2013, March 2). Interview with Al kilani Member. (B. A. Alaa, Interviewer)• Klein, P. D., & Ward, P. J. (2013). Keeping the family in family firms. Retrieved from

www.egonzehnder.com.• Louis, R. H., Williams, C., & Savlov, J. S. (2012). WHY DO FAMILY BUSINESSES FAIL? Saul Ewing.• Mesleh, K. (2012). Palestinian Family Business. Nablus.• Nolan, & Goodstein. (2004).• Poutziouris, P. Z. (2006). Handbook of Research on Famil Business.• Poza, & Ernesto, J. (2004). Family Business: What Makes It Unique? Family Business.• Shahla, A., & Tabba'. (2012). Family Business companies.• Tarhan, E. I. (2008). Conflicts and communication problems in family owned business.• The Unique Qualities of a Family Business. (n.d.). Business Management Consulting.• van der Merwe, S., Farrington, S., & Venter, E. (2011). An Assessement of selected family business

value in small and medium sized family business.• Ward, J. L. (2009). Ten Decrets of Successful Business Families.• Yaesh, A. (2013, February 5). Interview with CEO of Yaesh Company. (A. a. Alaa, Interviewer)


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