Family Business in India

Presented by: Group 4 & Group 5

History of Family Businesses

Characteristics of family businesses Inseparableness of family & firm Strongly rooted in local community & culture

Significance of status within commercial circles

Frugal merchant behavior balance between misers (no
altruism) & sahus (low credit worthiness)

Moral conduct determined economic fortunes

Family Business Current Scenario

Thirteen of 30 firms part of
Sensex are family-run businesses

About a third of companies

listed in Fortune 500 are family businesses.

Issues with family firms

Difficult organizational transition from an entrepreneurial
stage to a system driven, professionally managed firm

Succession dilemma multiple stakeholders for the

leadership position as generations progress

More than 75% respondents as part of a corporate

governance survey said the board did not discuss CEO succession planning at all

Separating ownership and management in family

business

Agency Costs
Actions by managers that
contravene interests of owners, plus activities and policies used to align interests of agent with owners

Ten Commandments of Successful Family Businesses

Recent trends in Family Firms

Future generations no longer having to work their way
up the corporate ladder equipped with MBAs

Age-old rule of daughters and daughters-in-law not

getting involved in business no longer being followed

Growing trend of independent entities for charity run by

lady members. Way of giving recognition and occupation for ladies

Dabur
Started in 1884 by Dr. S.K. Burman to sell ayurvedic
medicine. Publicly listed in 1986

Underwent rash professionalization process in late 90s Owners completely backed out of operations, and
professionals pushed for change at great speed

Group CEO and five out of nine Board members nonfamily professionals

Family Business Council interface between Family,

and Board and Management

Dabur Family Constitution

Defines purpose of Family Council & rules of
engagement

Key points:
No job at Dabur India Ltd Non-executive directorship
roles in subsidiaries Proposals for new collective ventures & business ideas to go through a balanced review committee Family members to get benefits, no salary Family members cannot use Dabur name without consent

Thank You