Family Business EMG464 Stavros Drakou S00602280

C.A.D.S a family business

Introduction
C.A.D.S. is a holding company in Cyprus, with a diversified portfolio of companies in different market sectors including medical, aviation, tourism, real estate, publishing and other ventures. Including all the companies, CADS employs around 2750 people in 6 countries, with the headquarters being in Cyprus. In 2011, the consolidated companies generated a turnover of 548 Mio. The EBIT of which CADS received was approximately 19 Mio. During the 2008 crisis, CADS was hit mainly due to the diminishing values of properties and the heavy drop in tourism. It has since found stability and found more opportunities to expand, due to the bad economic climate of Greece.

History
My father Andreas started C.A.D.S., and the name is actually the initials of each family member. The company was created before my younger brother was born, but luckily enough his initial is A, so as a family joke we got rid of my father from the company name. My mother does not have any managerial role in the company, but I have an older sister (2 years difference) and a younger brother who I am 9 years older. The main business was the ownership of the big travel company Libra Holidays and then moved on to hotel ownership and management through its subsidiary Cyprotels. C.A.D.S owns 80% of Cyprotels and is the main business of the company but not the only one. There are other companies that are owned by C.A.D.S like Pap Medical (a medical trading company, of which my mothers sister is a manager), TTG MENA (a tourism industry magazine), M.E.L.T.S (a luxury trade show) and there are other investments of high potential, which do not require management as it is only part owned. Those investments include big complexes in Bulgaria and Belarus, but after the crises of 2008 and the property market being highly affected from it, only a part of them have been sold and the rest are just dormant until the market picks up. It used to own 2 airline companies as well, but one was successfully sold, but unfortunately there was an accident with the other one and was decided it would be better to close it completely.

Facts and Figures

80%Ownership of Cyprotels 70% Ownership of Pap Medical 40% Ownership of Sunkiss Holidays 100% Ownership of UDrive Two car rental 100% Ownership of Blue Residence (50 villas) 100% Ownership of TTG MENA, MENA Luxury and TTG Balkans 10% Ownership of Hartmann Capital 60% Ownership of Sensible Staffing 16.8% Ownership of the Limassol Marina Project Prior to the 2008 crisis CADS invested mostly in the property ventures, but since then has heavily relied on the hotel business to earn income Cyprotels: o Four 100% owned hotels in Cyprus o Two hotels on lease in Cyprus o One 100% owned hotel in Greece o Three hotels on lease in Greece

Issues involving C.A.D.S

As mentioned earlier, I have an older sister who has already finished a BSc and MSc degree and is recently engaged, but has no desire at the moment to be involved in any of the companys activities. Her fiance just started unofficially working for the company, until a role is assigned to him. His role will probably be in the investment part of the company (i.e. deciding on financial products to invest in), future projects to be invested in (i.e. property opportunities, new hotel opportunities). He used to be a financial analyst for a prestigious bank in the U.K., so he will primarily do all the financial calculations when opportunities arise. My sister is adamant about not working for the hotel business, but shows some interest in the M.E.L.T.S. company, so maybe one day she will decide to work with the management of that team. My father keeps insisting on her working in the hotel company, but al his efforts have been unsuccessful until now. My younger brother is still 15 years old and has not shown any real interest in what degree he wants to study or where he would like to work, since hes still young, so the doors are still open to him. He will definitely work in the family business, but the future of the

companies portfolio is still unknown, so a definite role has not been decided for him yet. I have been working with my father during summers since I was 15 years old and learned quite a bit about the business as a whole. I spent quite some time training in all positions in hotels, I joined him in various meetings regarding all businesses C.A.D.S deals with and I would very much-and my father agrees-to take over the hotel side of the business slowly. The main problem that will be faces during succession is the trust of the other staff that I am the most suitable person to take over. Also the fact that the staff has been in the company for so long and are of a much older age and accustomed to the way my father has been dealing with business might cause issues. I would like to implement a more technological approach in all communications and record keeping, but it did not work in the past and might cause reasons for the staff doubting my fathers position and me not getting the respect I should have at the position I will have. I have a good relationship with the current CFO and COO, but I was always regarded as the bosss kid to them and only in the past 2 years when I had a more active role in the sales and marketing team they started to realize they might have less control of the company. When I took decisions in regards to social media, or discounts given for special weekends, they opposed them and said I was inexperienced and it was risky. My father usually had to say the final word, but still some tension was there. At the moment, my mothers sister works in Pap Medical as a manager with 10% ownership and never had any issues about control, but she has 2 children who she wants to join the company as well. Her husband is the main architect for Cyprotels and is responsible for all renovations and refurbishments. The eldest child of theirs is in the final stages of completing her architecture degree and the younger one is starting his studied in September. In the past there have been major issues in their family, due to the lack of communication between the father and son and also the father is very stubborn and does not want to accept other peoples opinions. This has escalated so much that my father was thinking of firing him, because he did not always follow my fathers decisions, but does not want to do so in order to keep some sort of peace in the family. I have a very good relationship with the kids of my aunt, but have realized how hard it is working with family, especially when they do not appreciate the others. So when one day I take over it will be a very hard decision to keep my uncle, or even hire my cousin, since work issues will always influence the family, but if I dont it will create family issues and potentially distance the two families.

Theoretical models
First of all, I believe the system of which the company will have when reaching the succession point will be of a blurred boundaries nature. As it stands the nature of the relationship is more of a Management-First Business since the talks on the dinner table surround the business and coming opportunities, but also what the roles might be for me when I take over. Usually the talks include my sister and what role she might have one day, which usually causes her to get upset and leave quite a bit of tension on the table. Stewardship theory very much applies to this case, as my father thinks of the company of an extension of himself and his network. However sick or busy he is, he would never leave the responsibility of managing the company to anyone else. Therefore the succession period will be very hard and complicated until he accepts that he has to step down and accept the change that is bound to happen. Even though he keeps asking for help on day-to-day operations and decisions and says he can not wait for his children to get involved in the company, it seems he will have a very hard time losing control and having a 3rd person view of the company. Succession How could succession be implemented, while keeping windows of opportunities open for the rest of the family members? How can Stavros gain the respect of the elder managers, or show he deserves to be in the position he will be? Family issues How can a decision be made about the uncle and cousin, that will not affect the family being as close as it is? Strategies for the future Since the economic crisis, the company changed the direction of operations from property orientated to more hotel orientated. Is it wise to count on one major company of the group to bring in the majority of the revenue or should a more diversified portfolio approach be more advisable and stop the rapid expansion of the hotel side?

Bibliography
Poza, Ernesto J. Family Business. Mason: South-Western, 2004.
Jay B. Barney and William S. Hesterly (2008). Strategic Management and Competitive Advantages. Pearson Prentice Hall. p. 273