|
Family-run businesses are moving towards third-generation ownership which is the most critical phase for their survival. To survive in the competitive environment, they must introduce best practices and lay down clear rules on governance and leadership.
Corporate India is synonymous with big family-run business houses like Tata, Birla, Bajaj, Reliance, Murugappa, Mahindra & Mahindra, Godrej, Lalbhai, Piramal, etc. Tata, Birla, and Bajaj have now become household names. These companies account for nearly 15 percent of the Indian economy, and their products have penetrated the lives of consumers in every aspect of life. When the founders died, their empires were taken over by their sons. And when the sons died, the businesses were passed on to their sons. Now with the second and third generations at the helm, it is a whole new India with its economy on an increasingly deregulatory mode. The descendants of the blue-chip dynasties are faced with a huge challenge: Transforming their companies into competitive dynamos that will prosper in the new global economy. Competition from multinationals and Indian entrepreneurs alike is coming on strong. Now, this is reckoning time for these family-run businesses.
Family-run businesses tend to start with an entrepreneur, and as long as he is the promoter and shareholder, it would be a family business. Historically, there are very few businesses that were started by a group of professionals. Entrepreneurs start a business and so in the early stage it would be family managed. The world of business would not survive without them. In fact, around the world, families are the repositories of entrepreneurships. It is families that take risks and nurture new companies; it is from such families that more entrepreneurs are found. Companies go through a three-stage process, family managed then professionally managed and finally world-class management.
It may not be surprising to note that 40 percent of Fortune 500 companies are family-owned or controlled. The family business is the world's most common type of business organization. It is also the most complex, with unique strengths and weaknesses that stem from being family-owned and managed. For a majority of individuals, family and work are the two most significant things in their lives. Family businesses combine these two worlds and create a unique set of consequences, which have positive and negative effects. The most important advantage is that it often starts a very high level of commitment to work. Family businesses tend to emphasize on high quality, invest for the long-term and develop loyal relationships with employees and other key stakeholders. This can make them tough competitors. At the same time, family businesses also tend to focus on issues and tensions within the family. A heightened concern with control can limit their growth and opportunity.
|
