Strategy and Entrepreneurship in the family business economic system

-The relationship between founding entrepreneurs and the new-generation

entrepreneurial class:
● The process of generation transfer is:
❖ outlined vaguely (possible outlet for latent conflicts previously
kept under control);
❖ under the control of the founding entrepreneur (centralised
management/responsibility);
❖ source of pressure on the education of young successors
● From the point of view of the heir:
❖ claims for independence vs. the need for a guide;
❖ claims for a better definition of roles;
❖ attempts at more constant communication on an equal footing
with one’s parent;
❖ need for more detailed planning regarding the phases and
progress of one’s career;
❖ desire for greater responsibility, especially as regards relations
with stakeholders, “which is the most important part of the job
and which Dad is still doing”;
❖ demand for more support for professional growth, possibly from
outside figures.

- Communication flows between family members about family business and

family wealth: how formal?
- The 2 problems for the family company:

- Responsible communication as a tool for business continuity and

development:
- New families:
● Married couple (with children (male and female) /without children)
● Unmarried couple (with children (male and female) /without children)
● Separated/divorced Couple (with children (male and female) /without
children)
● Remarried couple ( with children from current or previous marriage /
with children from the previous marriage but not the current one / with
children from the current marriage but not the previous one / without
children)
● Nuclear Family "atypical" ( Monoparental (widow/er; separated;
unmarried) with children / Parental (siblings,
nieces/nephews/grandchildren) / Homosexual couples / Single (without
children))
- Managers and independent advisors for the “de-familiarization” or
“managment succession”:
● Am I ready to “de-familiarize” my business?:
➢ Give trust to an “external’ person
➢ Hand over and lose power
➢ Define new roles: Director Vs. Actor
● Manage change respecting the 3 elements of FBA (Family, Business Assets):
➢ Manager: new competences for new competitive scenarios
➢ Professionals: a new perspective into the management of
internal change (company organization, family disputes....)
● Pros and Cons:
➢ Bring new competences
➢ Create a sense of trust
➢ Manage problems from distance
➢ Acquires know-how
➢ Possible disagreement with the entrepreneur
➢ Represents the image of the company
● Typical Problem:
➢ Low capacity to listen
➢ Low capacity to delegate
➢ Distrust towards “the external”
➢ Eccessive presence and involvement

- Opinions about more structured and formal communication in family

businesses:

- The presence of rules, by specific topic:

- 4 tipi di comunicazione nel family business:
1. Tra familiari
2. Tra familiari, dipendenti, managers e professionalisti
3. Tra familiari ed organi societari
4. La comunicazione dei dati aziendali all’esterno da parte della famiglia
proprietaria
- Competition between company (BIT) asta
- No heir - external manager (case of armani)
- If there is not enough equity, extra financing is needed to be attracted
- To develop family business in fashion it is more important to find new equity
- Orange color - assets - family asking for some goods, poor founder because
you are a founder and family (corporate and tax problems, family members
want something)
- Family planning is done when family members want ot join working with family
together. Need to think about wishes
- Family business in Europe - ceo, board, managers (3 tables)
- Business in a family - poor, stage period 25-30 years, we need to put
everything to gain wealth, change the clothes; family in business it is more
business mentality
- Yellow - start-up project (sisters, mother and father and etc), amount of equity
is important
- Difference between general partnerships (more flexible) and limited
participation (incorporation act)
- In partnership the equity is not represented by any paper
- Stock corporation - equity is represented by paper (shares)
- Another company cannot be shareholder in a partnership
- Another company can be a shareholder in a corporation
- Leverage by out (type of merger)
- 6 elements of the wealth : tangible, intangible assets, inheritance, cash, real
estate, ( with them you can create the foundation, diversification)
- Fiat group family anegli; Daughter of cavalli
- Family, company and private assets - study of family business
 - Fringe benefits - are the additional benefits offered to an employee, above
the stated salary for the performance of a specific service. ... of the benefits
in their annual taxable income.
- 1 step Start up - first and second generation of family , in many cases Second
generation is not following fathers’ dream to entrepreneur
- 2step is important to create an organization

Maldives case:
1. Different governance models between Family wealth investors and worldwide brand
management
a) Family members position and discipline of communication
b) The control of the performance
2. To be partner of a top luxury resort: a dream or a nightmare?
a) Multifamily business culture
b) Active role and dividend in nature
c) Country risk
3. Environment, logistic and management topics
a) Tide waves, erosion, reef and vegetation
b) Transportation costs and weather
c) Owner’s entitlement, GM relation ad hr