Q1: Should Family Firms Like GFC Fans Pakistan Be Run Like Non-Family Firms?

No, there is nothing wrong with operating family firms in Pakistan. In fact, as evident from case
2, 85% of 1-billion-plus businesses in South East Asia are family-run. And, the percentage
remains 75% in Latin America, 67% in India, and 65% in India. Stalwart companies such as
Walmart, Samsung, and Tata in India, are all family-run. One of the biggest investors in today’s
world, Warren Buffet, wants his son to lead his company. So, I believe there is nothing wrong
with GFC being a family-run business.

Out of 5 biggest ADVANTAGES of family-run businesses, as discussed in case 2, GFC seems

to have the following 4 advantages that justify it’s ownership;

● Being a family-run business, they can enjoy taking long-term objectives as they do not
have to please short-term investors at the cost of long-term business goals. For
example, they are diversifying extensively into related fields such as home appliances to
make their business sustainable in the long run.
● They haven’t loaded up on debt. As evident from the case, there are no such issues with
the high debt-equity ratio the company is facing. So, they enjoy better flexibility and
independent decision-making without being influenced by debtors' pressure.
● They have better labor relations. In fact, one of their foremen is handling a huge part of
their business that involves the use of labor. Had there been labor issues, it would have
been difficult for the company to run a 1-man show.

However, the biggest CHALLENGE they are facing is corporate culture. As opposed to facts
mentioned in favor of family-run businesses in Case 2, GFC doesn’t seem to have a healthy
corporate culture. Below are some points to consider in this regard;

It is important to emphasize that GFC Pakistan should have a clear and structured plan in place
for managing family members who join the company. This will ensure that family members
are treated fairly and evaluated based on their merit and qualifications, rather than simply being
given positions because they are part of the family.

It is also important for GFC Fans Pakistan to have clear guidelines for salaries, benefits, and
other incentives for family members, ensuring that they are compensated based on their job
performance, rather than their familial relationships. This will help to maintain trust and fairness
within the company, ensuring that everyone is working towards the same goal.

Furthermore, GFC Fans Pakistan should avoid making decisions based on personal biases or
family dynamics. I.e Sons of Ilyas Younus shouldn’t only join his department. If they are a better
fit for the department run by Ijaz Younus, they should go there. The same goes for the son of
Ijaz Younus. Also, if anyone has better qualifications and makes a huge contribution as is the
case with Nabeel Ilyas, they should be compensated accordingly. Nabeel has been managing
the export part of the company as well as helping in marketing and sales ultimately leading the
business expansion, but he is not getting the pay he deserves just because his cousins would
demand the same. Such a culture of biases and injustice NEEDS to Stop if GFC wants to
continue as a successful family business.

Also, the discrimination towards female members of the family needs to be stopped and
diversity in making decisions should be ensured. Family run-businesses in the West are
successful because they involve ALL, not only the male part of their families in businesses. This
needs to be stopped by GFC and female members should be given equal opportunity.

They can also introduce a special class of shares for family members to share a justified
proportion of profit value so that not every member of the family has to work for the company to
get money. In this way, only talented and capable people from the family would be hired. They
should also hire non-family members in their management to ensure the sustainable growth of
the company.

With that said, challenges will be there such as a lack of succession plans, no process in place
for managing differences among members, etc. But those challenges can be managed if they
followed the procedure used by Illycafe, mentioned in case 2, which has the PACT in place
regarding all the procedures of the business. That’s why their 3rd generation is successfully
running the business.

Do family members of GFC have the ‘birth right’ to manage and subsequently receive
compensation?

No one has the “birthright” to manage a company like GFC and receive compensation without
providing the valuable services the company needs. As mentioned above, GFC needs to work
on this important element if they want their family-run business to succeed.

As mentioned above, hiring and compensation practices should be based on merit and defined
procedures.

List The Factors That Must Be Evaluated To Determine The Compensation Of Family
Members?

● The job responsibilities and duties of the family member

● The qualifications and skills of the family member
● The market value of the job position
● The performance of the family member
● The financial situation of the company and its ability to pay
● The compensation structure and policies of non-family employees in similar positions
● The family member's education, experience, and contributions to the company
● Authority assigned to the family member
● The impact of the compensation on the morale and motivation of non-family employees.
Q2: Should The GFC Family Devolve Into Two Subgroups (I.E. Ilyas And Ijaz) Or Should It
Stay Together? On What Criteria Should This Decision Be Made? Explain.

I believe they should stay together based on the following reasons;

1) Previously, the Younus Group and Metro Group were divided because there were
dividable portions of businesses. Younus Fans went to 1 family while Metro Fans went to
the other. They were somewhat separate SBUs that could be divided.

Now that the GFC group consists of highly interdependent parts, dividing the group
would only make the condition worsen. One group can easily blackmail the other based
on the resources they are given as a result of division. Generations after generations
differences would eventually lead to one group selling the entire portion of the business
to 1 family only, as was the case of Ambanis in India.

2) Members of two brothers' families control/specialize in business units that complement

each other. The family of Ilyas Younus handles the marketing, sales, and distribution
side of the businesses. They work on the expansion of businesses and exports. While
family members of Ijaz Younus handle the technical part such as Finance and
Purchases. If both families are divided and business is also split into two groups,
Synergy would be lost. 2 interdependent units cannot function on their own separately
without this level of specialties in each unit.

3) The fact that Younus Fans and Metro Fans went down, in the words of Nabeel, was they
lacked the marketing specialties Mr. Ilyas possessed that was not offered after the
division of businesses. He is also of the opinion that people are complementary and
when things divide, companies go down very quickly. Now that GFC's technical business
side is controlled by one family while marketing, sales, and distribution are controlled by
the other family, the division of businesses will likely result in a failure because both
these 2 functions complement each other.

Criteria for staying together:

● Shared vision, values, and long-term goals among family members to remain sustainable
in the consumer appliance industry (as evidenced from their statements shared at the
end of the case study, nearly everyone of them wants things to change for better)
● Family ties and a desire to maintain the family legacy and reputation
● A history of successful joint decision-making among family members (between two
brothers Ilyas and Ijaz and their forefathers before)
● The ability to leverage the strengths and expertise of each family member to drive
business growth
● A belief that staying together will result in better financial and strategic outcomes for the
family business (Many family members including Nabeel believe that staying together is
a solution as the division of businesses would have its own set of problems)