INTRODUCTION TO FAMILY BUSINESS MANAGEMENT WEEK 1

Family Business Defined: A business in which at least 51 percent of the business is owned by a single family, and at least two family members are involved in the management activities, in addition to which the transfer of leadership to next generation family member is anticipated. Family Business Management, Ibrahim and Ellis 1

Dimensions that Distinguish the Family Business Family Business Potential for General Transfer of Power Management by Family Members 1 Degree of Ownership Extent of Family Involvement Family Business Management, Ibrahim and Ellis

Key Facts and Figures  It is estimated that 90% of all the businesses in the U.S. and Canada are family owned and operated.  Family business employs approximately 48% of the work force and produces nearly 50% of the gross national product.  Family businesses are reported to represent over 1/3 of Fortune 500 companies.  Less than 2/3 survive the second generation. Family Business Management, Ibrahim and Ellis 1

Advantages  Shared Values and Beliefs  Common Goal and Strong Sense of Mission  The Family Spirit  Perception of Family Name  Flexibility  Long-Term Commitment  Economic Independence  Entrepreneurial Culture Family Business Management, Ibrahim and Ellis 1

Disadvantages  Family Infighting  Boundary Problems  Role Confusion  Lack of Objectivity  Nepotism  Succession  Supervising Relatives  Inward-Looking 1 Family Business Management, Ibrahim and Ellis