Amrut Mody School of Management

Monsoon Semester 2022 -2023

TOPIC: Case Analysis

(Submitted in Partial Fulfilment of the requirements of the course)

Course: EFB 511 Family business Management and policies

Submitted to: Prof. Abhijit Kothari

Submitted by:
Aayushi Surana
AU1910201

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1. What issues, in this case, are unique to Family Businesses? Provide a list of five such issues.
Please explain why you think these issues are unique to Family businesses versus non-Family
Businesses.

A) Reluctance to hire outside the family

One issue is that family business owners are hesitant to hire qualified management from outside
the family.
As Vinod put it:
“We are blessed with a large family. And each member is keen on joining the business. When
we have so many capable people within the family, why hire outsiders? It is not as if we do not
trust outsiders. But what will our family members do if we hire non-family members?”
This is a unique family business problem because, when it grows to a level where the family
members are unable to manage the increased difficulty, it will be required to bring in outside
experts in fields like accounting, finance, or human resources. If this is the situation, expanding
the business will be challenging. A non-family firm, on the other hand, always employs people
and gets all the outside assistance they require, which promotes their expansion. Additionally, a
non-family member's decision is not influenced by bias or emotion.

B) Offering fair treatment to the children working in the business versus those who
do not

Fair treatment of children employed by the company and those who opted to take a different
career route is a problem. Often, one parent wishes to split all assets evenly, irrespective of the
workplace of the children. As a child or children’s split profits with people who have not
contributed, resentment is unavoidable. In this case if Dhiraj’s son does not work and he gets a
part of the profit it might be one of the reasons for the dispute.
Whereas in a non-family business the position and the salary are clearly defined hence no
dispute.

C) No Exit Strategy
There is no exit plan if Dhiraj's son or any member of the third generation decides they do not
want to work for the family business. Additionally, Jeevan Lal makes all the significant
decisions, so if he retires or passes away, there is no successor and no discussion about who
would make all the significant decisions, or who will take over the business.
In contrast, the entire process of decision-making and exit planning is well done in non-family
businesses.

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D) Lack of external view or vision.
Even while they may not always share the same views, in a family business, family
members frequently share a common background and set of experiences, which can result
in a shared understanding of the company. To succeed, businesses must have outside
perspectives of both their own operations and those of their rivals.
Whereas a non-family business has external views and has knowledge of their rivals.

E) Training.
When the next generation was integrated into the business, there was no special training
programme in place. Instead of fostering the idea that they must join the business, the
family should make it clear that they can only be a part of it if they are deserving of it.
The training programme should provide specific information relating to the goals,
expectations, and obligations of the position, and then he should be made a part of the
business at a higher position.
Just like in a non-family business the deserving one stays.

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2. What problems do you think the Mehta Group of Companies can face in the future? List three
important problems.

A) The family members do not have a mindset of hiring people from outside and as
mentioned all the finances are done by Jeevan Lal himself hence his sons are not
exceptionally good at it and do not have that skill developed yet. This can be one of the
major problems and hindrances in their growth.

B) Business decisions appeared to have been made more for the benefit of family members
than simply for the benefit of the company.
As Vishal though
Jeevan Lal’s comfort with each business had also been a deciding factor.

C) The family members are not open to innovative ideas and or technologies, which in one
or the other way means that they are not open to anyone's opinion in their family or
outside their family. And being rigid in terms of decisions and being traditional will not
help them in the future.