From A Family Company To A Family Business: What Is The Right Strategy? In this case study of the department “from a family company to a family Business” we will tell the story of the 100K Factory company, which decided to set up a separate company for its banking and finance in spite of fears expressed by family members. Has been providing solutions and comments by members of the real family firms involved and their ideas imaginable for the source of the problem in this story and from or on Mamaajb blame in the end.
100K Factory Revolution has been established family company 80 years ago, and the huge company’s activities in the Arab world and Central and East Africa and Asia. 100K Factory Revolution family started its activity in it like like a lot of families to exercise trade. The 100K Factory Revolution group has expanded to include many of the offices they represent within the Arab world and beyond.
In the late seventies and early eighties of the last century and during the take over responsibility for third-generation management company, TBN group entered the field of financial services. This step were not planned, but it was in order to increase and enhance the company’s services at the time. TBN group suffered some losses due to the failure to develop appropriate procedures to manage the risks associated with exchange rate differences and delayed payments and collection.
In the late eighties and early nineties, the commercial activities of the company only has not seen huge growth, but shipping and transportation management benefited from increased TBN range of goods and movement of products between Asia and the West.
The third generation of the company TBN members decided, after assuming the responsibility of directors for several years to bring professional group structure and work in order to increase its effectiveness. The group was at this stage-managed by AbN, son of Big Brother in the second generation. Management team included five of his cousins. While AbN holds the positions of CEO and chairman, he took all of his cousins responsibility for one of the three departments of the group: trade, manufacturing and shipping. NbO and filled one of the three sons of Uncle position of Chief Financial Officer of the Group.
It dealt with a review of the group structure aspects of the governance of the institution and the family as well as the human resources process. In order to reduce the Group’s exposure to risk, executive director of the working group, with the help of his team to find ways to give professional financial services group TBN. After a review of the strategy was the final decision to stay in the sectors of banking and financial services as an independent company on behalf of TBN financial services or “TBNFS” Acronym.
This has raised some concerns among some members of the family, and demanded them in line with the values and history of the family that TBNFS company aims to TBN loyal customers service to provide them with solutions that will help them to increase the size of their businesses. The company has endured in the past some of the losses as a result of this kind of support. Other consequences of giving professional for these services, which formed a source of concern when the family that it was also meant to expand and thus increasing the 100K Factory Revolution Group’s exposure to risk as a whole. Moreover, the new company will require changes to the organization: In the past, operations related to financing transactions for customers is part of the responsibility of the Accounting and Finance Division Headquarters; and from now on will become the part of TBNFS tasks which will be an independent legal identity.
The 100K Factory Revolution group was also to the lack of qualified financial skills required owners of staff, and therefore had to start hiring new employees. The immediate family members began to wonder about how the company’s management will enable more employees. Up to this point the family had been working in the interrelated and interdependent areas it had family members are well-equipped and rehabilitation properly from an early age to do these tasks. The NbO Chief Financial Officer of the group is the only one who has actual qualifications to manage TBNFS, but the team was then a collection of accountants and cashiers who worked with the family company for decades did not have the willingness to become part of the new company.
Chief Executive Officer and Chief Financial Officer Executive Officer of TBN put all those objections in mind, but they stressed that TBNFS will continue to support family values and will open up new markets for the group in addition to increasing competitive advantage.
In the end, the management team and family members not working and the company agreed on the establishment of the new company. TBNFS work with a small team has been newly appointed and had previously worked in the corporate world and institutions began. The team brought with him ideas contributed in giving a new corporate culture.
During the first five years and until the late nineties, TBNFS achieved good results. The Department has developed clear procedures to support 100K Factory Revolution customers in trade and in line with family values with regard to supporting the company’s loyal customers. Customers felt grateful for the services provided to them and the group has succeeded in attracting new companies because of their systems and services. TBNFS also succeeded in reducing the Group’s exposure to risk ratios through the bad debt tracker and the application of preventive measures to help customers with conventions and the package they already have and avoid defaulting on repayment. TBNFS became very successful and worthy of financial services company with respect and with a culture different from the rest of the group companies and the idea of customers reported they are of high efficiency of the company and quick decision-making. Unfortunately, the company did not attract only a few members of the fourth generation family where most members of this generation preferred to work in the other three departments set TBN.
AbN retired in the late nineties from his 100K Factory Revolution post as chief executive and chairman of the board and handed the flag to his cousin, who served as chief financial officer for the past twenty years. AbN and became president of the Family Council.
Before his retirement, AbN TBNFS agreed with management to expand its services to other departments of the group and provide leasing services for the management of transport and shipping to help them increase the transport and shipping capabilities have. But with the economic boom in the region and increase domestic investment, TBNFS saw opportunities exist beyond the activities of the group and began expansion through Tmwilasttmarat in real estate and stock markets. Family members and the management team has been supporting the expansion of that process and encouraged by the high return on investment.
In 2007, the company began to see some references to the existence of financial difficulties with some of the customers who have expanded rapidly in the last ten years. The beginning of 2008. Some members of the management team TBNFS resign and moved to work in other companies. During the years 2008 and 2009 TBNFS suffered greatly from the financial crisis, most of the customers and wanted to reschedule their debts, forcing the three other departments to help the group to mitigate losses TBNFS.
Family members are now in the face of questioning about why this happens. While other family businesses in the region have succeeded in passing the storm of the financial crisis, it was a huge group TBN losses to a large extent. AbN began to blame himself and ask a lot of questions: Was the founding TBNFS step correct strategy? The financial crisis has been outside the control of management, but is there were other signs predict failure? Is it due to the difference in culture TBNFS? Is this is a lesson for family businesses not to expand into new industries by the availability of appropriate qualifications in the family?
The first solution
The second generation, president of Almajdouie Group, Saudi Arabia
Above all, we understand that the financial crisis in 2008 was an exceptional event and globally. It was to this crisis negative impact on almost everyone, although to varying degrees.
TBNFS company’s performance was good before 2008, including levels achieved high efficacy and good results in terms of customer satisfaction. And therefore I do not find an excuse because the administration itself to blame, but it instead absorb the lessons and move forward. Perhaps the reason is TBNFS focus on the support of other sister companies in the group in order to increase its sales and overlooked aspect of credit risk. The casualty figures are unclear and the extent of the damage is unknown. To assess the situation properly, these details must be clarified and taken into account before taking any future action. The decision depends on the continuation of the company or liquidation basically on how high these losses. Another question is how long the company will continue to be affected by this loss?
Regarding the existence of a family member to the post of director of the company, in fact there is no guarantee that a person belonging to the family will function better than someone from outside. Often, managers from outside the family may own long experience in the industry and required greater commitment. TBNFS company need this experience now to determine the next steps and assess the chances of continuity.
If TBN family decided to continue TBNFS company to work, they must take advantage of the previous positive results achieved with its customers, and the use of a team on a high degree of professionalism and not necessarily have to be a team of family members, and increase the number of members of the credit risk team, and eventually conduct an audit and evaluation comprehensive “causes the deterioration of things this way” in order to draw lessons from the decline in the company recently.
The second solution
Everyone in the Tunisian family company
It is difficult to acknowledge when you should seize all opportunities and when to give up one of them and not pay attention to it, especially if you are part of a large family-owned company. I think it was logical to do TBN TBNFS founded the company because it was obviously a lot of opportunities and timely because the idea of the need to diversify activities present permanently in the family Vkracharkat. However, I think that’s important as well as the topic is how to diversify their activities. Maybe you should have Tkongmlah much slower founding TBNFS company to look carefully at the quality of the team that will be prepared to manage. In spite of the team that the company had significant financial knowledge, but none of them has a background of working in the family business, and perhaps would have been better trained to absorb the values of the family and the culture more. Maybe if this factor was found to have the case Donkiemanm unnecessary risks, because I think that despite the unpredictability of the financial crisis, but it was possible to prepare for them in advance not to exaggerate the risk. Many family businesses have successfully hedge such risks and do not bear such a big loss. However the crisis was undoubtedly harsh on everybody not only their results are limited to the financial sector.
I also think that taking into account what the company suffered from important is where it needs to be a separation factor in choosing whether TBNFS must continue to work or not losses. It is also important to assess the extent to which increased brand value as a result of this activity and how sustainability can be the company’s management in the future.
The exchange of blame is not a positive thing in a family business or in any other type of company. It should not be focusing on who should be blamed, but it must focus on what needs to be done in the future. I believe that family businesses need strategies revolve around how to get the greatest possible lessons learned and the effects of such experiments through the entire process evaluation in the Family Council. You must do so constructively with real strategic significance in a way, to be activated in response to losses incurred 100K Factory company. I myself do not think that there is justification for TBNFS liquidation of the company because it is possible restructuring and management successfully again using a different approach in dealing with the risks.