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THE FAMILY ENTERPRISE
”Family enterprises” are those which
are mainly owned by one
or more families.
The growing importance of these companies throughout
the world, at both social and economic level, means
that in many sectors they have become the driving
force of the corporate world, evolving a high degree
of innovation and entrepreneurial capacity.
The family business owner wishes to transfer his
business to the next generation and yet only a small
proportion of family businesses manage to maintain
the family nature for more than one generation.
Family enterprises make up an important part of the productive infrastructure of all advanced economies.
The fact that family businesses rarely last for more than two generation is due to the fact that the
family business owner does not always manage to successfully
overcome the following challenges:
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- Planning for
succession.
- Overcoming the resistance of senior
members to leave their positions at the right
time.
- Incorporating non-family directors.
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Solving the financial problems entailed in the
generational change
- Ensuring that the family
successor will be competent.
- Having the ability
to attract and retain non-family senior management
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Obtaining external financial resources or establishing
alliances with other companies without losing
effective control of the company. |
Ownership, control and management
of the company are the three elements involved when
it comes to defining the family enterprise. It would
be desirable to coalesce on a definition that encompasses
family businesses and create a clear reference for
the concept in order to specify its legal framework.
At the same time, the advantages that legislation
establishes for family enterprises and the social
recognition that may be fostered will serve to stimulate
entrepreneurial initiative and increase the number
of vocational entrepreneurs.
The challenges facing family enterprises
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- Finding capital
to grow without diluting family control.
- Solving
conflicts between the cash flow needs of both
the family and the business.
- Planning to resolve
the financial problems entailed in the generational
transition.
- Overcoming the resistance of senior
members to leave their positions at the right
time.
- Ensuring that the family successor is
competent.
- Overcoming sibling rivalry or non-acceptance
of the successor.
- Having the ability to attract
and retain non-family senior management. |
The key to success
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- Tradition and continuity.
- Quality
of products/services.
- Flexibility.
- Long-term
planning.
- Family-oriented business environment.
- Innovative and entrepreneurial spirit.
- Social
responsibility. |
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