Family Business Individual Case Study
Phases 1-3
Lecturer : Ed Gonsalves
Barigou Asma
Ajarif Wholesale Food Company
'The data and internal information about the company remain confidential'
History
In 1945, my grandfather and his brother started to work within a wholesale company
in Casablanca to earn money. In 1952, they decided to start their own business and
open their own store. They gathered all the money they saved and dedicated it to
buying a store. They started by finding the right location, since this was the first step
into making this business a reality.
At the time, the competition in Casablanca was fierce and the real estate market was
in a boom. The only opening for them was to move out of Morocco's economic
capital. Giving the situation, they decided to relocate in Marrakech.
The store opened in 1953, starting by selling food products to direct consumers. In
1956, they started to deliver wholesale grocery and dry goods such as pasta, salt,
sugar, chips, beans, nuts, etc. to some governmental institutions. Among the clients
were the Royal military forces, hospitals and public schools.
The company started to generate great revenues over the years and in 1985 my
grandfather's brother decided to sell his shares and move to another city because he
had a great opportunity to start a business of his own. From that point on, my dad
and uncle joined the business.
The primary responsibility of my father and uncle was to customize order fulfillment
to restaurants. Then, they were filing different roles within the company; selling
goods, unloading trucks and delivering orders.
The business needed a refreshing and positive attitude and that is what the young
generation had to offer. My dad and uncle were constantly changing and expanding
the business to keep up with wholesale business trends at that time. They allowed
the company to have an edge and decided to expand by adding a frozen goods line
that included all kinds of meats, dairy line and canned goods. Their goal was to get a
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brand image in the wholesale market by providing a unique service and by
increasing their customer database. As the company was growing, they hired more
and more employees including order takers, truck drivers and salesmen. In 2001, my
grandfather decided to retire and his shares to my father and uncle. They were ready
to take over the family business.
The current situation
Nowadays, the company is well known in Marrakech, offering a wide range of
products from the industry’s leading manufacturers. It distributes the best in grocery,
dry goods, canned goods, dairy and frozen goods to public institutions (hospitals,
schools, royal army forces) and restaurants.
My father is the president of the company since he was always the one achieving
great results and enhancing the company's revenues. As to my uncle, he is leading
the sales, financial and accounting activities. From few orders, the company has now
many clients and 20 employees performing in different activities.
My father has the vision of expanding the business through export since he has
many great offers. The wives were never involved in the business part of the
company, but they got little percentage of shares.
My uncle has 3 children and my dad two; my brother and I. Up to now, no one from
the third generation is involved within the family business. My cousin Amine is
working in a multinational company as a marketing manager. My cousin Sana just
opened her pharmacy six months ago with the help of her father and Hasna is still
studying in the primary school. My brother is a third year student within Brooks
University in Oxford, he is studying business administration and I'm doing my master
in Regent's college majoring in International Marketing.
My dad want me to join the business after my graduation but I have other interests,
however my little brother is willing to work as a part of our family's business company
since no other family member is involved.
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The Three-Circle Model
The three-circle model includes family, business and ownership. Each circle
includes many stages of the development of the business and each individual
involved in the company. (Gersik et al). For that reason, it needs to determine the
various stages of the development for business, employers and family members
who are involved within the family owned company. It's useful model that helps
understand deeply the dynamics at work of family business companies. (Gersik
et al). (Figure 1) The ability of family business to transfer the business to the
upcoming generation depends on how the owners are able to carry on
their
family component. (KPMG)
This model will allow viewing the situation in a real life and preparing the
company successfully handle issues that the family may face in the future.
Figure 1 Three-Circle Model
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Family system
My father
My uncle
My 3 cousins (Sana, Hasna, Amine)
Me
My brother
Owner’s wives
Ownership system
My dad
My uncle
My mum
My uncle's wife
Management system
5 salesmen
5 order takers
10 truck drivers
The family system
Until now, my cousins, brother and me, don’t have any shares within the
company since no one is involved within the business. Family members within
the same generation have different interest and goals (KPMG) .We are looking
for a plan that will maximize our financial security in order to live our desired
lifestyle and ensure that no one will feel unfairly treated. However, there is a
distant relationship among third generation members. (See appendix B)
Therefore the goals need to be clearly discussed and understood by all members
to avoid conflicts in the future (KPMG).
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Ownership System
My mom and uncle's wife are inactive members in the company. They are
looking for a process that will maximize value in terms of return on their
investment. Therefore, they will have to choose the most qualified person from
the third generation to take over the business. However, it is considered that
family members have different opinions and expectations from the family and
business (KPMG)
My dad and uncle, who lead the company, will have to deeply understand the
interest of all family members and employees taking into consideration the future of
the business.
Management System
In this case, all employers within the company are non-family members. They are
looking for securing their position, through obtaining continuous opportunities and
increasing compensation within the company. Therefore, they want to see a
competent successor who will take over the company and continue its success and
growth.
Future Concerns
Until now, the company doesn't face any problem. However, after applying
the three-circle model it relates the company to a succession issue, which is
going to take place in the future.
Succession planning is a strategic issue that requires time and attention of
owners. (Effective executive 2001) In this case the succession issue is taking
place in the future, therefore owners need to address the issues within the
succession process and discuss what can be done for the third generation to
take over the business and keep it growing and successful.
The succession-planning model aims to illustrate how family members can
effectively mange all-important family component within the succession
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process (KPMG) (see figure 2). This process is subdivided into the
‘ownership succession process’ and ‘management succession process’ that
can be taken at the same time or separately (KPMG). Using this model we
can outline one of each processes activities in order to achieve desired
outcomes that all family members will feel comfortable with and help avoid
conflicts that can negatively affect the business.
Accordingly the company needs to organize meetings between active and
non-active family members to discuss and communicate the issues that the
company may face in the future. The members need to set up the objectives
they want to achieve in the future. To achieve a great result these meeting
should be based on some rules (KPMG) (see appendix A)
Figure 2 : Family Business Succession Planning
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Questions for discussion
The questions that can be drawn from this case study are the following:
 Is the Third generation ready and want to take over the company?
 How should the succession planning take place in this case?
 Is there any possibility to sell the business?
 Is it better to sell the company?
 Would it be better to sell some shares to a non-family member if no one
from the third generation is ready to take over the business in the future?
 How the distant relationship among third generation will affect the
succession planning process?
References
-Gersick, K, Lansberg, I, Desjardins, M, Dunn, B (1997) `Stages and Transitions:
Managing Change in the Family Business’ [online] (cited 21 March 2013) Available
from
<URL:http://www.2mmanagementconsultancy.com/FBS/imagess/StagesTransitions.
pdf>
-KPMG (2011) ‘Family Business Succession Managing the All-Important Family
Component’ [online] (cited 1 April 2013) Available from
<URL: https://www.kpmg.com/ca/en/services/kpmg-enterprise/centre-for-familybusiness/documents/3468_succession.pdf>
-Vedpuriswar (2001) ‘Strategic issues in succession planning’ [online] (cited 1
April 2013) Available from
<URL :http://www.vedpuriswar.org/book_review/Strategic%20Issues%20in%20s
uccession%20planning.PDF>
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Appendices
Appendix A : Family Business Rules
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Appendix B : Genograms
Family Patterns of Communication
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