Professor Manisha Rajadhyaksha

WWI BBA 3
Entrepreneurship Development
Session 15:
International Entrepreneurship Opportunities: The nature of
international entrepreneurship; importance of international
business to the firm; international versus domestic
entrepreneurship

International entrepreneurship opportunities:

Export
Licensing
Production in different country
Acquisitions
Mergers
Wholly owned subsidiary

Why international business is important to the firm?

List reasons

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 Professor Manisha Rajadhyaksha
WWI BBA 3
Entrepreneurship Development
Session 17:
Family Business; Problems of Family Business - Communication
with Family Members; Employment of Family Persons; Problems
of Change Management and Succession Management; Role of
Professionals; Professionals vs. Family Members; Role of Woman
Entrepreneurs

Family Business
Definition:
Single family effectively controls firm through ownership more than 50% of the
voting shares; a significant portion of the firm’s senior management is drawn from
same family
Ownership control by members of a single family

Characteristics of Family Business:

✓ Group of people belonging to one or more families run one business enterprise
✓ Position in family business is influenced by the relationship the family
members have among themselves
✓ Family exercises control over business in form of ownership or in form of
management of the firm where family members are employed in key positions
✓ Family exercises the influence on the firm’s policy direction in the mutual
interest of family and business
✓ Succession of family business goes to the next generation

Types of Family Businesses:

✓ Family owned business
✓ Family owned and managed business
✓ Family owned and led business

Advantages of Family Business:

✓ Common Values

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 Professor Manisha Rajadhyaksha
WWI BBA 3
Entrepreneurship Development
✓ Strong Commitment
✓ Loyalty
✓ Stability
✓ Decreased costs

Disadvantages of Family Business:

✓ Risk of ownership
✓ Controlling ambiguity
✓ Subtle messages of buy - sell agreement
✓ Inability of shareholders to cash out of family business

Challenges faced by family businesses in India:

✓ Inter - relationships
✓ Management Succession
✓ Sibling Rivalry

Business Succession Planning:

Planning for succession or preparing on who will succeed the owner - leader of the
business
Process for identifying and developing family members with the potential to succeed
the key role of owner - leader in the business
Research  shown that only 30% of family businesses succeed into second
generation; 12% into third generation; and only 3% operate into fourth generation and
beyond
Good succession planning makes family business survive and thrive generation after
generation.
This requires thorough thinking and solid preparations
Challenge is to maintain a fine balance between business and family  making
decisions and undertaking actions that will honor family values and benefit the
business

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 Professor Manisha Rajadhyaksha
WWI BBA 3
Entrepreneurship Development

Steps for Successful Succession Planning:

✓ Make a solid case for succession planning
✓ Prepare an end plan
✓ Identify the successor
✓ Grooming and developing the successor

Making Family Business More Effective:

✓ Focusing on Business, not Family Needs
✓ Ploughing back of profits in the business
✓ Using caution with the family
✓ Delegating authority or decision taking
✓ Viewing big and broader picture
✓ Planning for Management Succession
✓ Prepare the Family Constitution

Success of Family business is tied directly to how well it manages the 5 unique
resources:
✓ Human capital  inner circle  skill sets of family members coordinated
cache of knowledge  clear division of labor  produces synergy
✓ Social capital  networking and other external relationships of family
members  complements skills and knowledge sets
✓ Patient Financial capital  equity and debt financing from family members 
reduces threat of liquidation
✓ Survivability Capital  family members’ willingness to provide free labor or
funds in time of urgency
✓ Lower costs of governance  reduces costs of governance  reduces costs for
accounting systems, security systems, policy manuals, legal documents, and
other mechanisms
Role of Professionals in Family Business

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 Professor Manisha Rajadhyaksha
WWI BBA 3
Entrepreneurship Development
Ten Commandments of Family Business
✓ Induction & Grooming
✓ Ownership structure
✓ Preserving wealth
✓ Conflict resolution mechanism
✓ Business vision, strategy & governance
✓ Family vision, strategy & governance
✓ Succession planning
✓ Compensation & rewards for family
✓ Recruitment and reward of non - family members
✓ Retirement and estate planning

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 Professor Manisha Rajadhyaksha
WWI BBA 3
Entrepreneurship Development
Session 18:
Quick Route to Entrepreneurship - Acquisitions, Ancillary
Development and Franchising; Concept of Bootstrapping;
Incubation Support

Franchising 
✓ Practice of using another firm’s successful business model
✓ System for selectively distributing goods or services through outlets owned by
retailer or dealer
✓ Patent or trademark or licences entitling the holder to market products or
services under a brand name or trademark according to predetermined terms
and conditions

Characteristics of Franchising:
✓ Agreement to sell products or services of some owner paying him/her specified
fee or commission
✓ Does not give franchisee ownership of product or service
✓ Agreement for a fixed period (range of 5 to 40 years)
✓ Replication of some successful business format
✓ Takes place in case of business with good track record of profitability
✓ Applies to business which are easily replicated and duplicated
✓ Can be terminated before expiry of franchising period
✓ In franchising, one is in business for oneself not by oneself
✓ It is a turn-key operation in which franchisee dictates most of operation from
store hours to colors

Types of Franchising:
✓ Product Franchising  dealers distributed goods for manufacturer
✓ Manufacturing Franchising  franchisor gives right to dealer exclusive right to
produce and distribute product in each area

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 Professor Manisha Rajadhyaksha
WWI BBA 3
Entrepreneurship Development
✓ Business Format Franchising  franchisor offers wide range of services to
franchisee including marketing, advertising, strategic planning, training,
production of operation manuals and standards and quality - control guidance

Concept of Bootstrapping 
✓ Situation where entrepreneur starts a company with very little capital.
✓ An entrepreneur is said to be bootstrapping when he or she attempts to found
and build enterprise from personal finances or from operating revenues of the
new enterprise.

Incubation  act of giving a rough idea the final form for meaningful execution