STRATEGIC PLANNING FOR FAMILY
BUSINESSES FOR CONTINUITY
Presented by:
Dr. Sami T. Salman
1
SPECIAL CHALLENGES OF FAMILY FIRMS
Finding capital
for growth without
diluting
family equity
Conflict between
family’s vs.
Business’ need
For cash
Inability
of family CEO
to “let go”
In time
Sibling rivalries,
non-acceptance
of chosen
successors
Poor
estate planning,
inability of next
generation
to pay
death duties
Inability
to attract and
retain competent
and motivated
family
successors
Inability
to attract and
retain senior
non family
professional
managers
Lack of ability
to create
appropriate
Cultural
congruity
2
POSITIVE CORRELATES
OF BUSINESS CONTINUITY PLANNING
1. Size of the business
2. Level of the strategic planning
3. Level of the perceived family harmony
4. % of outsiders on board
5. Age of owner manager
6. Degree of internality of owner-managers
Locus of control
3
FAMILY BUSINESS: THE ULTIMATE PARADOX?
Family businesses have built-in conflicts due
to the intersection of tow worlds which are
governed by different values and logics*
Family word
Business word
•Mutual cooperation
•Competition
•Loyalty
•Opportunities
•Unity
•Diversity
•Permanence
•Impermanence
•stability
•Instability
4
CULTURAL DIFFERENCES
FAMILY
Emotional focus
Memories
Character development
“Who you are”
Prepares individual for
future
BUSINESS
Fact focus
Future
Skills development
“What you do”
Does not prepare
Individual for future
After the business
5
Conflicts are inevitable in family businesses
The potential for conflicts increases
In an environment of change
Destructive
Constructive
Conflicts
Conflicts
6
“If there is any secret of success,
it lies in the ability to get
The other person’s point of view
and see things from his angle
as well as from your own”.
Henry Ford
7
SUCCESSFUL FAMILY BUSINESSES
1.
2.
3.
4.
5.
6.
7.
8.
Have excellent
management development systems.
Train the family on ownership
responsibilities From an early age.
Treat their employees fairly and with loyalty
Have a high sense of
responsibilities to society.
Emphasize value for money and quality.
Quick decision making.
Take a long term strategic perspective.
Are innovative and entrepreneurial.
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Table 1-2: Three-Circle Model
Ownership
Structure
Board of Directors
Plan 1
Plan 6
Structure
Family
Council
Plan 2
Family
Plan 4
Plan 5
Structure
Mgmt.
Development
Plan
PLANS
1.
2.
3.
4.
5.
6.
Share Holders Meetings
Family Plan
Mgmt. Development Plan
Strategic Plan
Continuity and
Contingency Plan
Estate Plan
Plan 3
Business
9
Table 2-2: Personal Factors that Motivate Offspring to Join
Family Business
Motivating Factor
Frequency
Make money
67%
Like the business
50%
Good career opportunity
45%
Family influence
40%
Help the family
39%
10
Figure 1-5: Overview of the Family Business Strategic
Planning Model
Economical
Vs
Financial
Constitution
Family
Factors
Succession
Planning
Vision
+
Mission
Survival
Strategy
Personal
Factors
Environment
Political
Vs
Marketing
Technology
Vision
+
Mission
Social
Vs
HR
Conflict
Management
Partnership
FAMILY
BUSINESS
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Figure 2-5: Family Factors in the model
Constitution
Family
Factors
Succession
Planning
Vision
+
Mission
Survival
Strategy
Personal
Factors
Conflict
Management
FAMILY
12
Figure 3-5: Business Factors in the model
Economical
Vs
Financial
Technology
Environment
Political
Vs
Marketing
Vision
+
Mission
Social
Vs
HR
Partnership
BUSINESS
13
Figure 4-5: Family Assessment for Case Study No. 1
14
Figure 5-5: Business Assessment for Case Study No. 1
15
CONCLUSIONS AND RECOMMENDATIONS
Feedback and control and family continuity plan.
Exploiting the external environment for growth
and change management.
Developing a second line of command structure.
Monitoring the critical success factors
Creating a unified planning approach.
Aligning of family vision and mission with that of
business vision and mission
Identifying the family and business co-relation
16
END OF PRESENTATION
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