STRATEGIC PLANNING FOR FAMILY BUSINESSES FOR CONTINUITY Presented by: Dr. Sami T. Salman www.dawahmemo.com

SPECIAL CHALLENGES OF FAMILY FIRMS Poor estate planning, inability of next generation to pay death duties Finding capital for growth without diluting family equity Conflict between family’s vs. Business’ need For cash Inability of family CEO to “let go” In time Inability to attract and retain competent and motivated family successors Sibling rivalries, non-acceptance of chosen successors Inability to attract and retain senior non family professional managers Lack of ability to create appropriate Cultural congruity

POSITIVE CORRELATES OF BUSINESS CONTINUITY PLANNING 1. Size of the business 2. Level of the strategic planning 3. Level of the perceived family harmony 4. % of outsiders on board 5. Age of owner manager 6. Degree of internality of owner-managers Locus of control

FAMILY BUSINESS: THE ULTIMATE PARADOX? Family businesses have built-in conflicts due to the intersection of tow worlds which are governed by different values and logics* Family word Mutual cooperation Loyalty Unity Permanence stability Business word Competition Opportunities Diversity Impermanence Instability

CULTURAL DIFFERENCES FAMILY BUSINESS Emotional focus Memories Character development “Who you are” Prepares individual for future Fact focus Future Skills development “What you do” Does not prepare Individual for future After the business

Conflicts are inevitable in family businesses The potential for conflicts increases In an environment of change Destructive Conflicts Constructive

“If there is any secret of success, it lies in the ability to get The other person’s point of view and see things from his angle as well as from your own”. Henry Ford

SUCCESSFUL FAMILY BUSINESSES Have excellent management development systems. Train the family on ownership responsibilities From an early age. Treat their employees fairly and with loyalty Have a high sense of responsibilities to society. Emphasize value for money and quality. Quick decision making. 7. Take a long term strategic perspective. 8. Are innovative and entrepreneurial.

Table 1-2: Three-Circle Model Ownership PLANS Share Holders Meetings Family Plan Mgmt. Development Plan Strategic Plan Continuity and Contingency Plan Estate Plan Structure Board of Directors Plan 1 Plan 6 Plan 4 Structure Family Council Plan 5 Structure Mgmt. Development Plan Plan 2 Plan 3 Family Business

Table 2-2: Personal Factors that Motivate Offspring to Join Family Business Motivating Factor Frequency Make money 67% Like the business 50% Good career opportunity 45% Family influence 40% Help the family 39%

Figure 1-5: Overview of the Family Business Strategic Planning Model Constitution Succession Planning Vision + Mission Conflict Management Survival Strategy Personal Factors Family Economical Vs Financial Technology Vision + Mission Partnership Social HR Political Marketing Environment F A M I L Y B U S I N E S S

Figure 2-5: Family Factors in the model Constitution Succession Planning Vision + Mission Conflict Management Survival Strategy Personal Factors Family F A M I L Y

Figure 3-5: Business Factors in the model Economical Vs Financial Technology Vision + Mission Partnership Social HR Political Marketing Environment B U S I N E S S

Figure 4-5: Family Assessment for Case Study No. 1

Figure 5-5: Business Assessment for Case Study No. 1

CONCLUSIONS AND RECOMMENDATIONS Feedback and control and family continuity plan. Exploiting the external environment for growth and change management. Developing a second line of command structure. Monitoring the critical success factors Creating a unified planning approach. Aligning of family vision and mission with that of business vision and mission Identifying the family and business co-relation

END OF PRESENTATION