Family Business Case Study

There are a lot of family businesses all around of the world. A recent study suggests that “Family businesses comprise 90 percent of all business enterprises in North America, and 62% of total U.S. employment” (Small Business Administration 2011). That accounts for over half the jobs in America. So what is a family business? It is a business that is governed or managed by family members in order to get the maximum profit possible. There are many benefits of being part of a family business. In such a business there are opportunities to build trust with one another, spend time with the children, get involved with the community, develop a bold family culture and provide jobs for the community. According to International Centre For Families

There can be many reasons for a conflict in business. A major conflict can be decision making, wrong decisions by the owner can tear a business apart more importantly a family apart. Problems arise such as stock control, Spouses often unknowingly generate conflict by what do they hear about the business or about other family members. Looking back at Application #2, we can use the Ambani family as a example. The Ambani family is one of the elite families from India and known world wide. Ramniklal and Natvarlal came to a conclusion of dividing there business due to all the conflicts. The mother disapproved of this at first but finally split it three ways. Each of the brother received 30%, the mother received 30% and the two sisters received 5% each. A study done by the School of Business University of Connecticut said that 24% of respondents show that the case of conflict comes from succession, 24% of respondents show that the case of conflict comes from the perceived competence of family members working in the business, 20% of respondents show that the case of conflict is followed by compensation, 20% of respondents show that the case of conflict is due to a lack of communication within the family (Figure 3). Along with this the survey showed that 13% of the respondents claim that the car of conflict is due to the lack of communication, 9% of the arguments came from sibling rivalry, 8% of the respondents

This is due to the mix of business values and family vales. Playing a role in each can defiantly stir up some problems. For example if a wife in husband get into an agreement at home it can carry over to the business side which can end very badly. According to KPMG and Family Business Australia Survey of Family Businesses 2009 in Australia, only 28%of respondents said they have a established formal family councils, 30 percent of respondents showed that they possess a board or other formal governing body, while a further 43 percent of respondents say they rely on less formal structures (Figure 4). We can compare this data to The International Center for Families in Business research of UK family. In their survey it showed that 59 percent of respondents said that they have some informal and unwritten governance plans, 29 percent of respondents showed that they have some documented about the governance plans, and only 12 percent of respondents showed that they have a fully documented governance plans (Figure 5). From the research between two companies we can see that most businesses law specific governance plans, this is become a big issue in many family businesses. From Application #1 we learned that a business can create a charter in order to keep the way of the business for generations to come. Looking back at the KPMG survey only 11.5% of respondents have a constitution, 88.5% of respondents don’t. Only