Family Run Business: “Eye Candy” BY YOU YOUR SCHOOL INFO HERE DATE HERE Family Run Business: “Eye Candy” Background of Business Eye Candy is a family run business that provides a variety of products, founded in 2007. These include bulk candies, specialty chocolate products and imported candy goods from other countries…
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The health of this business is compared to literature on family-owned businesses and from the interview data. Determining the health of the business Governance is one part of this business that makes it so successful. It is currently in the growth stage of development that has brought it sales success through the efforts of many family members. When it was founded, Eye Candy was launched under the investment of a first generation family investor who maintained most of the decision-making. However, due to his traditional leadership style and business focus, Eye Candy was at first losing many sales and was unable to create lasting relationships with the community. The first owner did not want to invest in advertising, marketing or technology improvements and therefore the quality of the brand and its products was not satisfying the local community. In order to make the business succeed, the second generation owner (a father) bought out the first generation owner and created a more successful business model. Succession planning was the product of much family conflict as this family was from a collectivist culture that valued tradition and respect for elders. The original first generation owner would not consult with family members, which Al Bawaba (2011) identifies as being one of the largest factors that leads to family business failures. This original owner was very authoritarian and wanted to control both operations and accounting practices without the input of others. When it became clear that this leadership failure was causing the business to lose sales revenues, they created a succession plan that honored tradition, but also put the business profit first. “It makes sense for a family that founded a business to continue to be associated with it” (HT Media 2011: 1). The succession plan, after buying out the original investor, continued to include the original owner in some of the business decision-making in honour of tradition. This reduced family conflicts that continued to cause problems with delivering quality service as many arguments occurred right in front of customers. The new governance system included less traditional business practices and more modern philosophy with more investment in advertising and customer relationship management. These changes are due to the input of the younger generation who are very active in decision-making and educated on modern marketing activities. Injecting younger talent into the business has given Eye Candy the ability to create better community relationships and set up a known brand in the local market. Without having input collectively from the family members, Eye Candy would still be losing money. When the original governance system was in place, the company was funnelling family expenses through the business model which kept leading to personal losses individually. According to Fitts and Rowe (2011) the best way to maximize company value is to remove all family expenses from business accounting. Under traditionalist family systems, it is common to pool resources, but only when there is a quality decision-maker that can manage all business activity successfully. The losses being taken were not only related to the business, but were reducing personal incomes in the process. The conflicts created in all generations of the family were causing motivational problems at work and
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