Introduction
Family businesses are an important part of economic development and prosperity. Many people have established family enterprises in order to experience economic growth. However, the management of family businesses is not easy. Businesses owned by members who share family relations are very challenging to manage. Apart from the business issues that arise from time to time, there are family issues as well. Some of the most striking challenges in running family businesses include succession disputes, family conflicts, gender disputes in the management position, financial weaknesses, mismanagement, work relationship among others (Davis). It is important to keep i9n mind that the analysis of family businesses help in understanding strengths, weaknesses, threats and opportunities that businesses are exposed. This paper presents a case study of Zayed Al Hussaini Group, which is a family business. The case in question is concerned with a member of a family business who had been appointed as the new manager of the business during a meeting, prior to his flight, out of the country. His appointment as the new manager met resistances. The issue that is battled out is leadership and succession conflict.
Family business ownership problem
The family business was established in the 1940s by Zayed Al Hussaini, the grandfather to Ahmed. At the time, he established the business; he was only 15 years old. The founder, Zayed, was a pearl driver who together with his family brothers worked as drivers of pearl (Anam Shahid). However, the business seemed not to be promising, and they were, therefore, forced by the declined market to seek for alternatives elsewhere. Nevertheless, Zayed and his younger brother Ali conceived an idea led made them venture into the shipping business. The formation of the UAE was a big boost to their business. The region relied much on sea transportation and, therefore, their business began to flourish in 1971. Getting customers was not a problem. They still had the same customers they had served while they were driving pearls.
The expansion business opportunity in the region made Zayed enter into a long term contract with one of the leading Multinational Company. Zayed took nothing for granted. He combined the two business under a new name; Al Hussaini Group. The business dealt in two areas; shipping and Fast Moving Consumers Goods (Spraggon). The later became the most impressive in performance and returns. Therefore, the family members decided to expand it.Business was expanded to include a wide range of product in their portfolio. With the expansion rate, managing the wide range of brands became a challenge. Therefore, the two brothers decided to incorporate their elderly children in the management of the business. As a result, Maryam and Bilal, Zayed’s daughter and Ali’s son joined the business. Maryam took up the management of the retail business whereas Bilal took up the management of financial manufacturing.
As the business expanded further, conflicts of interest began to rise. More opportunities for expansion were looming in Oman. Bilal being an educated fellow was better paced in clinching more opportunities in Oman by entering into partnership with the local companies. To make matters worse, Ali, Bilal’s father started to shift his focus towards the line that his son was concerned with. He already saw a great chance of success in Oman by assisting his son. Already there was looming a sense of division in the business. Zayed was the elder brother and the chairman of the group. He had a several issues to deal with. Being the eldest in the business and the family, he had to work hard towards ensuring that the family unity is maintained. However, his brother Ali and his son Bilal were not very cooperative having realized that there was a big chance for expansion in Oman.
Zayed was the protagonist in the family business issue. He was faced with the dilemma. Maintain family unity and overseeing the financial management became two critical areas to deal with. Moreover, the partnership that was successfully established in Oman was posing a lot of financial strains and instability. In fact, it led to the accumulation of debates and significant decline in the business revenues. To make matter worse, Oman was failing, and most of the investors already started to pull out (Anam Shahid). The business reputation had been tainted by this failure.
The challenges that seemed not be ending made it difficult to have a family business operate as before. Consequently, the Chairperson, Zayed who is also the elder brother in the business summoned all the top management body comprising of the family members to an urgent meeting. Zayed had no option but to sacrifice the family unity in order to save the business from collapsing. It was indeed a challenge for the two brothers to continue working together. Consequently, the partnership between Zayed and Ali was dissolved, and Zayed had to restructure hi enterprise. He called on two of his children; Zainab and Hadman to take part in the management together with Maryam who had watched the two brother part ways.A new family business was established. It was called Zayed Al Hussaini Group.
The major challenges that Zayed faced as a protagonist include; difficulty in balancing family unity and financial oversight, tainted reputation of the business due to its inability to pay up the debts, resistance from the brother to have him supervise the prosperity of the business.
Challenges were increasing day in day out. The death of Hadman made the business to take a new turn. The investors lost confidence in the business and began to demand their shares in the family business. Zayed was forced to reshuffle the management of the company. In a heated meeting, he named Ahmed the new general manger to take up the position of the General Manager. The turn of events was undesirable. Ahmed appointment as the new manager met several oppositions from the family members involved in the business. Ahmed had once resigned from the family business due to the challenge of having to balance between the family ties and the business roles and the leadership position. He was reprimanded by his siblings and cousins who saw him as a snatcher. They were all eying the position of General Manager and saw Hamdan’s demise as an opportunity to clinch that position (Anam Shahid).
While inspecting the records of the family business, Ahmed discovered a lot of issues that were superficial yet had lasting impacts on the future of the business (Bodolica). He even discovered that his cousin who was in charge of the business at Qatar had even taken a personal loan in the name of the family business. These issues became very challenging for Ahmed to handle. He thought of ways of skiving the position but his grandfather, Zayed who was also the group chairperson insisted. Even gender issues arose when Ahmed’s own sister claimed that she had been looked down upon because she is a lady.
Evaluation of the Family Business Health
As mentioned earlier in the discourse, family business is a good opportunity for economic growth. Zayed Al Hussaini Group analyzed in this dissertation has its strengths and weaknesses.
Strengths
- The company had learned and highly qualified managers-all the family members who took up various material position in the family business were educated and had managerial skills
- Attachment to the business-being a family investment, the managers were family members who could save the business
- Ideas to expand the business-the managers were aggressive to clinch every opportunity that would prevail in the market
- Faster growth rate-the business rate of growth was very fast soon after Zayed broke up with his brother Ali and his son Bilal
Weaknesses
- Succession disputes-power struggle among the family members remained a major weakness in the business
- Lack of accountability-most of the managers in charge of various departments was irresponsible and lacked the integrity. For example Majidwho was in charge of Qatar could go to the extent of taking loans for personal benefits in the name of the business
- The struggle to maintain family unity at the expense of ensuring business success-so many losses were realized due to the lack of oversight body on the financial operations.
- Constant disagreements among the managers-the hiccups that arose in the management from time to time led to the lack of peaceful business environment
- Ineffective audit- poor auditing or lack of it led to several losses
- Inability to pay the debts-the business accumulated debts that became too difficult to pay. As a result, had financial deficits
- Limited scale of products in the market
Goals of the Business
Contributions of the various characters in the family business
The members of the family involved in the business have contributed in different ways in the business. The contribution of the various members can be analyzed as shown in the table below:
Historical Development
The company was first established and co-owned by Zayed and Ali in the early 1960s. Soon after its formation, the business progressed well and expanded significantly. Consequently, Mayan and Bilal joined the company and were assigned managerial positions in different fields.
In 1995, Bilal established partnership with regional partners in Oman to further expand the business. However, the newly established branch seemed not be growing despite the financial investment. Losses were incurred by the end of 1996
Early 1997, Zayed and Ali parted ways due to disagreements of the management and growth of the Oman business branch under the management of Bilal. This detachment of Ali and his son from Zayed led to the restructuring of the business (Anam Shahid). Zayed resorted to create the business under a new name; Zayed Al Hussaini Group in the early 1997
In 1998, Zainab and Hamnad joined the management force of the newly created business. Zainab and Hamnad were daughter and son to Maryam. Zayed empowered Maryam, Zainab and Hamnad to take up the management positions in their business and, therefore, Zayed began to reduce his control in the running of the business (Anam Shahid). New rules and policies were developed to reduce redundancies and ensure effective utilization of resources.
The expansion of the tourism and travel industry in the United Arab Emirates saw the company emerge as one of the leading family businesses in the region. The need to have more competent manager in the business led to the recruitment of Ahmed to assist in the management. Unfortunately gossips in the office on Ahmed’s capacity to lead his department compelled him to resign. He moved away to return to class in order to gain more experience in the management of the business.
Eight years later, Ahmed received a call that informed of him of his uncle Hamnad’s demise. He was reluctant to get back home due the challenge that waited for him. He knew that the death of Hamnad would make him to be required to take part in the management of the family business. In a boardroom meeting, Zayed, the chairman named Ahmed the new overall manager of the business (Anam Shahid). Nevertheless, his appointment met several resistances from his siblings and cousins because they had been eying the top position for long before the return of Ahmed from London (Anam Shahid). Despite the resentment from his own cousins and sister, Ahmed went ahead to scrutinize the company performance and held the concerned parties responsible for the failure. Ahmed got himself at crossroads on how to save the collapsing company while maintaining the family respect and unity.
Alternative Actions
Managing a family business is very challenging. So far, Ahmed is faced with very controversial situation. He has critically to think through the situation before making a decision. He has been elevated as the general manger of the family business and there are issues he has to resolve in order to run the business. Ahmed needs to apply the concept of strategic management in order to resolve the crisis is facing the business. He needs to do the following:
i. Conduct an internal and external analysis of the business environment- Ahmed should apply the Porter’s models to understand the internal structure of the business and the corresponding external factors. This will help him to identify the strengths, weakness, opportunities and threats in the business.
ii. Ahmed needs to convene a meeting that will put everything in a straight path. He has to explain his objectives to all the members involved in a clear manner. The vision should be made very clear. As such, he needs to consider lying off hesitant members who may be stumbling blocks in the process. However, such a decision will result to sacrificing family unity in order to save the business. He needs to identify members who share in his vision to help save the situation.
The power of the Protagonist in the family business
The protagonist in this case is the General Manager of the business. He has all the powers to make the decision to run a business in a way that may be plausible. As a general manager, he has the support of the chairman, Zayed. This position mandates him to source for competent and co-operative managers from outside the family to replace the hesitant groups.
One of major goals is to revive the business life. The business is suffering losses due to poor management of financial resources. Ahmed needs to source external auditors who will conduct the auditing and hold the concerned members responsible for the losses and financial mismanagement. As the overall manager, he has all the powers to do what appears good to the business.
Implementation Plan of the Action
Resources
The implementation require hiring of external auditors and business analysts
The financial requirements will depend on the amount that the experts may require to do the exercise
Time
It may take a period of almost 2 years to fully understand the internal and external environment in order to come up with sound decision
Works Cited
Anam Shahid, Virginia Bodolica and Martin Spraggon. "Zayed Al Hussaini Group: the road ahead for the family business in the UAE." EMERALD EMERGING MARKETS CASE STUDIESj ( 2014): VOL. 4 NO. 1.
Bodolica, V. "An examination into the markets for corporate control: evidence on merger and acquisition deals involving Qatari companies." Corporate Ownership and Control (2013): Vol. 10 No. 4.
Davis, John A. "Preparing Family Business Cases." Havard School of Business (2007).
Spraggon, M., Bodolica, V. and Ali, N. "‘The awakening of the ‘sleeping partner’ at U-Brand." Asian Journal of Management Cases, (2010): Vol. 7 No. 2, pp. 155-173.
