Family Business: Riad Terra Bahia - Assignment Example

Family Business: Riad Terra Bahia Name Course Institution Introduction The key stakeholders that influence family businesses that have been passed down one or more generations are the parents, the active and non-active sibling shareholders, spouses, and the non-family members. This is an essay discussion of the nature of the family business, Terra Bahia based in Marrakech, Morocco. It works to give the guests the Moroccan experience in its cuisine and service. The business has been owned by the Corry and Thierry family who intend to pass it on to me, their son. 1) The Family business The family business is a hotel riad called Terra Bahia. It is based in Marrakech, Morocco and my parents obtained it ten years ago. The intention is to hand over the business down the family tree where I am the one expected to take over the governance of Terra Bahia. As the family business, its aim is to give its guests thee best Moroccan experience in the form of some of the décor and the food offered at the hotel. It focuses on giving the best possible service aligned with the vision and mission of the business. (Kindly insert the mission and vision statements of the hotel here). The hotel was purchased by my family in 2007. It started out as a hostel mainly used for accommodation after which it rea into a larger resort that hosts numerous guests and has listings on various online accommodation booking platforms[Lon17]. It has experienced struggles such as…(kindly give me more information about the financial history of the hotel, the challenges and the most profitable years). 2) About the Family My name is Thomas. I am from a nuclear family of 6, my mother, father, three siblings, and I. I am the youngest of my siblings where ahead of me are two brothers and a sister. My mother is called Corrine and my father is called Thierry. My two elder brothers are Remain and Antione and my elder sister is called Emilie. Despite being the last born, I am the sole heir of hotel riad, a family business that my family has owned for ten years. It is currently under the ownership and management of my parents. We all get along and have no history of family major fights. We also communicate often and meet often which ensures that we remain close enough to care for each other and maintain enough knowledge of each other to ensure that we help each other at all times. Although my siblings have little interest in the business as compared to me, the family business is open to selling shares to all interested parties, including my family members. It is for that reason that our parents keep reminding us about the importance of transparency and honesty in communication which they insist must be frequent. That is because the greatest causes of the failures of family businesses are family feuds, especially in cases where siblings have joint ownership or where those not directly involved in the business have shares in the business. To avoid that, our parents made sure they named me the sole heir based on genuinely honest terms. My parents made it clear from a while ago that I shall take over the family business because my siblings were not as interested in the family business as I am. I have also studied courses that go hand in hand with the responsibilities related to management and entrepreneurship which gives me relevant knowledge related to the hotel. Besides that, my interest in the family business was evident from my ate teenage where I would make many inquiries in relation to the business which could count as an internship training period from the founders, my parents. 3) Sustainability of a family business What successful families contribute to the Family Business According to research, 30% of family businesses successfully make it to the second generation but only 12% survive and pass on to the third generation. The intention is to see the family business survive across generations. The families of the business owners play a big part in the enhancement of the chances of the survival of the family business[Andur]. (i) Family Unity Family unity is a critical factor behind the success of ever family business. United families put the interests of the business ahead of their own and as a result easily manage to adapt to changes within the industry and the business. Unity is build and maintained through the prioritization of honest and effective communication. In the case of my family, communication is central to the family culture which in turn translates onto the business. For instance, we hold regular meetings to know where each member of the family stands in relation to the business, their willingness to contribute to its success, their ability to do so, and to discuss the need for family support in various areas of the business. It is through the meetings that my parents made it clear about the succession plan and the reason for selecting me as the sole heir of the business. The family meetings give each family member to bond, share their innovative ideas, and also make inquiries in relation to the family business in areas that they do not quite understand[Wil15][NAP16]. My parents also made it their job to educate us all about the family business. A little extra information is always shared during the family meetings but there are additional trainings and lessons given through practice working at the hotel and the provision of documents with information about the hotel. Our parents have also built conflict resolution procedures when such instances arise. They come along with training with the intention to impart all of us with the conflict resolution skills which goes hand in hand with teaching us communication best practices. In their case, conflict has only arisen once. However, with the planned succession plan, the stakeholders shall increase and be diverse where I shall own the business but expect the intervention of my parents. The opinions of the stakeholders must be filtered to take in the most relevant[Ste165]. (ii) The realization that the business is not all about the money The family must find a way to find a greater purpose from the business other than money as a motivator. It is easy to say that a business is not all about the money. However, it helps to reinforce the value with vision and mission statements about which all stakeholders should be aware. The realization and acceptance that thee business is not just there for the money keeps the people in charge of the business going even when the going gets tough because of the greater vision. The incorporation of all the stakeholders with the core values helps build a strong culture for the moment and for the future generations. It begins with the formulation of the core values, the translation of those values into action, and the adherence to the values to incorporate them into the culture[Kel16]. (iii) The existence of a unified vision A unified vision ensures that every person that gets involved with the family business understands the course of the business and their expectation to honour it. This includes sharing of the succession plan early enough to prevent instances of conflict among siblings who hoped to inherit the family business. The succession must include a person that is actually interested in the business, a person that has an idea of how to run the business, and a person that is willing to learn from the ones that are more experienced. Every contribution they make should contribute to the achievement of the vision of the business[Arn17]. (iv) Strong Governance The most successful family businesses are those that have governance that is ensured by strong boards where the family embers avoid the ‘principal agent’ problems. Such problems are avoided by the direct involvement by the member or members of the family involved in the governance of the company[Pra13]. In the case of our family business, the fact that it is still in the first generation is one of the reasons why the family is directly involved in the governance whereby my parents make most of the critical decisions. I am also occasionally directly involved in the operations of the family business. (v) Prepare the next generation for the business The ideal preparation is not a mission to solely finding the next CEO. Rather, it should strive to sensitize the entire next generation about the business, train them, and take into consideration those that are most interested and most qualified. Although the two do not always go hand in hand, automatic expectation of the next generation to join the family business outs undue pressure on them. Such are the causes of successors with low self-esteem who try to fit into the shoes of their parents which never works most of the time (the ‘successor curse’). The family business mostly fails when a person of the next generation involuntarily joins the family business to please the parents[NAP16]. In our case, my parents (How did your parents approach the succession plan and decide on you?) Our parents gave us the opportunity to follow our passions in our academics where they encouraged us to match our skills with the work we hope to do in the future. They never at any one time implied that the work referred to must be the family business. As a result, none of us ever felt pressured to join the family business. The also educated us about leadership and the challenges that come with the same. Unique family contributions to the family that are transferable to future generations Professional management of the business despite it being a family business contributes to the ten-year success of the business and can be transferred to the future generations, That includes accountability to the management, the adherence to the rules and required procedures unless where change and alteration is necessary. The unique family contributions that my family exhibits include the regular family meetings held to discuss individual progress including the family business and the requirement to take into consideration the contributions of the various members of the family. He sharing of ideas includes innovative ideas which the person running the business directly gives the final say. The maintenance of strong business performance and the commitment and capability of the family help to keep the business in the ownership of the family[Chr10]. Family relationships must be harmonious where the involvement of the rest of the family that does not directly run the business understands its level of involvement in the business. That eliminates the possibility of feuds and intrusion with the expectation of their ideas to be taken up without a question. Our parents always make it important for us to keep up with the progress of the family business and sometimes give suggestion of the way forward. Our parents also ensure that there is professional management of the wealth of the family that comes from the business. The cultivation of a culture of pure professionalism and the separation of management from ownership as exhibited by my parents in their business activities gives the employees a sense of security in their jobs. They also experience a sense of fairness where they are comfortable enough to invest their time knowing there are opportunities to grow. Most outside employees fear working in family businesses because of the fear of the glass ceiling that limits growth as a result of the power vested on the family in decision-making processes. The same applies for instances where the families make critical decisions informally which might not be the most productive methods. The extent to which riad Terra Bahia is founded on the Family Assets (i) Family Values Constructive and open communication As discussed in the requirement of frequent family meetings that involve closure among family members, openness is required whereby honesty is key. The same openness and honesty in communication is expected in the business where even the external employees are encouraged to do the same. Dishonesty is enough ground to lose ones job, something that makes even the external employees keen in their dealings and communication. Family cohesiveness and the separation of family from business affairs Family cohesiveness encourages that family watches out for each other and that very member of the family is treated fairly. However, professionalism is essential and family affairs are treated differently from business affairs. It is for that reason that my parents encourage the development of a business and management mentality while at work rather than an ownership mentality. That is because the ownership mentality is likely to result in unrequired assertiveness that is likely to result in a dictatorship kind of leadership. Relating positively despite conflicts Positively relating during business is a sign of professionalism which comes from the family values already in place. Our parents always insist that we find a way to conduct our daily chores around the house even though we might have fallen out, something that is more like a family tradition. When transferred to the business environment, that is an essential value where family feuds and disagreements shall not be mixed with business affairs. (ii) Family Heritage Our family prides the remembrance of our cultural roots, and closeness in the family. Taking the family heritage into consideration, the family business thrives on the incorporation of the components of the family heritage. Riad Terra Bahia is largely built on the family heritage of the Moroccan culture whereby the décor and some of the meals offered reflect the Moroccan culture. The hotel aims at reflecting the Moroccan culture without interfering with the comfort of our guests in the most relaxing way possible. It is for that reason that it is not exclusively focused on Moroccan cuisine and décor. That shows openness to diversity whilst holding on to the culture for marketability purposes. (iii) Family Identity Reputation Ours is a small family with a modest reputation as most. Besides the identification with the business and the identity of an honest family, it is just like any other Moroccan family. We have never been associated with negative family sagas and criminal activities which makes us a trustworthy family. That is a good identity and reputation upon which we can build. 4. A SWOT analysis of the riad Terra Bahia Strengths Strong governance Effective communication skills within the business and the family Family cohesiveness The incorporation of trending technology The maintenance of the family values on which the business is built and the family heritage Professional management of the business and the business assets Weaknesses The lack of a clearly outlined succession plan The mere fact that it is a family business The high likelihood of management conflicts because of family feuds among future generations. Opportunities Change to grow fast High chances of innovation because of the open communication culture and regard for all suggestions Threats Other corporate businesses in the same industry The lack of interest among family members to run the family business and instead venture into other passions Competition from older established businesses within the industry Future conflicts Likelihood of the collective action of selling off the business by future generations Globalization and the likelihood of the relocation of the members of the family 5. Recommendations Ownership of or partnership with external charitable foundations At the moment, the business only engages in small charitable activities and should engage more in such to promote the values of the business and its corporate social responsibility. In addition to ensuring that the business observes its CSR, such activities also promote family values where they realize that the business is not only there to serve them because there are other people or projects that are dependent on them such as children’s homes and orphanages. Ownership of the business The ownership refers to the holding structures of the business, the legal documents involved in business transactions and in relation to business properties, and the presence of well though holding structures. In the case of the family business, there is need for a clear formulation of an ownership structure which must involve the inheritance structure or requirements. The trading of shares It is essential to be clear in the trading of shares among family members to ensure that the business remains in the control of the family. Most of the most successful businesses have ensured that they hold the majority shares whereby some deliberately restrict the direct involvement of people other than the family members. Although private equity investors add value and capital to the company, the result is the dilution of the control by the family and such decisions need careful consideration. The same should be provided for through official and legal documents to ensure sustainability through future generations[Art03]. The current ownership of the business established the culture, mission, and vision of the business and since it is run on the above mentioned family assets, it preserves them at every cost[Kel16]. Although not in depth, it has reasonably mitigated the costs of the roadblocks that are likely to face the family business in the future. It is expected that the ownership of the business remains in the family as it currently is under the management of the founders who are also the first generation. The scope for improvement involves the coverage of the succession plan and the creation of a formal training plan for future generations. There is also need to formally record the requirements for the CEO who I selected such as reasonable prior experience in other firms before taking up any managerial roles in the business. All that must be planned wee in advance[Arn17]. References Lon17: , (Lonely Planet, 2017), Andur: , (Keyt, Entrepreneur; Bellet, 2015; Hoy, 2009), Wil15: , (Bellet, 2015), NAP16: , (NAPW Admin, 2016), Ste165: , (Cook, 2016), Kel16: , (Graves, 2016), Arn17: , (Boudewyn, 2017; Rebrovick, 2003), Pra13: , (Sharma, et al., 2013), NAP16: , (NAPW Admin, 2016; Sharma, et al., 2013; Cook, 2016), Chr10: , (Caspar, et al., 2010), Art03: , (Rebrovick, 2003), Arn17: , (Boudewyn, 2017), Read More