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... Family businesses play a significant role which cannot be replaced by any other field of business. According to the National Federation of independent Business 2002, more than a third of Fortune 500 firms are family-owned and 90% of American businesses are family-owned. There are more statistics which are listed below: Worldwide, 75% of all firms are family firms (Globak Entrepreneurship Monitor 2002 ); Family firms represent 89% of all businesses in the United States and represent 64% of the U. ... Gross Domestic Product (Family Businesses¡¯ Contribution to the U. ... Economy 2003); 60% of public companies are family controlled and family businesses account for 60% of total United States employment; (Family Business Review, Summer 1996); 78% of jobs created in the United States are by family firms (Gongressional Testimony 1998). ... family businesses will experience leadership shifts in the next 5 years, as CEO¡¯s retire. (Mass mutual/Raymond Institute Family Business Survey 2003)
From the above statistics we can see that family businesses account for a large number of the total number of businesses worldwide. But what is a family business? According to Jepson (1969), if any business possesses one or more of the following characteristics:
1£®Business employs at least one family member;
2£®The family control ownership and/or decision-making power;
3£®Future plans consider succession of the business to the next generation.
The family business is an organization where two or more extended family members, control the direction of the business through the exercise of kinship ties, management roles and ownership rights. (Marcear 1989) Therefore, family businesses include family, business and ownership. The graph of the three circle model of a family business shows this.
The three circle model of a family business
Developed by Tagiuri & Davis, Harvard, 1980
The relationship of the family members in a business should divide into different roles between home and work. Family members have their certain positions in a family. Turning into a business, family members also have their own job position. However, the inherent inner conflicts and vulnerabilities exist in both family and business. ¡°In order to understand the enormity of this juggling act, the blending of both the familys business-of-living with the familys living-of-business, one must first understand the preexisting lifestyle of the family. ... K 2000) Thus, the management of the family business is also important. In this essay, how to manage a family business is going to be further discussed with appropriate examples. Then, the advantages and disadvantages of the family business will be analyzed.
How does a family company run?
There are many successful family companies in the world and also there are a lot that have failed. ... com/) This is the typical way to continue a family company. ...
From this perfect example, we can find that the management in a family company is very different to other kinds of companies especially in the maintenance stage. Normally in a family company, the employer and their relatives centralize all the power to manage their business but Sam Walton used a wise method which is different to the conventional way to encourage his employees.
Approximate Word count = 2511
Approximate Pages = 10
(250 words per page double spaced)
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