Family Business proposal by MD

CHAPTER ONE
INTRODUCTION
1.1 Background the study

The area of family businesses is virgin for research and development cases. Family business
research are thought to be still at an early stage, however, evidences has undergone drastic
development (Sharma, 2004; Zahra & Sharma, 2004, Cited in Mari Ingalsuo, 2014). Widely
acknowledging family business research is about the complex relationship between family and
business (Tourunen, 2009). Coming to Ethiopia, the history tells that past regimes it was this
individual business runners were not allowed to have beyond a certain level and entrepreneurial
initiatives was lost. However, after the fall of the military regime, the EPRDF privatized most
state owned enterprises and reversed the military regime’s socialist policies. The current
entrepreneurial environment in Ethiopia is relatively inviting and more stable when compared
with the past regime. The government has formulated different policies that encourage
entrepreneurs/private enterprises to take the initiative to start new ventures of their own. Despite
several challenges, entrepreneurship in Ethiopia has started thriving well (Betesaida antonios,
2010, aau) Among the different kinds of entrepreneurs in Ethiopia, those who are engaged in the
restaurant business are significant. The restaurant industry plays a crucial role in the overall
economy of country by creating job opportunities for a considerable number of people as well.
So far, this topic is chosen due to the dissertation of successful completion of continuous class
assignment towards family businesses, which arose while studying. Due to these circumstances,
the researcher wants to study the Ethiopian family business characteristics and the challenges
and opportunities related to them.

1.2 Background of the Organization

Simntu Bar & Restaurant was established in 2001 with a capital tie up of around 200,000 birr in
Addis Ababa Arat/ 4 kilo/ kebennna round about. Before the story of Simntu Bar & Restaurant
comes in to existence the restaurant’s owners, ancestors (their father Mr. Gezu kidanu and
mother Mrs. Mebriht Alem) who have been born, grown up of and residents of Addis Ababa and
doing another business though their family roots were born and raised in the Tigray region of
northern Ethiopia. So far, they have been in marriage for more than 40 years and thanks to god
they are in life still. It was from their marriage time they have a desire to open their own venture
but due to the unfavorable conditions and government policy restrictions it took them long times
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to take commuted action. However, Since 1981 E.C they start to realize their vision by opening a
coffee house then after 12 years they also grown up it into a garage with minimum 5 to 8
employees which are not family members. The couples have four sons and daughters total of
eight (8) Childs. The couples were successful in the garage works and were able to get a
sustainable and paramount profit. After some years both the couple had come up with the idea of
opening restaurant to get additional earnings to support their large family and decided to pass the
venture for their Childs. Starting from 2001 E.c eight of the Childs got succession and opened a
restaurant called Simntu Bar & Restaurant meaning eight of the sisters and brothers. Starting on
wards their father is a taxi driver and giving advisory service to the restaurant in this time. At the
beginning, the whole business operation was handled by eight of the brother and sisters, and with
some around 15 employees. After a while, four of the daughters got American residency permit
and had gone soon. The three sons were the coordinators, and controllers of the business activity
and the forth elder one were assigned us manager. Things had continued like this for about four
years and by the year 2005, they recruited Mr. Addamsie given his major responsibility to honor
customers and handle Complaints. And it was becoming increasingly difficult for them to meet
their customers’ needs and wants with the current level of staffs and subsidiary. So, they
understood that they had to open new subsidiary and strengthened their staffs. Though they
didn’t have any prior business experience, they were successful in attracting and retaining loyal
customers. Sooner they hired around 40 employees and this number continued to increase as
years passed and as the business expanded. In order to satisfy its customers’ needs and to
increase its accessibility, the restaurant opened its first branch in the year 2005 in kasanches.
Thus, currently the restaurant is rendering its services in its two branches. The restaurant mainly
prepares Tibs, Kurt and other fasting foods which are served with Injera and beverages like
different types of wine, Bears and soft drinks. At present, there are about 67 employees working
in the two branches of the Restaurant. The three sons are engaged in managing the business. The
older son is responsible for the overall supervision of the process and the workers at the
restaurant. Mr. Addamsie Belay is still performing his job of greeting customers and handling
complaints and he is also active in social activities even though not a family. The capital of the
restaurant has increased considerably over the years. Despite the presence of many factors that
are constraining the growth of the business like less educated managers /vocational diploma
holders and below grade school staffs, the Restaurant is a profitable enterprise.

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1.3 Statement of the Problem

Addis Ababa is a megacity of Ethiopian city in which growing fast and many modern restaurants
are being opened in the city. Coming up with the truth there are also many specialty restaurants
engaged in preparing different kinds of cultural foods. The entrepreneurs/owners who start this
business this day are having opportunities for growth of their ventures and getting financial
supports. However, they also bump into several obstacles in their day-to-day operational and
administrative issue. In fact, the Simntu restaurant is currently also immersed with the
operational and administrative challenges as well becoming disabled of exploiting of the
opportunities provided by the environment and absence of solid strategy for even greater growth.
The challenges include concerns about rising competitive pressures, and the adverse impact of
less educated staffs especially the administration body/s are vocational diploma holders. In spite
of these challenges, however, conditions implicate that as there is a strong potential for growth
and increased profitability of the restaurant.
1.4 Objectives of the study
1.4.1. General objective: The general objective of the study is assessing the challenges &
opportunities, and the unique behind the family business firms in Ethiopia in case of Simntu
Bar and Restaurant.
1.4.2. Specific objectives: By drawing up from the above general objective this study is also
aimed to address the following specific objectives.
 To find out the special challenges that are facing by family businesses given to the
Simntu bar and Restaurant‘s case
 To identify favorable situations if any, that may contribute to effective operations of
the restaurant
 To know the difference between the family and non family businesses via empirical
and literature reviewing
1.4.3 Research Questions
 How family businesses differ from non-family businesses?
 What are the special challenges that are facing by the restaurant?
 What conducive situations are there contribute to effective operations of the restaurant?

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1.5 Research Methodology’s

1.5.1 Purpose and Design of the Study

In order to make this research easy to evaluate descriptive method will be applied. Thus, this
method is found to be appropriate because of its suitability for describing existing situations in
the selected study area and for analyzing major issues by applying a quantitative research design
and case study method.

1.5.2 Research Strategy and Techniques

In this regard the source and type of date to be used may concerned with that, the study will
employee both primary and secondary data type and sources in order to produce a richer and
more complete result. So long a structured interview will be used as main research strategy to
identify the challenges & opportunities, and the unique behind the family business firms.
Furthermore, in-depth personal observation will be conducted. Secondary data regarding how
family businesses differ from non-family businesses will take from empirical evidences and
course materials too.

1.5.3 Data Processing and Analysis Methods

In order to analysis the data which will be collected, the researcher will apply a qualitative
methods and the content that my collected will be coded and classified so as to highlight the
important finding and summarize the mass of the data collected via content analysis.
1.6 Significance of the Study

The research may use to widen the knowledge of the researcher about the unique characteristics
of Family Business and enhance the researches future carrier. Academicians may also use the
findings of the research to influence their learning references as well as to answer some
academic questions and/or to use them as a reference for further study.
1.7 Scope of the study

The study will confine to areas of family owned businesses especially to the Simntu Bar and
Restaurants. Hence, the success and failure of methodological and geographical will seized by
the researchers convenience in relation to the respondents. But, the paper will not incorporate the
responses of other restaurants.

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1.8 Limitation of the study

In conducting of field limitations that the researcher may face with them can be listed as
follows.
 The output of this study may be delaminated because of that, the area of focus is on
restaurant and may not be good enough to study the issue of the d/t family businesses.
 Since the data’s will be collected at one time base from the selected target population to
describe some larger population at that time, it will not allow analysis continuity and
changes over time. etc…
1.9 Organization of the Research

The research will contain four chapters in such a way that the first chapter highlights the background and
statement of the problem of the study alongside its objectives, overall methodology, significance, and
scope. The second chapter mainly will focus on review of related theoretical literature, empirical literature
and the conceptual framework (if applicable). The fourth chapter will be enlisted to come up with the data
analyses and interpretation while findings, conclusions and suggestions will be drawn up also with the
last chapter.