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What makes a family Business Successful?

Extracts from this document...

Introduction

´╗┐Fall 10 08 Fall MGT6340: What Makes a Family Business Successful? 3rd December 2010 Word Count: 2725 The aim of this paper is to identify and discuss the criteria that academics and others use to assess the relative success of a family business. The author will then take a criterion and apply it to a successful family business. Contents 1. Introduction 3 1. Criteria of a Successful Family Business 4 1. Family 4 2. Business 6 3. Governance 8 4. Foundations 10 1. Case Study 12 1. Bottlegreen: Sustainable Principles 12 2. Bottlegreen: Sustainable Practices 12 1. Production Facility 12 2. Recycling 13 3. Suppliers 13 4. Distribution 13 5. Packaging 13 1. Bottlegreen: Philanthropy 14 1. Breakthrough Breast Cancer 14 2. Charitable Functions 15 1. Bottlegreen: Conclusion 15 1. Conclusion 16 1. References 17 1. Bibliography 18 1. Introduction Family businesses have become recognized as powerful but complex organisations because of the interaction between the family and business systems. They are also known for their distinct characteristics. Nevertheless, these features could have a positive or negative effect on the survival of the business. This assignment will highlight the key factors that define a successful family business but it will also examine the weaknesses, which in turn could threaten the life of a family business. Furthermore, the assignment will also evaluate one of the key factors through an illustration on the family owned business, Bottle Green, a U.K. soft drink manufacturer. 1. Criteria of a Successful Family Business 1. Family Family businesses are different from any other type of business because there is an interdependence of family and business systems. The overlap can create an outstanding business performance but it may come at an expense. ...read more.

Middle

45). Davis agrees with their statement since he believes that governance within a family business can be more complicated than for a non-family owned business (2001). In order to overcome any family business problems, the factors of business, family and ownership will need governance. According to Carlock and Ward, ?family business governance requires parallel family and business thinking to support the development of planning, decision making and problem- solving structures for both the family and business systems.? (2001, pg.140). A successful family business will be able to understand the importance of family governance. Kenyon-Rouvinez and Ward define the meaning of family governance. A family governance aim to ?achieve, maintain, and increase family members? unity both among themselves and with their family business; promote stable and committed ownership; and ensure that shareholders adopt a professional attitude towards the business so as not to impede operations.? (2005, pg. 53). The figure below illustrates the family and business governance structure. Carlock and Ward stress on the importance that ?sharing information and coordinated action between the family council and board of directors is often required because of the overlap in the family and business systems.? (2001, pg.141). (Source: Carlock and Ward, 2001, pg. 141) With the help of a regularly scheduled family council and board of directors, a family business can provide a governance structure throughout the business, which in turn can create a forum for sharing information, allow shareholders to access the information, communicate and discuss concerns related to the business and encourage family participation in the decision making process. As a result, these factors can create a healthy family business. 1. Foundations According to Poza, there is a general perception that family business are ?less socially responsible because of their incentive to protect family wealth? and ?less ...read more.

Conclusion

Although this technique cannot be used when the bottles are placed on the shelves, it manages to utilise the full use of space during transportation. 1. Bottlegreen: Philanthropy 1. Breakthrough Breast Cancer Breast cancer has become the most common cancer in the UK with over 46,000 women and 300 men being diagnosed each year. Since it can affect everyone in some way or another, Bottlegreen has created a limited edition bottle containing a new cordial flavour known as Bottlepink. With every bottle sold, Bottlegreen will donate 10% to the breast cancer charity, Breakthrough Breast Cancer. The charity fights cancer through research, looking at prevention and cure, campaigning and education. 1. Charitable Functions Bottlegreen is willing to help charities and businesses that are raising funds for praiseworthy projects. Bottlegreen can assist these charities and businesses by donating their products for charitable functions. Recently, Bottlegreen have donated to Marie Care Cancer Care, Action Against Hunger and St Johns Ambulance. The donations may by small but it can make a big difference to a charity. As a result, Bottlegreen will always be known for their philanthropy throughout the community. 1. . Bottlegreen: Conclusion After evaluating the family owned business Bottlegreen, the author of this paper has concluded in believing that Bottlegreen is a successful family business especially in terms of the foundations criteria. The family owners of Bottlegreen established the business using and undertaking sustainable practices while helping the local community through philanthropy. For this reason, these foundations will always be part of Bottlegreen?s values and vision. 1. Conclusion This assignment only includes several criterions on what makes a successful family business. Nevertheless, they all give an indication on how to create a healthy family business. These criterions may formulate a successful business but there will be consequences if the family business cannot perform in these areas. 1. ...read more.

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