Family business is often the most successful in many aspects of growth and development. In fact, it is no secret that most of the global economy are controlled by family businesses. However, just like in any firm or organization there are challenges faced by this business which is often unique to the firms because they are family. The main problem in such business firms is the role of family members in succession for various positions. Without a clear succession policy, most of the firms end up experiencing hefty losses due to time lost in mismanagement or as a result of bad leadership. This paper uses the case study analysis of Cousin’s Consortium Case to depict how family businesses are administered.
In this case, Al Blanchard is the Chief Executive Officer of Grandview Industries taking over from his father. He has since grown older and wishes to retire. The dilemma, however, is that there is a need for a lot of consultation on who should be the next successor. Morris, his younger brother, is also getting old and would not want to take over a larger company especially now that he has been a victim of a heart attack. Al wants to raise the issue from a professional point of view to all the family members but fears that there will be rifts and disagreements among them (Chrisman et. al, 2015). Furthermore, those who succeed him would be working to ensure that their descendants are the ones to succeed them. The challenge this is to implement a smooth succession.
Studies on family business have derived various ways of handling arising challenges, especially of succession and management. Davis in his first dissertation came up with a 3-circle model that aimed at categorizing the various family members and their stakes in the business known and distinct (Colmort et. al, 2014). It helps create a distinct entity and axis of management from which they can address challenges. The circle relates family members with whether they are employees and or owners of the business so that decision critical situations can be handled with the knowledge of the players. In the case of Al’s company, they would have adopted such a system to reduce the problems of sidelining a family member as in their case that led to the leaving of Sarah’s husband.
References
Chrisman, J. J., Chua, J. H., De, M. A., Frattini, F., & Wright, M. (May 01, 2015). The Ability and Willingness Paradox in Family Firm Innovation. Journal of Product Innovation Management, 32, 3, 310-318.
Colot, O., & Bauweraerts, J. (September 01, 2014). Succession in family versus nonfamily SMEs: What influence does it have on performance?. Canadian Journal of Administrative Sciences / Revue Canadienne Des Sciences De L'administration, 31, 3, 149-159.
D'Angelo, A., Majocchi, A., & Buck, T. (January 14, 2015). External managers, family ownership and the scope of SME internationalization. Journal of World Business.
De, M. A., Frattini, F., Pizzurno, E., & Cassia, L. (January 01, 2015). Product Innovation in Family versus Nonfamily Firms: An Exploratory Analysis. Journal of Small Business Management, 53, 1, 1-36.
Wiklund, J., Nordqvist, M., Hellerstedt, K., & Bird, M. (November 01, 2013). Internal Versus External Ownership Transition in Family Firms: An Embeddedness Perspective.Entrepreneurship Theory and Practice, 37, 6, 1319-1340.
