FAMILY BUSINESS MANAGEMENT-AN

INTRODUCTION
 High percentage of share capital owned by a family either jointly or
individually

 Family members reign utmost decision making process

 Expression of Intention to maintain family involvement

 A number of generations of the same family involved in

management or ownership

 Management or ownership control by direct descendents of the

founders
 In a family enterprise, there is a unique source of
competitive advantage derived from the interaction of
the family, management and ownership

 Family unity is highly required to succeed as FOB

 Family businesses are ubiquitous

 70 per cent of USA Inc are family owned and controlled

 1/3rd of the Fortune 500 companies are family controlled

 About 60 per cent of publically traded firms remain under family

influence

 Family businesses are small, but USA FOBs are operating in France,
Germany, Italy, Spain, Canada and Japan

 In Asia and Middle East 95 per cent businesses are FOBs

 Family business is an enterprise in which two or more members own 15

per cent or more of the shares, family members employed in the business
and the family intends to retain control of the firm in the future
 KONGO GUMI is considered to be the oldest
surviving family business in the world
 It is in the construction business and is based
out of Osaka in Japan started business in 578
AD
 The family migrated from Korea to Japan
more than 1400 years ago
 They built Osaka Castle in the 16th century
Advantages of FOBs
 There is a long term orientation as the continuity of
the firm is of great concern to the older generation
 The family culture is a source of great pride for family
employees alike
 In a Family firm Less bureaucracy
 Family firm shows greater willingness at bad time by
ploughing back profits
 It is structured to impart training to younger
members of the family
Disadvantages of FOBs
 Lack of role clarity among the members of the
family leads to confusion
 The style of functioning may be autocratic or
patriarchal
 The next generation may not be worthy of their
position and role in the organization
 There can be very strenuous succession battles
 Some family members with vested interest they
drain the funds from the business
Family Business in India
 India has a rich and glorious history of family owned enterprises

 From ancient times business in India has been concentrated notably the Jains
and Marwadis in the north- Agrawals or Marwadis- Goels, Jindals, Singhal,
Jhunjhunwala, Kedias and Gindodiya

 After the advent of the British some other communities ware added Parses,
Chettiyars etc.

 Predominance of business communities also led to predominance of business

families

 The Indian businessmen lived in interlinked social structures and the primary
entity was extended Joint Family
 Most of the business in India were related to trading much of the
manufacturing continued to be done by some craftsmen

 Cawasji Davar set up the first cotton mill in Bombay in 1854

followed by Jamshedji Tata

 The spread of European thoughts and English education had its

impact on Indian business too

 The Marwadi community established Calcutta as a center for

Commerce in the east such as Birlas, Bangurs, Khaitans and
Goenkas did business from Calcutta