Family Owned Business - Essay Example

 Family Owned Business Abstract This study examines the perspective and insight of family owned business enterprises. We start by examining the definition and meaning of family owned business enterprises and then thoroughly scanning the advantages and disadvantages of such business enterprises. Lastly, we explore one of the prominent family owned enterprises, Al Masaood Group, headquartered in Abu Dhabi. It has been observed that the involvement of such business organizations is crucial to today’s market and they have key functions to perform. Introduction A business enterprise comprising one or more members of a family is a family business. In this kind of enterprise, family members are not only the owners of the business but also are committed to developing and attaining further growth of the business enterprise. In most countries, business enterprises are family owned. In the United States of America, family controlled or family owned dealings are about 80 percent of the overall companies. Aims of the project In this project, we will first examine the concept of family owned enterprises. We will attempt to define and explain the term family owned businesses. Secondly, we will try and find out the ownership structure of family businesses. Here, we will find out the diverse constitutions of family businesses. In some, business may be entirely owned by members of a family; whereas in others, family members may be key share holders of a particular business enterprise. Next, we will try and find out why maximum business enterprises are family owned. In other words, we will try to ascertain the pros and cons of a family controlled or owned enterprise. After examining all the above aspects of a family owned business enterprise, we will present a case study of the Al Masaood Family owned business. Literature Review In this study we try to find out the meaning and definition of family business. There has been a plethora of studies conducted in family business enterprises. Despite this, there are a lot of family business enterprises which may fail. Hence, we will try to find out the advantages and disadvantages of family owned businesses. Lastly, we will examine the Al Masaood family and its contribution for a successful family owned business venture. Research Methodology We will first examine the definitions and structure of family owned businesses and then the pros and cons of such ventures. Lastly, we go to find out the history and growth of Al Masaood family. Definition of a family business Academicians have defined family businesses with respect to the research undertaken at a particular time. These definitions may be based on the degree of possession by members of a family or on the basis of involvement of the family in business or the generational succession or transfer and lastly on the basis of numbers conditions. Here, we consider the definition of Barry who defines a family business as ‘an enterprise, which, in practice, is controlled by the members of a single family’. Structure of family owned business enterprises Broadly speaking, the ownership structure of a family owned venture can be divided into organizations controlled by family members and organizations in general. Family owned businesses can be further categorized into financial intermediaries, corporations, state and families. Pros and cons of family owned ventures One of the main advantages of a family owned business venture is that they seem to control their fate. They have a wider outlook of their venture. They believe in following the family culture which includes norms, beliefs, and values and extend this to their family owned business organization. Due to this employees have a larger sense of belongingness and also there is less bureaucracy thereby making decision making quick and effective. Other advantages are the implementation of long term planning and greater stability in business (Ibrahim & Samad 2010). One of the main disadvantage of a family owned business venture is that they may have problems in accessing market capital. Also if the successor is not as competent or driving as the predecessor then it may lead to business failures. Families can usurp the property of the family business for their personal benefit. These firms may have issues in accepting professional individuals who can help to enhance competition and react to technological breakthroughs. Al Masaood Group – a case study This is a family owned business venture which is actively involved in commercially developing Abu Dhabi. In fact, this group is a part of important development projects undertaken in Abu Dhabi. This family business has strived hard, values organizational culture and now employs over 7000 employees. Now headed by H.E. Masaood Ahmed Al Masaood, H.E. Abdulla Al Masaood and H.E. Rahma Al Masaood this has broadened its business activities and emerged as one of the largest conglomerates in the Middle East. This is basically a family controlled business organization. As discussed above, this is one organization which values its family culture and has extended it to their business venture. This firm is committed to attaining innovation, excellence and quality in their products and services provided. Moreover this firm believes in diversity in the workplace and its personnel comprise of more than forty diverse nationals. One aspect for a business to succeed is to drive innovation and also diversification. This family business provides importance to both. This has spread its wings and has entered diverse markets like construction, automation, horticulture, water, technical training and so on. Another aspect of this family owned business venture is that it has formed strategic ties with several business enterprises which help the`m to provide better services to its clients. For example, in order to provide key services in the travel & leisure market, it has strategic tie ups with airlines like Air France, Air Arabia, Lufthansa, Egypt Air and Continental. In total, it has over 200 alliance partners globally in order to provide excellent services to customers. In fact, the Al Masaood Group supervises firms which are further balanced by the strong strategic partners thereby helping to diversify their business (Al Masaood Group 2012). Research findings This business enterprise has strived to accept the services of professionals in attaining competitive edge over its rivals. In fact, it has adjusted to change and have embraces the new technologies to attain growth. Also, it believes in diversity in manpower as it helps in garnering the best talents in the market. Hence, a diverse manpower also gives this family owned business the path to flourish and excel and attain further growth. It believes in diversifying business so that the firm has greater stability in business. Moreover, this is one group which undertakes long term planning and has formed strategic partnerships and diversified the group to include expert services into different segments of the market. This helps them to have a wider customer base and also as a group aid in garnering more profits. Conclusion By conducting the above study on family businesses, we have observed that such business enterprises thrive in the market mainly due to the dedication and commitment displayed by members of the family. Also these people are focused towards growth of the organization as adverse reputation of the firm may negatively hamper the reputation of the family name. Moreover, these enterprises are chiefly controlled by family members or may be family owned. However, they may form strategic partnerships wherein family members hold key positions in the management of the company. Lastly, the key to success in such firms is by gaining competitive edge, valuing organizational culture and allowing a diverse workforce in order to benefit from diversity. References Al Masaood, 2012 Welcome to the Al Masaood Group’, viewed 5 March 2012, from http://www.masaood.com/ Ibrahim, H. & Samad, F.A., 2010, ‘Family businesses in emerging markets: the case of Malaysia’, Africal Journal of Business Management, 4 (13), 2586 – 2595. Read More