Introduction

 Family business are ideal in nature as they are

loyal to the principles of the founder and thus
insure uniformity in their operations.
 Succession is one important decision which
determine future effectiveness in terms of
company operations.
 Family business comprises of family members
in business operations insuring effective
utilization of in house talent in family.
Importance of family business

 Contributing to economic development:

family business play crucial role in economic
development of most of the countries. Retail
sector, small scale industry, service sector are
owned by family business.
 Spirit of entrepreneurship: family business
as contribute towards development and as
been successful in country like India it paves
way to various families to initiate and bring
up new ventures in country.
 Philanthropy : family business in India along
with their development have also
concentrated towards welfare of general
public by investing on hospitals, educational
institutions, construction of roads, etc.
 Trust lowers transaction cost: partnership and
other forms of business involving outsiders usually leads to
conflict in long run. In case of family business as all the
parties in family are affected by loss incurred in company do
not involve any sort of conflict and difference in point of view
arises they try and solve it internally in the family ensuring
business is not affected by the same.
 Quick to react: As managing team size in
family business is small compare to other
form of business decision making process
involves less period of time which helps to
take timely decision.
Uniqueness of famliy business

 A unique feature of businesses in the rural community is that family

ownership dominates the industries and the community.
 The traditional industries of beef, grain, sheep, dairy and others are
primarily family business dominated.
 In a rural community where traditional agriculture is prominent this
style of business also dominates the community.
 Family businesses are unique in the world of commerce nationally.
The uniqueness of a family based business is the intertwining of the
principles of marriage and kinship and the use of capital to generate
income.
 Other forms of business as found in more urban communities may not
necessarily have the strong relationship between marriage and kinship,
sense of heritage concerning the farm, and use of capital and
generation of profit
 Business ownership is combined with managerial control in the hands
of business principals.
 These principals are related by kinship or marriage.
 Family members provide capital of the business.
 Family members include business principals.
 Business ownership and managerial control are transferred between
the generations with passage of time.
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