Example Of Conflict Over Leadership In Family Business Case Study

1.Why was there no business succession plan at Lakkard?
Business succession planning is an important process, which is essential for preparing future company leaders from internal human resources. The main obstacle to a successful succession planning in the majority of companies, however, is the unwillingness of the older generation to give up their leadership position and to put the future of the organization into the hands of younger successors. Unfortunately, CFL followed this pattern and did not realize the need to prepare his son for taking over Lakkard. Whether it was short-sightedness or a conscious decision to maintain leadership, it is strongly connected to CFL’s commitment to the company and his sense of responsibility for Lakkard’s future. The success of his business decisions, which allowed to create Lakkard and lead it to prosperity, made CFL blind to the current problems of the company and to his inability to demonstrate superior leadership qualities. However, transferring company management to his son would indicate that CFL is no longer able to control Lakkard, which does not go along with CFL’s sense of pride and a certain level of arrogance.
This attitude is especially dangerous, when it doesn’t reflect the best interests of the company and makes the business, especially a family one, vulnerable to the competition from stronger rivals. CFL’s desire to remain the head of the company was so strong that he would rather prefer to give away Lakkard to the foreign management, despite the clarity of the natural succession by his son, than to retire. Therefore, it is critical for Peter at this stage to establish clear rules of succession, otherwise Lakkard may become a victim of CFL’s continuous attempts to prove that he is still able to lead his company.
2.How could CFL have better managed this process?
Since CFL wants to keep Lakkard a family business, he should have involved Peter in the daily operations of the firm much before. The mere fact that Peter had little knowledge or desire to interfere into the company’s affairs demonstrates that CFL was not able to manage the succession process appropriately. Hence, CFL could have handled the issue of succession in a better way, if he tried to gradually shift some of his tasks to his son, thus introducing him to the company and the industry. CFL in this case would take the role of a mentor, who could explain Peter the importance of Lakkard for the family and to interest him in running the business in the future. Moreover, CFL should have gradually increased Peter’s responsibilities, thus encouraging more participation in the company life and preparing him for leading Lakkard at some point of time. Finally, CFL should have clearly communicated the rules and the time of succession, In this way Peter could make long-term plans about becoming the owner of Lakkard and work towards acquiring specific skills and knowledge, which are necessary for leading a company.
3.What would you do now if you were (a) CFL, and (b) Peter
(a) In the current situation CFL is faced with several choices. Firstly, he can sell the company to Carabazzo, and enjoy the money from the deal. However, this solution goes against CFL’s aspirations to keep Lakkard a family business. Moreover, taking into consideration the deep commitment of CFL to the company, it is hard to imagine that he would be able to leave Lakkard. Thirdly, tight relationships with the employees and the deep concern for their well-being, which is profoundly embedded into the company culture, make it hard for CFL to sell the company, thus jeopardizing the future of the people in it. The second option for CFL is preserving the status quo and maintaining the leadership and ownership of the company. However, this strategy cannot be implemented in the long-run because of CFL’s health issues and the declining profitability, which indicates the need for major reforms. Taking into consideration infeasibility or inappropriateness of the previous two choices, the most reasonable solution for CFL would be to decline Carabazzo’s offer, but at the same time to address the problem of succession in the company. Since CFL strongly believes in running Lakkard as a family business, he should transfer the ownership of the company to his son. However, this change can be introduced gradually, by progressively involving Peter in the company business and appointing him as CEO of the Lakkard, while maintaining the ownership by CFL.
(b) Peter also has a number of options, however most of them are associated with some trade-offs. If he continues to insist on his decisions about the future, he risks to push his father to selling the company to Carabazzo. If Peter chooses to abandon family business and to select a different career path, there is a high chance for the company to go bankrupt under the current management practices of CFL. Therefore, Peter should adopt an intermediate approach, which would minimize the conflict between father and son, prove Peter’s ability to run Lakkard, while limiting CFL involvement in the company’s affairs. In order to be able to pursue several career paths, the primary objective for Peter should be completing his degree. At the same time he should slowly get involved into managing the company and overlooking the decisions of CFL. Such approach would reduce direct conflict between the two, while giving Peter some decision-making power and providing him with the necessary information about the current company performance. Once Peter completes his degree, he may decide on his further steps depending on the situation at that time. It will be highly beneficial for him to discuss company succession with his father. If CFL continues to insist on managing the company alone, while market position of Lakkard will deteriorate even further, the most optimal solution for Peter would be to look for other job opportunities or to employ his entrepreneurial talent for starting up his own company. In this case he may try to convince his father to sell the business, until it is too late and the deal still promises to bring the Lakkard family some profit.