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Corporate Governance and Succession in SMEs


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Corporate Governance and Succession in SMEs

  1. 1. A Debate
  2. 2.  Governance Succession SME’s in Latin America: Mexico  Case Study: Cineapolis SME’s in Africa SME’s in Asia Conclusion
  3. 3. • Structures put in place to discuss and decide the right issues at the right time by the right people in the right place.• A way to integrate ownership, business and family subsystems while maintaining the necessary boundaries.
  4. 4.  Alternative to sale or closure. Ownership succession: the complete and irreversible transfer of ownership from one group to another. Managerial or leadership succession: ultimate transfer of management duties and responsibility from one C.E.O to another
  5. 5. FAMILY BUSINESS NON FAMILY BUSINESS Owner holds all the cards • Owner holds all the cards Poor business • Poor business performance performance • No natural or trained No natural or trained successors/gender issue successors /gender issue • Unwillingness of CEO to let Unwillingness of CEO to let go go Conflict within family
  6. 6. • Plan, Plan and Plan—a process, not an event• Reduce lifestyle issues• Have an organization• Develop talent—a marathon, not a sprint• Strategic planning to determine needs of business going forward• Implement appropriate governance
  7. 7.  5,144,059 companies 99.8% are SME’s Sales 52% of GDP 72% of Employment Regulated by SPyME Life period: 3-5 years Services Comercial Manufacturing Others
  8. 8. SOCIEDADANONIMA Limited Liability Fixed or variable Fixed or variable capital capital -Shareholder’s Shareholder’s liability liability is limited to their stock -Directors liability interest A disinterested No third party third party Sucession must be Minority rights stablished sin ce the beggining Accounting methods Sucession and merger
  9. 9.  Absence of planning and forward thinking Inadequate leadership and management skills Lack of future business plans and problems with cash flows Inability to innovate Inadequate access to technical assistance
  10. 10.  Mexican Founded in 1947 Cine Cine “La Cinepolis Morelos raza” Small company Family business
  11. 11. CHAIRMAN Father OF THE BOARD Sons Director Director PROBLEM :family matters have repercussion on the business
  12. 12. Son CEO Familymembers Director Director
  13. 13.  Biggest cineplex chain in Mexico with 205 theaters in 65 cities Largest chain in Latin America 230 theaters 2,160 screens 13,000 employees throughout Mexico, Guatemala, El Salvador, Costa Rica, Panama, Colombia, Brazil, Peru and India.
  14. 14.  North Africa, Mauritius, and South Africa  South Africa: 55% of all jobs, 22% of GDP  Nigeria: 95% of all formal manufacturing activity  Senegal and Kenya: conducive for SME’s as well Incentives are being given by Institutions  African Development Bank, UK Commission for Africa, International Finance Corporation, UN
  15. 15.  Political and economic  Poor access to formal instability financing Informality  Management Limitations brought  Infrastructure about by the market  Unavailability of Lack of regulations and certain raw materials policies  NO SUCCESSION Undeveloped regional PLANS integration
  16. 16. More InitiativesCommunicationMore rigid policiesMore diverse sources of financingSuccession Plan
  17. 17.  China is regarded as having the most competitive SMEs. Followed by North Asian markets  Japan, Hongkong, Korea and Singapore Private-owned enterprises have chosen the highly centralized family style to be their ownership capital structure.
  18. 18.  Change in ownership is a dynamic evolution, which, however, is restrained by external institutional environment to appear to be ultra-stable. The changes in the corporate governance system are often more slow than necessary and, in some cases, are not even made at all. This mismatch, even if transitory, could stop the growth of family firms
  19. 19.  Combining the modern market rules and the traditional Chinese culture.  Admission of the difference in knowledge and capability among people.  Ownership and property rights should be unambiguous  Improvement of internal management and training of talents to increase competitiveness.  Rely NOT on the network-based but the rule- based development.
  20. 20.  There is a growing need for greater transparency and corporate governance among SME’s. SME’s are facing the same problems all over the world. SME’s aren’t the only ones experiencing problems in corporate governance and succession.  Apple and Steve Jobs