1 STRATEGIC PLANNING FOR FAMILY BUSINESSES FOR CONTINUITY Presented by: Dr. Sami T. Salman

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

3 P OSITIVE C ORRELATES O F B USINESS C ONTINUITY P LANNING 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

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

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

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

7 “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

8 S UCCESSFUL F AMILY B USINESSES 1.Have excellent management development systems. 2.Train the family on ownership responsibilities From an early age. 3.Treat their employees fairly and with loyalty 4.Have a high sense of responsibilities to society. 5.Emphasize value for money and quality. 6.Quick decision making. 7.Take a long term strategic perspective. 8.Are innovative and entrepreneurial.

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

10 Table 2-2: Personal Factors that Motivate Offspring to Join Family Business Motivating FactorFrequency Make money67% Like the business50% Good career opportunity45% Family influence40% Help the family39%

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

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

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

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

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

16 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

17 END OF PRESENTATION