The Life Cycle Of Family Businesses The story of a family company formation unique story. Uniqueness will depend on the way the family and think about the conditions and the economy in general and other factors within the control of human or abroad. There are, however, typical patterns can be observed in the evolution of family businesses. The way they evolve normally appear in stages and certain challenges and strategies are applied. The success or failure of a family business on many different factors depends. Discusses Dr. Hisham Al-Ajmi Executive Director of the Forum for the wealth of the family and the founder of the Journal of the fortunes of the companies, the life of a family business cycle, and the Omnia Software factors that can be controlled and those that can not be controlled, and how it turns out that the family unit is of great importance and is the basis for the success of the family business.
Puzzle continuity of family businesses
Statistics indicate that the majority of family businesses do not last beyond the third generation. This is in spite of the multiplicity of competitive advantages that the family business may be available, such as the influence of the family name of the significant potential and trust between family members of the company and the long-term trend because of a desire to provide for future generations the family and many other advantages. Why is the failure rate rise to this degree? In fact, the succession is the most common factors in respect of the reasons leading to the suspension of family businesses. The Omnia Software company’s transition from one generation to another requires significant organizational efforts and sometimes emotional as well as the efforts of the family company, facing a lot of family businesses obstacles impossible in this transitional phase. However, the succession is not the only reason for the failure or conflicts; many dimensions of family business management method determines the possibility of continuation.
It’s interesting, because once you pass the family business to this stage that most frightening and similar companies have failed to overcome, it is clear possess great potential to continue for too long. The success of the family business for decades or even stories spanning centuries until it became a part of history. Collection of historical family businesses are part of the Omnia Software ; a special union family businesses and companies that up to two hundred years in age. There is also a union in the United Kingdom small and medium-sized businesses, a “Altersentnarnz” Tercentenarians which consists of ten companies owned by families, and all of these ten companies older than 300 years. One companies to the Union Bank is C Hoar & CO banking and investment services, which was founded in 1672 and is probably the oldest family-owned bank in Europe. Honorary member of this union are Hugel Winery French company which was founded in 1639 and now run by atheist tenth generation of the family.
In fact, the continuity of family businesses look as if it were a puzzle to some extent. It seems that some people know the solution to this puzzle and continue to manage their businesses successfully even without changing the actual activity often. He wanted “Larry Di Joy” in the magazine article, “Harvard Business Review” to solve this puzzle. The end result reached by this researcher is that a family business that last for decades or even centuries to the companies that possess the most stable personal: “They know the truth themselves, and they realize their position in the world and appreciate new ideas and new employees and save their money in a way that allows them to dominate.” Overall, this is what the family company’s success is attributed to the extent of uniting the family; and the strength of the alliance, which brings together members of the family supporters to mark the company’s business. In spite of that, this is just my opinion and does not provide a lot of adopting him as to how that should be managed by companies in order to ensure the continuity of their success.
It mentioned the challenges associated with the succession to justify the high failure rate of family businesses. However, we know the companies did not cause her any succession difficulties However an estimated her to continue beyond the third generation. The rise and demise of this family business rate just can not be explained by family conflicts, but can be interpreted to the way they are managed and how to adapt to the macroeconomic and microeconomic factors. In fact, he said, “Joey D” (in 1997) that the family business for a long life characterized by a very good ability to “change management.” With the speed of the rhythm of the economic climate has changed, it became logical to say that adapt to the new circumstances, the speed will largely determine businesses’ opportunities to survive. In order to adapt before it is too late, the determination of the needs of the change in time comes in the top ranking in terms of importance.
That is why there is a special interest in following up the various stages that are usually experienced by the family business and when the need for change and thus show the change management become one of the very important things.
The life cycle of family businesses
Normally, the family business going through certain stages of the development of its business. The sequence of these phases can be called life-cycle professional family business (see “The Life of a family business” cycle).
It begins with the establishment of a new family business aspirations of its founder. And starting from this point is the way in which the company is developing a direct result of combining vision of the founder and his position from running risks.
At this stage, it is important to see the impact on the dream of the founder and his vision automatically traditional values of the environment and in the spirit of the times. While his dream is gradually becoming a reality, it is noted how increasing founder keen to protect the fruit of his efforts and thus would prevent the company from carrying out any risks are exaggerated. Look “Innovation and reservation” stage This is a natural result of the owner made his way with difficulty through the company initially cumbersome and desire stage now in maintaining the ground gained.
At a later stage, the company opens its doors to gradually join the second generation, which has its own vision and sometimes sweeping desire to make more strategic thinking and organization work more professionally. Usually gets a new generation of modern education and technological knowledge of contemporary feature, which employed to direct the stage of the “Professional” This is a family company. Pumping the most professional company in the limbs of this approach might happen under the leadership of founder may not occur until after the inauguration of the second generation of the reins. Professional crucial stage as it lays the foundation for the company’s expansion. The best possible scenario to happen is to be the main outcome of this phase of the cycle of professional awareness of the owners of the company Alriisieh activities in which they work and begin to look for new opportunities.
The next stage is the stage of “expansion and restructuring” and requires a lot of effort from the management towards innovation and to do as much as risky. It is a stage based on the reformulation and re-organization strategy. In many cases, it is the new starting point, where the family business is due to the initial vision of the founder and the twins to face more serious current challenges. Normally associated with the expansion needs of family company into a restructuring phase. Often this stage coincides with the increasing number of family members joined to the work of the company (including in-laws and cousins) and requires a more systematic corporate governance rules. This phase is undoubtedly the most crucial stages in the life cycle of the family business. It symbolizes a turning point: You may write to members of the family and their company, or may continue Etcherzmon and disappear from the scene.
If the family company has been able to pass the “expansion and restructuring” phase, they enter into the next stage, which could be called the stage of “integration.” This phase calls for the reservation to the memory founding in the early beginnings of the company. A merger of the need to focus on commercial systematic discrimination of products and services, and this is by integrating distribution channels and further expansion in the local and global markets operations. It’s closer to reviving the company.
The life cycle of a family company
Does this course apply to all family businesses? Is it necessarily requires a succession of several generations of the passage in this session? What happens if a family company from the establishment phase moved directly to the expansion phase? What kind of impact that their culture and traditions of the family (the core values) on the life cycle of her company?
These questions and many other questions related to the life cycle of family businesses and the answers will vary from case to case.
In general, we can say that the best business model in the family business would be fruitless without the family unit to support the different stages. Pass the different stages on the professional way to manage the company will not only support, but in the end always will depend on the combination of professionalism and strength of family cohesion and contiguity who Ademanha. It also requires a sense of reality; the family must pay attention to the most basic indicators to the existence of conflicts and disagreements in the family company.
Application for family businesses in the Arab
One of the key aspects affecting the life cycle of family businesses is the cultural frameworks and traditions surrounding. For family businesses in the Arab, you must take into account the life-cycle model many internal and external factors ins.
First, the installation of family businesses in the Arab world is different. Families live in a more social environment and are often more numerous. This makes issues such as stakeholder structures and redistribution essential part of the continuity of the family business and unity. The importance of this in the “expansion and restructuring” phase, where families often experience changes in institutional structures and the need to modify their ideas, which may represent a challenge based on the number of stakeholders involved and non-participants.
Second, there is debate between the fact that the Arab culture-oriented entrepreneurship and investment, but at the same time is typically used a conservative approach to business performance. This conservative think sometimes interfere with innovation and entrepreneurship. However, the Arab family businesses characterized succeeded in their life cycle developed sense of realism to the extent that it can be applied to this conservative thinking and processed in accordance with the conditions and the status quo.
Third, there is the influence of society on the Arab family businesses. Affect their efforts to protect their reputations on the way they communicate and the decisions they make. Usually it represents the founding contract of trust with the customer values. So The founding of the company trade mark is happening from the beginning as early as the “innovation and the reservation phase.” At the moment, consumers returned again to embrace the thought of saving. Tend to the old way of thinking after the era of overspending the limit as a result of recession-free for years. If possible, keep as much of the traditional family through the company’s life cycle, we’ll Arab family businesses maintain a competitive advantage in today’s markets. Trust and expansion in accordance with the calculated risks should be a strategic goal. And we must not risk the reputation of the company in all phases of the family business life cycle.
There are many special features which may work on the formation and modification life cycle of the Arab family businesses. Above all, though, The management of a family business can be a challenge at any stage of their life cycle. In the end, successful family businesses are what make the family unit and ideas strategic priorities at all stages of their life cycle.