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STRATEGIC PLANNING FOR FAMILY BUSINESSES FOR CONTINUITY

Presented by:

Dr. Sami T. Salman

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SPECIAL CHALLENGES OF FAMILY FIRMS

Inabilityof family CEO

to “let go”In time

Sibling rivalries, non-acceptance

of chosen successors

Poorestate planning,inability of next

generationto pay

death duties

Inability to attract and retain senior

non familyprofessional

managers

Inability to attract and

retain competent and motivated

family successors

Lack of abilityto create

appropriateCultural

congruity

Finding capitalfor growth without

dilutingfamily equity

Conflict betweenfamily’s vs.

Business’ needFor cash

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POSITIVE CORRELATES

OF BUSINESS CONTINUITY PLANNING

1. Size of the business

2. Level of the strategic planning

3. Level of the perceived family harmony

4. % of outsiders on board

5. Age of owner manager

6. Degree of internality of owner-managers Locus of control

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Family businesses have built-in conflicts due to the intersection of tow worlds which are governed by different values and logics*

FAMILY BUSINESS: THE ULTIMATE PARADOX?

Family word

• Mutual cooperation

• Loyalty

• Unity

• Permanence

• stability

Business word

• Competition

• Opportunities

• Diversity

• Impermanence

• Instability

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CULTURAL DIFFERENCES

Emotional focusMemoriesCharacter development“Who you are”Prepares individual for future

FAMILY

Fact focusFutureSkills development“What you do”Does not prepareIndividual for futureAfter the business

BUSINESS

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Conflicts are inevitable in family businesses

The potential for conflicts increases

In an environment of change

Destructive

Conflicts

Constructive

Conflicts

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“If there is any secret of success,

it lies in the ability to get

The other person’s point of view

and see things from his angle

as well as from your own”.

Henry Ford

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SUCCESSFUL FAMILY BUSINESSES

1. Have excellent

management development systems.

2. Train the family on ownership

responsibilities From an early age.

3. Treat their employees fairly and with loyalty

4. Have a high sense of

responsibilities to society.

5. Emphasize value for money and quality.

6. Quick decision making.

7. Take a long term strategic perspective.

8. Are innovative and entrepreneurial.

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Table 1-2: Three-Circle Model

Structure Board of Directors

Structure Mgmt.

DevelopmentPlan

Structure Family Council

Plan 1

Plan 2 Plan 3

Plan 4

Plan 5

Plan 6

Ownership

Family Business

PLANS1. Share Holders Meetings2. Family Plan3. Mgmt. Development Plan4. Strategic Plan5. Continuity and

Contingency Plan6. Estate Plan

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Table 2-2: Personal Factors that Motivate Offspring to Join Family Business

Motivating Factor Frequency

Make money 67%

Like the business 50%

Good career opportunity 45%

Family influence 40%

Help the family 39%

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Figure 1-5: Overview of the Family Business Strategic Planning Model

F A M I L Y

Constitution

Succession Planning

Vision+

Mission

ConflictManagement

SurvivalStrategy

PersonalFactors

Family Factors

EconomicalVs

Financial

Technology

Vision+

Mission

Partnership

SocialVsHR

PoliticalVs

Marketing

Environment

B U S I N E S S

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Figure 2-5: Family Factors in the model

F A M I L Y

Constitution

Succession Planning

Vision+

Mission

ConflictManagement

SurvivalStrategyPersonal

Factors

Family Factors

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Figure 3-5: Business Factors in the model

B U S I N E S S

EconomicalVs

Financial

Technology

Vision+

Mission

Partnership

SocialVsHR

PoliticalVs

Marketing

Environment

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Figure 4-5: Family Assessment for Case Study No. 1

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Figure 5-5: Business Assessment for Case Study No. 1

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CONCLUSIONS AND RECOMMENDATIONS

Feedback and control and family continuity plan.

Exploiting the external environment for growth and change management.

Developing a second line of command structure.

Monitoring the critical success factors

Creating a unified planning approach.

Aligning of family vision and mission with that of business vision and mission

Identifying the family and business co-relation

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END OF PRESENTATION