MGT FAMILY BUSINESS MANAGEMENT

Q1.How to build trust and commitment in developing Family

business organization? Explain

A1. Trust can be defined as belief that someone s honest or reliable.

Trust is the main source of long-term perspectives ie; loyalty,
commitment and much more. Trust can provide a very powerful
advantage to family business management. It is the foundation of all
relationships in an organization. A trusting partnership involves
trusting the judgement of your employees and believing in their
commitment. Trust can be built by:-
- Trusting other members judgement
- Trusting members’ intentions or motivations
- Trusting someone’s abilities to put the interests of others instead
of their own goal
- Trusting others abilities to execute on commitments and build
strong and lasting relationships

Commitment can be defined as being dedicated , responsible and

willing to complete various tasks and goals
Commitment can be built by:
- Creating a strong teamwork culture
- Maintaining the work ethics
- Have a positive work culture
- Develop trust among family members
- Clear communication of goals and objectives
- Provide feedback whenever necessary

Q2. What is family culture?

A2. Family Culture can be defined as the family traditions, practices,
ideas which one has inherited from their ancestors. Family culture is
something which is very important as it is the duties and
responsibilities of the parents make sure that these family values ,
traditions and languages is carried out by their kids and generations to
come. Family Culture ensures that there is a cultural bond between
the family members. These traditions can be unique and vary from
family to family. Having a family culture gives that person/family a
sense of identity. It also provides comfort. Family culture enhances
the relationship and traditions of each and every family and gives
something for the family to look forward to. The way we speak,
behave, interact, think, the language we speak etc. is all a part of our
upbringing from our family culture. The Family culture also helps
people/families to remind them about their past and their upbringing.
Family Culture is meant to enrich a family a create positivity among
them . Family Cultures strengthen the bond of the family and help
family to get more closer. Family culture also helps families to create
long lasting memories and stories which can be passed on from
generations to generations .

Q3. What do you mean by succession planning?

A3. Succession Planning is a systematic and strategic method of
planning where members of the organization ensures that the
employees that are recruited have the ability to fill each key role
within the company. Succession Planning is performed in order to :-
- Identify highly skilled individuals : - Those invidivuals whoa re
prepared to take over a senior position when employees leave
the organizations
- Can Save Money
- Can help in case of an unforeseen event:- It means ensuring that
the organization is prepared with a plan in case an unforeseen
event occurs.
In succession planning the board is responsible. They hire an
executive director to ensure it has a skilled manger.
In Family Business succession is the transferring the ownership of the
business. In Family Business succession planning needs to start early
as it is gives time for children to learn various management skills and
as they can be mentored for a longer time. One of the challenges that
comes with succession planning is that whether the younger
generation are interested in continuing the family business or being a
part of that legacy. One suggestion could be to work with a family
business adviser. As the adviser will help one to identify the various
pros and cons. Another challenge would be finding the right successor
who has the ability, skills, leadership and determination to carry
forward the various tasks that are assigned to him/her.

Q4. Explain the rewards and challenges of latter generation family

members
A4. Working in a family business can be very rewarding and
challenging at the same time .

Rewards
- It creates an opportunity to build a family legacy that has never
been seen in the family before
- Family Business tends to be more flexible compared to a normal
business
- Even though conflicts may arise in a family business, there is an
absence of office politics which can solve conflicts quicker.
- In Family Business Management usually there is a stronger
bond of trust among family members
- There is a sense of peacefulness as the next generations will be
able to continue the businesses
- There can be less cost and expenditures involved as family
members are willing to contribute their own financial resources.
Challenges
- Family Problems:- In a family business there can be a lot of
conflict which arises between family members thus creating a
grudge towards a particular family member
- Organization Structure: - At times it can be difficult to handle
business as some family business do not have a proper chain of
command
- Growth:- Another challenge can be determining the capital and
resources needed to grow the business.
- Succession:- Another problem faced by family business is the
problem of succession as majority of the younger generation are
not interested in continuing the family business.

Section B
Q2. Briefly explains the important content of Business Plan.
A2. A business plan is a formal written document containing the
goals of the business, the various methods being used and the time
frame.

The important components of business plan are:-

1.General Information:- The executive summary should appear in the

business plan. It should summarize what you expect your business to
accomplish. It reveals the company mission, vision, statement. It
should also give information as to why you started the company.

2. Company Description:- It includes key description about your

business , goals and target the customers you want to serve. This
should explain why you’re company stands out from other companies
and offers your solutions and their competitive advantages.

3. Market Analysis:- In this a market analysis is done to identify the

strengths. Opportunies ,weaknesses and threats. It also helps visualize
your target customers , their buying habits and which services do they
need

4. Competitive Analysis:- A good business plan will present a clear

comparison of your business vs your direct and indirect competitors.
This is where you prove your knowledge of the industry by breaking
down their strengths and weaknesses. Your end goal is show how
your business will stack up. And if there are any issues that could
prevent you from jumping into the market, like high upfront costs,
this is where you will need to be forthcoming. Your competitive
analysis will go in your market analysis section.

5. Description of management and organization:- The Business must

also outline how your organization is set up. Introduce your company
managers here and summarize their skills and primary job
responsibilities. An effective way could be to create a diagram that
maps out your chain of command.
6. Breakdown of products and services:- While your company
description is an overview, a detailed breakdown of your products and
services is intended to give a complementary but fuller description
about the products that you are creating and selling, how long they
could last and how they will meet existing demand.

This is where you should mention your suppliers, as well as other key
information about how much it will cost to make your products and
how much money you are hoping to bring in.

7. Marketing Plan:- This is where you describe how you intend to get
your products and services in front of your target customers. Break
down here the steps that you will take to promote your products and
the budget that you will need to implement your strategies

8. Sales Strategy:- This section should answer how you will sell the
products that you are building or carry out the services that you intend
to offer. Your sales strategy must be specific. Break down how many
sales reps you will need to hire and how you will recruit them and
bring them on board

9.Request for funding:- If you need funding, this section focuses on

the amount of money that you need to set up your business and how
you plan to use the capital that you are raising. You might want to
include a timeline here for additional funding that you may require to
complete other important projects.

10. Financial Projects:- This final section breaks down the financial
goals and expectations that you’ve set based on market research

Q1. How are the Family businesses differing from non-family

businesses? Explain.
A1. Family businesses are run by family members while in non-
family business there may be no relationship. In non-family business
there is an organized chain of command as in some family business
there is non organized chain of command. Succession Planning is an
issue in both family as well as non-family business. In family
business it is much difficult to raise capital and obtain funds. Family
business operations are more flexible, and they operate whenever they
choose to. Non-family business are more formal and you are likely to
get a training from a non family business organization. In Family
business organizations the products and services are most likely to be
of better quality, skill and experience as many families inherit their
family businesses and perfect the craft which had been practiced by
their ancestors. In a non family business there is a job security while
in family business there is no job security. The daily sales of a family
business cannot be predicted. In family business there can be conflict
among family which lead to family problems and lack of
communication thus leading the business to fail. The salaries in a
Family business management may vary from month to month while in
a non-family business organization the salary is fixed. In family
business organization not much qualifications and also pressure from
other family members and friends who may lack the required skill and
talent to employ them, while in a formal business organization you
are required to submit C.V. ie; a list of your achievements. In
planning process - In family planning, all interested members of the
family get together to develop a mission statement that describes why
they are committed to the business. In allowing family members to
share their goals, needs, priorities, strengths, weaknesses, and ability
to contribute, family planning helps create a unified vision of the
company that will guide future dealings. Business planning begins
with the long-term goals and objectives the family holds for
themselves and for the business. The business leaders then integrate
these goals into the business strategy. In business planning,
management analyses the strengths and weaknesses of the company in
relation to its environment, including its organizational structure,
culture, and resources. In family business management there are more
emotions involved whereas non family business organizations it is
more formal.