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Management > Chapter 5 Packet Notes > Flashcards

Chapter 5 Packet Notes Flashcards

1
Q

A group of people bound by a shared history and a commitment to share a future together, while supporting the development and well-being of individual members.

A

Family

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2
Q

An organization in which either the individuals who established or acquired the firm, or their descendents, significantly influence the strategic decisions and life course of the firm.

A

Family Business

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3
Q
  • Family concerns
  • Business concerns
A

Family and Business Overlap

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4
Q
  • Care and nurturing of family members
  • Employment and advancement in the firm
  • Loyalty to the family
A

Family Concerns

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5
Q
  • Production and distribution of goods and/or services
  • Need for professional management
  • Effective and efficient operation of the firm
A

Business Concerns

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6
Q
  • Strength of family relationships during challenging periods of business change
  • Financial sacrifices that family members make for the good of the firm
  • Operation as a family business distinguishes the firm from its competitors
  • Higher levels of concern for its community and non-family employees
  • Capability to plan and prepare for the long haul
  • Emphasis on quality and value
A

Advantages of a Family Business

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7
Q
  • Conflict among family members about
  • Family business momentum
  • The founder’s imprint on the culture
  • Organizational culture
A

Disadvantages of a Family Business

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8
Q
  • Risk (consequences of failure) to the family in launching a business.
  • Nepotism and the differences in competencies and merit of family members involved in the business.
  • Family traditions versus the business need to innovate and seize opportunities.
  • Unity and cooperation of family versus business need to foster diversity and competition.
  • Family loyalty versus the necessity to provide opportunities for non-family employees
A

Conflict Among Family Members

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9
Q

The founder’s core values become a transmitted part of the culture (for better or worse).

A

The Founder’s Imprint on the Culture

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10
Q
  • Patterns of behaviors and beliefs that characterize a particular firm.
A

Organizational Culture

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11
Q
  • Mutual respect
  • Integrity
  • Wise use of resources
  • Personal responsibility
  • “Fun”
A

Family Business Cultural Values

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12
Q
  • Parental concerns in passing the business on
  • Co-preneurs
  • Sons and Daughters
  • Sibling Cooperation, Sibling rivalry
  • In laws in and out of the business
  • The entrepreneur’s spouse
A

Family Roles and Relationships

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13
Q
  • Temperment and ability necessary for business leadership
  • Motivation of the children to take an interest
  • Education and expertise
  • Timetables in employing and promoting
  • Avoiding favortism
  • Sibling rivalry likely problems, avoidable?
  • Preventing the business relationship from damaging or destroying the parent-child relationship.
A

Parental Concerns in Passing the Business On

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14
Q
  • Opportunity to share more in each other’s lives.
  • Business differences interfere with family life.
  • Work doesn’t leave time for family life.
  • Sharing family responsibilities eases the load.
A

Co-Preneurs (Husband-Wife Teams)

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15
Q
  • Personal preferences different from the business
  • Personal qualifications insufficient to assume role in business
  • Desire for personal freedom to choose another career.
A

Sons and Daughters

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16
Q
  • Best case: Siblings work as a team, each contributing services according to his or her abilities.
  • Worst case: Siblings compete as rivals and disagree about their business roles.
A

Sibling Cooperation, Sibling Rivalry

17
Q

Disagreements about how to treat and reward in-laws and family members/children.

  • Assign to different branches or to different business roles.
A

In-Laws in and Out of the Business

18
Q

Communication between entrepreneurs and spouse is critical for their performance as an effective team for both the business and the family.

A

The Entrepreneur’s Spouse

19
Q
  • Best practices (Professional management)
  • Nonfamily employees in a family firm
  • Family retreats
  • Guidelines
  • Family Councils
  • Family business constitution
  • Family protocol
A

The Need for Good Management in the Family Firm

20
Q
  • Promote learning to stimulate thinking and fresh strategic insights.
  • Solicit ample inputs from outsiders to keep things in perspective
  • Establish channels for constructive communication and use them.
  • Build a culture that accepts continuous change
  • Promote family members only according to their skill levels
  • Attract and retain excellent nonfamily managers
  • Ensure fair compensation for all employees, including those outside the family
  • Establish a solid leadership succession plan
  • Exploit the unique advantages of family ownership
A

Best Practices (Professional Management)

21
Q
  • Hazards:
    • Competition with family members for advancement.
    • Getting caught in the crossfire and politics of family competition within the firm.
  • Solutions:
    • Identify family-only reserved positions in advance.
    • Treat both family and nonfamily employee’s fairly in matters of reward and promotion.
A

Nonfamily Employees in a Family Firm

22
Q
  • A gathering of family members, usually at a remote location, to discuss family business matters.
  • Use of an outside facilitator may be necessary.
A

Family Retreats

23
Q
  • Set a time and place.
  • Distribute an agenda prior to the meeting.
  • Plan a schedule in advance.
  • Give everyone a change to participate.
  • Keep it professional
A

Guidelines

24
Q
  • An organized group of family members who gather periodically to discuss family-related business issues.
    • Represent the family to board of directors
    • Useful in developing the family harmony.
    • Increases understanding of family traditions and interest.
A

Family Councils

25
Q

A statement of principals intended to guide a family firm through ties of crisis and change.

A

Family Business Constitution

26
Q

An extension of the constitution incorporating additional agreements that includes:

  • Ownership agreements (inheritance and buy-sell compacts).
  • Governance and personal politics
  • Use of business resources by family members
  • Conflicts of interest and noncompetition agreements.
  • Codes of conduct
A

Family Protocol

27
Q
  • Avaliable family talent:
    • Mentoring
      • Guiding and supporting the work and development of a new or less-experienced organization member.
    • Competency
      • Allowing only qualified competent family members to assume leadership roles in the firm increases the value of the firm for all who have an ownership interest in it.
A

Available Family Talent

28
Q
  • A sound, profitable business
  • Stable, healthy family relationships
  • Advance planning for leadership succession
  • Positive family leadership and team-oriented management structure.
  • Presentation of career opportunities without pressure.
  • Open communication on family business issues
  • Reluctant parents and ambitious children
A

Conditions Favoring Successful Leadership Succession in a Family Firm

29
Q

Passing ownership of a family business to the next generation.

  • Who will inherit the family firm? when?
  • Should each heir recieve an equal share?
  • Should ownership be transferred gradually?
  • How are tax considerations to be handled?
  • What to do with other wealth and assets of the founding enterpreneur?
A

Transfer of Ownership

Management (33 decks)

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