family business - Economia - Università degli Studi di Roma Tor

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Università degli studi di Roma “Tor Vergata”
Master of Science in Finance and Banking
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FAMILY BUSINESS
DRAFT AT 2013, March 12
(Prof. Luca Gnan)
TEACHING STAFF RESPONSIBLE FOR THE COURSE:
Prof. Luca Gnan
Email: [email protected]
Availability: Contact via email
PRE-REQUISITES FOR THE COURSE:
None
LEARNING OBJECTIVES
Family businesses are characterized by distinct core competencies that can result in
unique competitive advantages. They take a long run view of the business—across
generations, rather than publicly traded quarterly reports. Their capital can be very
patient, owners will sacrifice their salaries in order to make payroll, and they are an
integral part of their communities, unlike publicly traded counterparts that might
abandon a community at the blink of a budget. They can engender a great deal of
loyalty on the part of employees, and the existence of family may reduce agency
problems.
Family Businesses also face challenges that threaten their continuity. The challenges
are primarily the result of issues presented by the interaction of family, management,
and ownership—particularly where the family wishes to perpetuate its influence
and/or control from generation to generation. Family firms seem to be as agile in one
generation as they are fragile across generations.
Family businesses start with an owner-managed first generation (usually an
entrepreneur). The next generation—G2—is the sibling generation, and G3 is the
cousin era. The probability of passing the company to the next generation diminishes
significantly, with fewer than half making it to G2 and only about less than 15% making
it to G3. So, despite the benefits of family, there can be some significant issues.
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Università degli studi di Roma “Tor Vergata”
Master of Science in Finance and Banking
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The course explores and analyzes family business continuity challenges and best
management practices. The focus of this course is on pragmatic, action-oriented,
management, governance, finance, and family/business leadership skills.
Attention is devoted to evaluating family firms and its growth options to provide a
roadmap for analyzing how family ownership, control, and management affect
performances and how more value can be created and ensured through generations.
The course is divided into 3 different sections:



Section I: original features, peculiarities and governance of family firms
Section II: managerial dynamics and family firms’ financial evaluation
Section III: family office services
The course addresses the governance and the finance of established family businesses.
It examines succession, values, life cycles, marketing strategies, conflict resolution,
communications, legal, and financial aspects, estate planning, management,
philanthropy and other topics that uniquely touch family business governance and
finance. It will convey the characteristics that differentiate family businesses from
other businesses.
Upon completion of this course, students should understand:
1. the unique assets and vulnerabilities of family enterprises.
2. the role of the CEO in governance, management, and the transfer of power
3. the relationship between the role of the board, the family council, and top
management in providing effective governance for family business continuity
4. key family dynamics
and be able to:
1. Identify the various stakeholders and the role of trust among family members
and their impact on succession and continuity
2. Discuss the developmental needs and challenges of next generation leaders
3. Analyze the effect of estate taxes on ownership transfer across generations of
family business owners and the implications of ownership structures on the
competitive advantages of family businesses
4. Explain the importance of strategic planning to family business continuity
5. Explore the critical role and challenges that non-family managers play in familyowned operations
6. Analyze the impact of family culture, family communication, family conflict, and
family unity and explore their interaction effects on the family business
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Università degli studi di Roma “Tor Vergata”
Master of Science in Finance and Banking
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TEACHING METHODS
The adopted teaching method is a Participant-Centered Learning one, that is highly
interactive. Each module maybe composed of a frontal lesson, which is a theoretical
foundation brick, immediately followed by class open discussion of one or more real
cases, and a full debrief with key take-away points. Additional tools will be profitably
used, such as role-playing, testimonials, etc.
MAIN REFERENCES
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Poza, E. J. Family Business, First Edition. Mason, OH: Thomson South-Western,
2004.
L. Gnan, D. Montemerlo, (2006) “Family-firm relationship in Italian SMEs:
ownership and governance issues in a double-fold theoretical perspective”, in P. Z.
Poutziouris, K. X. Smyrnios e S. B. Klein, Handbook of research on family business,
Edward Elgar Publishing.
de Pedys V., Antonelli A. “ Family office for family business” Oxford management
Publishing, 2008, ISBN 978-1-906728-01-4, (available at the following link
http://www.oxmp.co.uk/item_det.php?id=94 )
P. Poutziouris, (2001) ‘Understanding family firms’, in (Ed) Adam Jolly, Institute of
Directors-The Growing Business Handbook, London: Kogan Page Chapter 6.3; pp.
th
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9-15 , 4 edition, ISBN 07494 3600 X.
R. Levin, V. Travis “Small company finance: what the books don’t say” in Harvard
Business Review no. 87608, nov-dec 1987.
Villalonga B. and Amit R. (2005) “How do family ownership, control and
management affect firm value”, Journal of financial economics 80 (2006), 385-417
(available on line at www.sciencedirect.com and www.elsevier.com/locate/jfec
As far as the textbooks are concerned , students will need to prepare the following
sections:
- Poza, E. J. Family Business, Second Edition. Mason, OH: Thomson South-Western,
2006 :
Chapter 8 pp. 137-152 (Family Business Governance)
Chapter 9 pp. 153-167 (Family Culture)
Chapter 11 pp. 271-290 (Family meetings, councils and family offices)
- L. Gnan, D. Montemerlo (2006): all
- P.Poutziouris (2001) : all
- B. Villalonga, R. Amit (2005) : sections 1,2,3,5
- R. Levin, V. Travis (1987) : all
During the course, 9 cases will be discussed:
(the following 2 cases from the textbook Poza, E. J. Family Business, Second Edition.
Mason, OH: Thomson South-Western, 2006 and other sources):
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Università degli studi di Roma “Tor Vergata”
Master of Science in Finance and Banking
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1. The Vega Food Company
2. The Grupo Ferrè Rangel
(the following 6 cases from Harvard Business School Publishing. You need to register to
download
the
cases
at
the
following
link:
https://hbr.org/registration?conversationld=1011637, then download each individual
case at the indicated link)
3. “R & R” : http://hbr.org/product/r-r/an386019-PDF-ENG?Ntt=mossi
4. “Anderson Steel service inc” : http://hbr.org/product/anderson-steel-serviceinc/an/899011-PDF-ENG?Ntt=davis%2520%2520anderson
5. “Matthew A. Hunter” : http://hbr.org/product/matthew-a-hunter/an/806203-PDFENG?Ntt=davis%2520%2520malhotra
6. “Khalil Abdo Group”: http://hbr.org/product/khalil-abdo-group/an/898011-PDFENG?Ntt=kholil
7. “Butler Lumber company” : http://hbr.org/product/butler-lumber-co/an/292013PDF-ENG?Ntt=butler%2520lumber
8. “Pitcairn family Heritage fund”: http://hbr.org/product/pitcairn-family-heritage-rfund/an/208073-PDF-ENG?Ntt=villalonga&Nao=10
and
9. “Kff or the taramosalada kings” in “The growing business handbook” (cited above)
chapter 6.1, pp 107-112; or in P. Poutziouris , D. Pistrui (editors) “Family business
research in the 3rd millennium:building bridges between theory and practice” FFI
publications, Oct 2001
CASE DISCUSSIONS
Students are expected to be fully engaged in the entire learning process. This means
that students need to prepare the assigned readings of the cases prior to each class
and come to class prepared to participate in group work and/or discussions to enhance
the learning of the individual and the class. Students will find the relative assignment
for each case on the website. Please read the questions carefully before the lesson.
The objective is to involve all the class members in the discussion. The cases are
designed to integrate the concepts from the case into the context of the course.
With case discussions, each student will develop:
1. The ability to set the parameters for the problem (key concepts from the case).
2. Ample knowledge regarding the subject of the case (understanding of material,
good response to the observations of others).
3. The ability to connect the case to other course concepts.
4. The ability to involve others in the discussion.
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Università degli studi di Roma “Tor Vergata”
Master of Science in Finance and Banking
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In order to effectively discuss the cases, students need to be:
 prepared with facts and specific quotes from the case.
 prepared to comment, ask questions, or make observations about the case.
During the discussion, students need to:
 take a position on a question or a point.
 ask questions to clarify a point.
 help keep the discussion moving and on track.
 help draw others into the discussion.
 integrate theories and content from other cases.
During the discussion, students should not:
 come unprepared and show your lack of knowledge.
 monopolizes the discussion.
 make irrelevant comments.
 be insensitive to other’s desire to speak or share opinions.
OTHER LEARNING SOURCES
Slides and other material will be available on the course website.
ATTENDANCE
Because of the concentrated nature of the MScBA programme, attendance in class is
very important. Students who miss more than 6 hours (including arriving late or
leaving early) will be required to prepare ALL the chapters of the textbooks and other
materials for the exam.
NOTE: Attendance for the first class session is mandatory as important information
regarding the course and the instructors’ expectations are given. If you know in
advance that you will be absent for one session, please contact your instructor to
ensure that absence from a particular session is acceptable.
EXAM
The exam is made up of two parts: a written and an oral exam which will be held on
the same day.
I° - Written exam) You may be given questions to answer regarding a case study. As
you respond to the questions, please use specific content and theories (use names to
identify theories and models) as the basis of your analysis. You will not receive credit
for your personal opinions unless backed by theory, lecture, and/or text material.
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Università degli studi di Roma “Tor Vergata”
Master of Science in Finance and Banking
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Moreover, describe how the content/theory can be applied to the situation. Your
answers will be evaluated on both quantity and quality. Answers that are more
detailed and demonstrate a higher level of understanding and analysis will receive
more points.
II° - Oral exam) You may be asked to discuss your written answers to the case
questions and to focus on some specific theoretical issues.
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