Management Issues for the Global Family Business - Coursework Example

Management Issues for the Global Family Business INTRODUCTION Many family business owners and researchers consent to the fact that family ventures are special in their very nature, mainly due to the influence and the pressure of the family on the activities of the business (Hall and Nordqvist, 2008). Many of the factors that stand in the way of the success, growth and the survival of a business can be traced to the family relationships and the associations between the different members of the particular family (Farrington and Venter, 2010). Other scholars insist that the conflicts that affect the family are the primary problem areas underlying family businesses. Through this report, the author will explore the lessons learnt through designing and participating in the play about the problems facing the Italian family business, incorporating the lessons learnt from the plays of other groups. OVERVIEW OF THE FACTORS BEHIND THE PROBLEMS FACING FAMILY BUSINESSES It is important, to note in advance, that many of the problems that face family businesses can be traced to the linkage and the relations between the different family members operating the business, or those with interests in the venture. From the case of the Italian family business, it is important to note that the conflict that arose from the failure of the accounting function was the major source of the problems of the business. The problem of the failure of the accounting function, where the liability could be taken by Jasmine was compounded by the family attachments between her and the other family members. The problem compounded and ended up with the loss of the 30 percent of all the profits of the business, simply because the owners of the business opted to cushion the person responsible for the violation of bookkeeping (Hildereth and Mancuso, 1999). In the case that Jasmine was only an employee in the business; the situation could have been very different, as the members of the family would allow her to be reported to the police. The dynamics of the interpersonal relations of the family members have been identified as a critical pitfall for many family businesses (Hildereth and Mancuso, 1999). From the case of the Italian family business, the vested family relations of the family members in Jasmine narrowed their choices to two, when the one they left out would be the most favourable for the business (Rodriguez et al., 1999). THE LESSONS LEARNT FROM DESIGNING AND PARTICIPATING IN THE PLAY AND THE PLAYS OF OTHER GROUPS Lesson number 1: demonstrated by the inability of the business to recruit the right personnel for the accounting function of the business Mainstream input-output frameworks for the economic activity of businesses propose that businesses focus on the conversion of inputs into the desired outputs. The inputs in this case, include those made by investors, suppliers and employees, either in the form of labour or funds (Donaldson and Preston, 1995). On the other hand, the outcomes produced by the business are then sold to the customers of the business, which translates into the capital benefits enjoyed by the business (Flyvbjerg, 2012). According to the mainstream frameworks of business, which are extremely effective and open to the measurement of performance, businesses work towards meeting the wishes and the needs of four major parties: employees, investors, customers and suppliers (Zbar, 2004). Through an exploration of the business outlook of the Italian family venture, it is clear that little attention was offered to the needs of the different groups. Muluti gave the input of an investor, despite that information about suppliers is not given (Farrington and Venter, 2010). From a review of the problems facing the business, it is evident that the selection employees did not meet the threshold required from the hiring and the management of employees (Fishman, 2009). More importantly, it is possible that the selection process used to appoint Jasmine was not effective, as the interests and the relevance of family relations took the central role (Strategic stakeholder management, 1999). . Lesson 2: Family and non-family conflict play an important role in the success or the failure of a business. Different from the non-family business, a family business will have other stakeholders, including the family members with interests in the business (from the case study, these include Antonio) (Ward 2004); not-active shareholders like Uncle Tom and cousin (Aronoff et al., 1997) and those without an investment in the business, including Guido (Fishman, 2009). From the display of the relations between the father, the mother, the children, and the non-family stakeholders to the business, including the case where the father makes the statements that ‘he would shoot one of the others’, it became evident that the management of the business may have been affected by family conflict. Ward (2004) maintained that the satisfaction of the family members, who are the team members in the running of the business, is a major indicator of the effectiveness of the management of the business. The evidence of the father’s dominance includes his use of violence at business meetings (Sundaramurthy, 2008). Lesson 3: Conflict of interest in the running of family and business-related activities plays an important role in the failure of family businesses From the case of the Italian family business, it is evident that there is a conflict of interest between the different members of the family, including those between Jasmine and the person that had assigned her the accountancy office (Adendorff, 2005). The fact that Muluti, the father of Jasmine appears to force his way during decision-making may be cited as evidence that Jasmine was offered the role of an accountant without her acceptance or consultation. This fact is implied during one of the family meetings, after she is offered the option of working for the business at a different office (Carlock and Aronoff, 2001). After the statement is made, she makes alarming statements that implied that her assignment to the accountancy office may not have been her choice. The statements that she made included that she did not like numbers and she was not comfortable with her office (Gersick et al., 1997), and that was why she cooked the accounts of the business. The fact that she expresses her disinterest in the office and mathematics can tell any reasonable reader that she did not accept to work as an accountant, right from the start (Loewen, 2008). The numerous cases of conflict of interest show that the management of the business did not have a common goal and vision for what they wanted to make the business grow into; it may have been the major reason behind the failure of the accounting function (Carlock and Aronoff, 2001). CONCLUSION Many family business scholars and owners acknowledge that family ventures are special in their very nature; the familial relations between members of the business trigger dynamics that are not present in other businesses. The factors behind the problems that face family businesses include that the family members look at the business as an extension of the family. The lessons learn from the play and other plays include that family businesses suffer from the inability to recruit the right personnel; family and non-family conflicts influence the success or the failure of the business; conflict of interest in family businesses can cause the failure of the business. The lessons justify the roots of the problems facing the Italian family business. REFERENCE LIST Adendorff, M., 2005. The Development of a Cultural Family Business Model of Good Governance for Greek family Businesses in South Africa. Ph.D. Thesis, Rhodes University. Aronoff, C.E., Astrachan, J.H., Mendosa, D.S. & Ward, J.L., 1997. Making sibling teams work: The next generation. Family business leadership series. Marietta, GA: Family Enterprise Publishers. Carlock, R. and Aronoff, C., 2001. 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Professional management in family businesses: Toward an extended understanding. Family Business Review, 21(1), pp. 51-69. Lester, D. and Parnell, J., 2004. The Complete Life Cycle of a Family Business. Association for Small Business and Entrepreneurship. Proceedings from the Albuquerque meeting. Loewen, J., 2008. Money Magnet: Attract Investors to Your Business. New York: John Wiley & Sons. Rodriguez, S.N., Hildreth, G.J. and Mancuso, J., 1999. The dynamics of families in business: How therapists can help in ways consultants dont. Contemporary Family Therapy, 21(4):453-468. Strategic stakeholder management. 1999. Academy of Management Journal, 42(5). [Online] Available from: http://www.l2manage.com/methods_strategic_stakeholder_ management.html Sundaramurthy, C., 2008. Sustaining trust within family businesses. Family Business Review, (1), pp. 89-102. Ward, J.L., 2004. Perpetuating the family business. 50 lessons learned from long-lasting Successful families in business. New York, NY: Palgrave Macmillan. Zbar, J., 2004. Chemistry and consideration: Running a family business is often more about managing relationships than numbers. Florida Trend, 3(47), pp. 93. Read More