Family Business Dynamics


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Family Business Dynamics

  1. 1. Family Business Dynamics SYLLABUS Third Mini 2004 ENT 5447 Tues. – Thur 11:40 – 1 PM Rm. 1101 FACULTY: Stan Mandel, Ph.D., CPA, PE Director, Angell Center for Entrepreneurship Executive Professor, Babcock GSM OFFICE: 3115 Worrell Professional Center (O) 758-3689 COURSE DESCRIPTION: Family businesses impact all our lives. It is estimated that over 95% of all US businesses are family owned, that they contribute over 50% of GDP, and that they account for all US new job creation. Interestingly, less than 20% of them survive to the second generation. WHY? Most likely all of us will be involved in our own family’s business or another’s - as a professional manager, accountant, lawyer, psychologist, or employee. This course explores the business, personal, and interpersonal issues associated with a family-owned and managed company. We will examine such issues as: your role in a FB; strategic family and business planning; succession planning (training and letting go); FB communications and conflict resolution; ownership and estate planning; etc. LEARNING OBJECTIVES: Family Business as a field is both multi-disciplinary and multi-level in its scope. Students will achieve learning objectives at four different levels of analysis. • Individual ⇒ Learn under what circumstances you should consider joining your family’s business. ⇒ Understand the competencies and commitment required for a successful career in a FB. ⇒ Improve self-awareness of your role in the FB, as successor, family manager, non-family manager, and advisor. • Interpersonal ⇒ Learn how to increase family dialogue on FB issues and ideas. ⇒ Become sensitized to the sources of conflict within FB. ⇒ Develop analytical skills to deal with the issues and conflict that arise in FB relationships. ⇒ Understand FB issues from the perspectives of owner, family, and manager. • Organizational ⇒ Practice diagnostic skills needed to interpret issues within a FB setting. ⇒ Develop management skills that can positively impact the success of FB. 1
  2. 2. ⇒ Learn the significance of the different governance roles of family councils and boards of directors. • Strategic ⇒ Develop the skills needed to begin planning within a FB (family, estate, business, and succession). ⇒ Learn how to integrate the strategic plans of the business with those of the family. ⇒ Discover and utilize the core competencies of a FB. POLICIES: 1. If you have a question, seek additional insight, or want to discuss subjects in greater detail, please see me after class or make an appointment. My job is to provide opportunities for you to be successful in the class and hopefully in your future career. Your job is to take advantage of these opportunities. I also appreciate questions addressed via email. You will get a prompt response, and if the question is a good one, credit for participation. 2. Since this course involves a number of participants, change will be inevitable. There may be additions/deletions to readings, change in dates, or similar modifications. I will attempt to keep such changes to a minimum. 3. Please feel free to invite members of your family business to attend one or more classes. This provides a richer learning experience for all. 4. There will be at least one opportunity for you to attend a meeting and presentation of the Wake Forest University Family Business Center (WFU-FBC). We encourage you to participate, as this gives you additional networking and learning opportunities not often available in a pure academic environment. REQUIRED READINGS: • There is one required book and several re-prints of articles, chapters, and cases that are required for each class. I believe you will find the readings interesting and that they help you better understand the interdisciplinary nature of FB dynamics. • The required text is: Family Business (Ernesto J. Poza, Thomson South-Western, ISBN # 0-324-26151-9). This is available in the bookstore, or you may order it from or other sources. • Each student is expected to read all chapters, articles, and cases. • The class is designed around a number of learning techniques. We will keep lecture time to a minimum. Your weekly contribution is to be prepared to discuss cases and your reaction to the speakers and readings. 2
  3. 3. FIRST DELIVERABLE (Class 7, January 27): We will divide the class into seven teams of three members each for the analysis of the Zimmerman family. Use these team assignments for this deliverable. At the January 27 class, each team will present a portion of the “American FB Survey 2002" that can be found at the following site: Include the findings, but more importantly, what you find interesting when compared to organizations that are not defined as FB. On January 27, each team should make a PP presentation of about 10 minutes. The entire team should present and be prepared to respond to questions. Hand in a PP copy to me at the beginning of class. Team 1: Company Characteristics, Leadership Profile, Succession Plans Team 2: Estate Planning, Philanthropy, Ownership Issues Team 3: Non-family Issues, Boards of Directors, Strategies and Organization Team 4: Perceptions of Outside Advisors, Investment Planning, Team 5: Perception of Business Climate, Plans for Current Year, Changes in Findings Team 6: Critique Team 7: Critique SECOND DELIVERABLE (Class 11, February 10): See the last page of the syllabus for description of questions to respond to for the Pollack PR Mkt Group case. This is an individual assignment. Most students find cases a fun and interesting way to apply the principles learned in the readings. There will be case discussions throughout the semester. The entire class is responsible for reading and preparing each case. When preparing a case for class, we like to think of our self as a consultant brought in by the Board of Directors to help resolve an undefined problem(s). Some cases will be video in format and give you the opportunity to see the emotions that are evoked within FB situations. COURSE PROJECT (Class 15, February 24): Primary Project Focus. The WFU Family Business Center is in the process of developing various instruments to help measure the progress that member organizations make on a broad range of family and business indices. Working in groups of 3, your course project will be to develop one or more of these measurements. As the course unfolds you will become more familiar to these issues and how they might best be measured over time. As an example, your group might want to develop a family business balanced scorecard…or all groups might want to develop such an instrument independently. Alternative Course Projects. Creativity in project development is encouraged. A project can take many forms. They can be either individual or team. Following are some suggestions. 1. Prepare an interactive consulting outline (similar to “Creating Happier Families and More Successful Businesses”) that deals with such global issues as: • Family Business Strategic Planning 3
  4. 4. • Professionalizing the FB • Re-engineering the FB • Corporate Renewal for the FB • Another appropriate issue of interest to you and of a global nature to FBs. 2. Develop a business plan to exploit an opportunity or correct a deficiency within your family owned business. 3. Individuals from a foreign country might do a research paper on the impact of his/her country’s culture and governmental policies on the operations of family owned enterprises within that environment. 4. Develop a case study on your own family business. 5. Use data from Mass Mutual/Arthur Anderson to prepare an article for publication in a business journal. 6. Prepare a strategic family business plan for the family business in which you are involved. 7. Facilitate yours or another FB in developing mission statement and statement of operating principles (see me for outline). 8. Analyze another family business with the purpose of assessing its functionality and the opportunities available for non-family members. 9. Other appropriate topics of interest to you. KEEPING SCORE: Businesses generally keep score by measuring performance against such standards as sales, profits, ROI, etc. Similarly we will keep your score by measuring how well you perform in such areas as: class discussion, case analysis, and major project. Specifically your grade will be determined by: Area Points 1. Class Participation 250 2. Course Project 500 3. AFBS Presentation 125 4. Case Analysis 125 Total Points 1000 4
  5. 5. Readings: Purchase or Access 1. Family Business (Ernesto J. Poza) 2. American Family Business Survey Supplied 3. Generation to Generation: Life Cycles of the Family Business (Introduction) 4. Strategic Planning for the Family Business: Parallel Planning to Unify the Family and business (Chapter 2) 5. Ford Family 6. Creating stronger families and more successful businesses 7. Case: Salvatore Ferragamo, SpA 8. Case: The Pollack PR Mkt Group 5
  6. 6. ENT 5447 2003- FBD CLASS AGENDA; Mini 3; Tuesday-Thursday; 11:40 – 1:00 pm; Rm 1101 Date Objective Theme, Class Time Assignments 1. 1/6 Overview of FB Course intro; Case: MM CD Syllabus; discuss term project; Generation to Domain Generation…; FB: CH #1 (Define FB) 2. 1/8 Recognize conflict Direction, focus, and conflict FB: CH #2 (Leadership) Case: Montelopre (Video Case) 3. 1/13 Deal with conflict Mini Cases: Decision Points (A) FB: CH #3 (Trust) 4 1/15 Interdisciplinary Conflict in the FB FB: CH #4 USASBE nature of FB, DM Speaker: Robert Caldwell 5. 1/20 Diagnosis & DM Mini Cases: Decision Points (B) 6. 1/22 Succession & back Ford Family; FB: Ch. # 6 (Strategic Growth) to your ENT roots Speaker: Jane Brightwell 7. 1/27 Current Global Presentations on AFBS Report American Family Business Survey: Issues pdf 8. 1/29 Organizational Governance in the FB; Case: Feragammo; Governance Case: Feragammo FG: Ch. # 8 (Governance) 9. 2/3 Family Governance, Speakers: Andy & Bruce Brown FT: Ch# 9 (Culture, Counsels) Innovation & Change 10. 2/5 Nagging issues Legal and $$$ Issues FB: Ch. # 5 (Estates & Ownership) Speaker: Neal Tackabery 11. 2/10 Preparing the next FB Issues Applied Team written case analysis…hand in at start of class generation Case: The Pollack PR Mkt Group 12. 2/12 Consulting with FB Speaker: Susan Leonard Creating stronger families and more… FB: Ch# 10, 11 (Leading Evolution, The Future) 13. 2/17 Professionalizing Non-family members FG Ch. # 7 ((Non-Family Members) the FB Speaker: Gerald Chrisco 14. 2/19 OPEN OPEN 15. 2/24 Term Projects Term project presentation Project due at start of class Note: Family Business: FB: Ch# X 6
  7. 7. Family Business Dynamics I would like to learn more about you and your interest in family businesses. Please take a moment to complete the following. If you would like to visit about any of these issues, please come on up or make an appointment…Stan 1. Name _________________________ 2. Do your parents or other relatives operate a family business? __________ If so, please describe the business, giving the industry, name, location, years in business, size (employees, sales, acres, or a measure you are comfortable divulging). 3. Do you plan on joining the family business described above or any other family business? ___________ 4. If so, please describe the position you will have upon entering this business. 5. Describe your prior work or management experience. 6. If you are currently interviewing or plan to this semester, describe the companies and functional areas in which you are interested. 7. Describe your talents, strengths, skills or abilities you believe will make you successful in the job or business you would like to join. 8. Are you interested in starting your own business? __________ Describe this business. 9. Thoughts for the major project. 7
  8. 8. The Pollack PR Marketing Group Written Case Analysis (2-4 pages) Due: February 10, Beginning of Class Instructions: Individually answer question one and either two or three. Kindly limit to no more than 3 pages double spaced. Helpful Hint: I am interested in your ability to express and apply the major content areas from the course. These include, but are not limited to: succession (training and letting go); fairness in participation and estate planning; sibling rivalry; opportunities for non-family members; family and business system conflict; family participation agreements; communications; transferring power...almost all topical areas of the course. I do not expect you to apply each topic to each question, rather what you feel are the most important issues for that question (some may be repeated). Please use proper grammar and write in complete sentences. 1. Required. Do you believe that Noemi Pollack made the correct decision when she permitted Stefan to join the business? Why? Include in your answer what she did right and what you feel she should have done either prior to or at the beginning of Stephan’s employment. Should Noemi have included her other son, Greg, in these plans? How? 2. Option You are a bright young MBA graduate from Babcock and have established a family business consulting practice in NYC. PPMG has engaged your services to analyze PPMG and make appropriate recommendation. It is midnight the day before you are to make an oral presentation to Noemi and Stephan. Describe what you will tell them by: a. detailing what are the company’s competitive advantages, and analyzing how they arose; b. detailing what are the significant problems that PPMG faces today, and analyzing how they arose; c. recommending how they deal with these problems to minimize the adverse affect on the company’s future success. 3. Option You are a perspective employee of PPMG and are interviewing for the position of creative manager. Melina Webster and Jonathan Elkins are both friends so you are aware of the ambiguity surrounding Stephan’s actual authority. During an interview you let it be known that you are somewhat of an expert in family business dynamics, having successfully taken a course at Babcock GSM from one of the leading authorities in the field. a. What questions would you ask Noemi? Stephan? Why would you ask these questions? b. Under what circumstances would you accept a position at PPMG? Why? 8