MNE3704

FAMILY BUSINESS MANAGEMENT

Ms MS RADEBE
Department of Applied Management
University of South africa
Pretoria

university
of south africa
1© 2023 University of South Africa

2All rights reserved

3Printed and published by:

4The University of South Africa
5Muckleneuk, Pretoria

6MNE3704/1/2025

710051562

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CONTENTS Page

PREFACE vii

Learning unit 1: The nature, importance, and uniqueness of family business 1

1.1 What constitutes a family business? 3
1.2 Succession and continuity (the three-generation rule) 4
1.3 Building family businesses that last 5
1.4 The systems theory perspective 6
1.5 The agency theory perspective 9
1.6 The strategic perspective, the resource-based view and competitive
advantage 10
1.7 The stewardship perspective 11
1.8 Ethics, social responsibility and the family business 11
1.9 Summary 13

Learning unit 2: The family dynamic challenge 15

2.1 Introduction to family dynamics 16
2.2 The stories of two very different family cultures 17
2.3 Zero-sum dynamics and family culture 18
2.4 The family systems perspective 19
2.5 The role of genograms and family messages in helping us
understand the family system 19
2.6 Family emotional intelligence 20
2.7 How families add value to the family business interaction factor 20
2.8 The benefits of family meetings 21
2.9 Family unity and continuity 22
2.10 Planning and policy making 22
2.11 Conflict management. 23
2.12 Summary 24

Learning unit 3: Ownership of an enterprise 25

3.1 Introduction 26
3.2 Shareholder priorities 26
3.3 Responsibilities of shareholders to the company 27
3.4 Effective governance of the shareholder-firm relationship 29
3.5 The role of the board 30
3.6 Information, communication, and education: shareholders 31
3.7 Ownership structure: design and execution 32

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3.8 Summary 33

Learning unit 4: The governance and professionalisation challenge 34

4.1 Introduction 35
4.2 What is family business governance? 36
4.3 Governance for family businesses 37
4.4 Professionalisation challenge and family governance 37
4.5 Blurred systems boundaries 38
4.6 The family council’s contribution to family governance 39
4.7 Family governance: managing the challenges of succession 40
4.8 Summary 41

Learning unit 5: Diagnosing the family business and creating conditions for the
continued spirit of enterprise 42
5.1 Introduction 43
5.2 Outperformance and sustainability in family businesses 43
5.3 Enterprise sustainability: time to call for unity 45
5.4 The twelve elements of strategic fit: the 12s model 46
5.5 Continuing the spirit of enterprise: lessons from centennial
family companies 47
5.6 Role of the board, family council, shareholders and non-family
management in ensuring continuity 48
5.7 Summary 48

Learning unit 6: Transfer of power 50

6.1 Introduction 51
6.2 The ceo as architect of succession and continuity 52
6.3 The ceo exit style and the transfer of power 52
6.4 The unique roles of the ceo spouse 53
6.5 Summary 54

Learning unit 7: G
 overnance of the family business: boards of directors and shareholder
meetings 56
7.1 Introduction 57
7.2 The board of directors 57
7.3 Recruitment and selection 59
7.4 Governance of the business family: family meetings, councils, and
family offices 60
7.5 The family council 61
7.6 Summary 62

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Learning unit 8: Strategic planning and transgenerational entrepreneurship 64
8.1 Introduction 66
8.2 Strategic planning 101 and the family business 66
8.3 Zero-sum family dynamic and strategic planning 67
8.4 Creating value with unique business models 68
8.5 The life cycle of the firm, the family, and the need for parallel
strategic planning 69
8.5.1 Stages of business development 69
8.6 Strategic regeneration: transgenerational 70
8.7 Unique vision of family-controlled companies 71
8.8 Discussion forum activity 72
8.9 Summary 72

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 INTRODUCTION
15 Dear Student

We have pleasure in welcoming you to this module on Family Business Management

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(MNE3704) and trust that you will find it a rewarding and interesting area of study.

Family Business Management is becoming increasingly important in South Africa as well

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as in the international community, as more families seek to become independent and

self-sufficient. Although Family Business Management is not a new subject, it has become
more relevant as the process of business transformation continues in the South African
marketplace. In this module we will focus on the factors that enable a family business to
remain successful.

We shall do our best to make your study of this module successful. You will be well on
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your way.

1 PURPOSE OF THE MODULE

The purpose of the learning is to empower you, the learner, with the competencies
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(knowledge, skills, values and attitudes) necessary to optimally utilise your family-owned
or family-controlled business as a way to economic wealth and growth. As a learner, you
will investigate the uniqueness of the relationship between the family and its business.
You will discover the competencies necessary for sound managerial, governance and
family practices. Your newly acquired competencies should increase the likelihood that
your family-owned or family-controlled organisation will continue from generation to
generation, contributing to job creation, personal fulfilment and economic wealth. The
module is delivered via myUnisa, the Internet, peer group interaction, and community
engagement in some of the activities. Your Lecturers will interact with you on myUnisa
and via email.

2 THIS MODULE IS AN UNDERGRADUATE STUDY

Undergraduate degrees in the College of Economic and Management Sciences provide
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graduates with a wide range of knowledge and skills that will equip them to work in
the business community. Graduates who wish to major or specialise in Family Business,
have to learn about all the activities and processes that are required to be a successful
and sustainable family-owned business. This module will introduce you to matters per-
taining to theories that lay foundation to the family business, while introducing you to
the importance of board of directors as well as family councils. This module builds on
a second-year module Corporate Entrepreneurship (MNE3702). While MNE3702 builds
on the heart of entrepreneurial activity and dimensions, MNE3704 will show you the
importance of building family businesses that last based on the ability of the owner to
do a proper transfer. You will also be directed towards gaining insight on the succession
plan and different types of CEOs found in this business. Also, interesting to note that this
module will open up broader opportunities on strategic management of such businesses
through understanding the owner-manager roles. This module provides this interesting

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yet valuable and well sought-after knowledge. This module is one of the five compulsory
modules for students who intend to major in Entrepreneurship.

Moreover, the module will benefit those who are working in the field of management
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(construction), web development, management analysts, appraisers, or assessors of real

estate as well as imports and exports.

3 STRUCTURE OF THE MODULE

For you to succeed in this module, you are advised to start studying early in the semester
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and to work on your assignments at your soonest convenient time. In this module we
promote continuous learning and we want to urge you to make an effort in studying the
study guide together with the prescribed book for the module (the prescribed book will
assist you to study more independently, retain more and attain better outcomes). It will
assist you to study anytime and anywhere. Now and then, you will be directed to the
links that will enrich your knowledge as well as case scenarios that will seek to bridge
the theory and practice. Make use of the study programme, activities, YouTube, videos,
articles, self-assessments and Discussion Forum activities in the study guide and do the
assessments when it is required of you. Read the sections in the prescribed book as in-
dicated in the study guide.

4 MODULE OUTLINE
23 This section presents the outline of the module .

FAMILY BUSI- Learning unit 1: THE NATURE, IMPORTANCE, AND UNIQUE-

NESS MAN- NESS OF FAMILY BUSINESS

Learning unit 2: THE FAMILY DYNAMIC CHALLENGE
AGEMENT

Learning unit 3: OWNERSHIP OF AN ENTERPRISE

Learning unit 4: GOVERNANCE AND PROFESSIONALIZATION

CHALLENGE
Learning unit 5: DIAGNOSING THE FAMILY BUSINESS AND

CREATING CONDITIONS FOR THE CONTINUED SPIRIT OF

ENTERPRISE
Learning unit 6: TRANSFER OF POWER
Learning unit 7: GOVERNANCE OF THE FAMILY BUSINESS:

BOARDS OF DIRECTORS AND SHAREHOLDER MEETINGS

Learning unit 8: STRATEGIC PLANNING AND TRANSGENERA-

TIONAL ENTREPRENEURSHIP

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5 BLENDED LEARNING
24 As a Unisa student, you have to access the myUnisa online module site, where you will
be able to access various online resources to help you in your studies. It is important that
you allocate time to access this online site, which has been designed to give you ample
opportunity to communicate with your lecturer, e-tutor and your fellow students. This is
an important communication platform; you will be required to maintain your visibility as
information will be shared here. The e-learning environment will assist you in collabora-
tive learning, sharing of information, and doing the assessments, and will consequently
enrich your learning experience.

6 PRESCRIBED BOOK
25 The following book is the prescribed book for this module:

Poza, E.J. and Daugherty, M.S. 2018. Family Business. 5th Edition. Ohio: South-Western
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Cengage Learning. ISBN 9780357039212

7 MODULE SUMMARY
28 We wish you all the best in studying the module. Please remember to do the following:

y Study all the learning units in the study guide.

y Study all the sections in the prescribed book as indicated in the study guide.
y Complete all the self-assessment questions.
y Do the assessments in Tutorial Letter 101 as they are linked to the study guide.
y Become involved in the group Discussion Forums (as they count for your assignment
marks).
y Read the articles included in the learning units of the study guide and answer the
questions relating to the articles.
y Watch the YouTube videos included in the learning units of the study guide and answer
the questions relating to the YouTube videos.

29 Kind regards,

30 Lecturer for Family Business Management (MNE3704) module.

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