1) please answer the question below from the analysis document attached, (to know how to answer the question… read the introduction underneath the question) — write one paragraph only, minimum 5 to 7 sentences only —
question: Use one or more of the different conceptual frameworks covered in Module 3 for structuring this analysis.
introduction: Family businesses represent the primary engine of economic growth and job and wealth creation; they are also unique in their challenges and opportunities. Without leadership and vision from members of two generations and the use of key family, management, and governance practices, the future is bleak for FCBs. The blurring of boundaries among family membership, family management, and family ownership subjects family businesses to the potential for confusion, slow decision-making, or even corporate paralysis. An inability to adapt to changes in the marketplace or govern the relationship between the family and the business will ultimately undermine the business. As a result, a family businesses that lack multi-generational leadership and vision will not be in a position to retain the competitive advantages that made it successful in a previous (often more entrepreneurial) generation.
module 3, we will explore the following theoretical perspectives that dominate the study of family business:
- In the systems theory approach, the family enterprise is modeled as comprising three overlapping, interacting, and interdependent subsystems of family, management, and ownership. The joint optimization of these subsystems is discussed as the opportunity for significant adaptive capacity and competitive advantage by the firm.
- Agency theory argues that the owner-agent overlap in a family company presents some cost reduction opportunities, but also highlights some agency costs that are unique to family firms; for example, CEO entrenchment, inability to manage conflict, and the potential for risk-aversive and self-dealing behaviors. Management and governance practices that reduce the likelihood of incurring these agency costs are discussed.
- Resource-based theory holds that competitive advantages derive from core competencies that are the result of the unique overlap between owners and managers, between family and business. Speed to market, long-term investment horizons, product differentiation through high-quality/service strategies, and reduced administrative costs are some of the often-seen advantages. They are the result of concentrated ownership, family unity, shareholder loyalty and patient capital, company size, strategies that focus on proprietary products or niche markets, and the transfer of skills and knowledge across generations. The unique attributes and core competencies of family enterprises enable them to turn these resources into competitive advantages.
- Stewardship theory argues that founding family members view the firm as an extension of themselves and therefore view the continuing health of the enterprise as connected with their own personal well-being. Its continuity is often deemed a collective responsibility of family members.
It’s important to not place too much emphasis on categorizing / oversimplifying something as complex as a family enterprise. FCBs are constantly in motion, and distinctions between stages and boundaries can — and do — blur. There are many “hybrid” conditions — such as when ownership is shared across generations. The goal is not reduce FCBs to rigidly-defined types, because we then lose appreciation for the special qualities that distinguish them from non-family firms.
2) Write a recommendation for family only not the business: Specific suggestions for addressing the problems/issues identified in the analysis document (and/or for addressing any new problems/issues that have emerged in the analysis document). — write one paragraph only, minimum 5 to 7 sentences only —
3) after you answer the questions above, please write 3 to 5 key points for each question in a separate word document.
4) make 1 slide PowerPoint for each of the questions above. total of 2 slides