1. THE LIFE AND TIMES OF A FAMILY BUSINESS: A CASE STUDY
Rudolph B. van Buuren (Ph.D.)
Associate Professor – Faculty of Economic and Management Sciences
University of the Free State – School of Management
P.O. Box 339, Bloemfontein, South Africa, 9300
Telephone: +27-51-401 2460
Fax: +27-51-444 5345
E-mail: vbuurenrb.ekw@mail.ufs.ac.za
ABSTRACT
This paper attempts to isolate a number of pitfalls, failures and successes of Kloppers,
a medium size family business in South Africa, within the context of the life-cycle of
the firm. The discussions follow this family business through its 40 years of existence
as it progressed through the various stages in transition from a pure family business,
to a family-owned business, to selling of the business and ultimately the re-invention
of the original family business.
The family is currently entering its 3rd generation and from a contextual perspective
this paper focuses predominantly on succession, ownership and management of the
family businesses as driving forces for success throughout the stages in their life-
cycle.
The findings form an integrated understanding of critical components of decision
making criteria that either support or inhibit sustainable success in family businesses.
These decisions had a profound impact on the business and managerial situation
facing the 2nd generation of children, and will impact on the way in which the 3rd
generation of children is introduced into the Kloppers business.
The main objective of this study was therefore to evaluate the history of the firm since
inception to date with the view to understand the critical aspects that the owners had
to deal with during their transitional phases between the first and second generation of
children. The study concludes with an overview of critical areas that require attention
from a family business perspective in relation to succession management and strategic
business management to ensure sustainability and success.
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2. 1. INTRODUCTION
Traditional views on the sustainability of family businesses have focused the attention
to the important interrelationship between ownership, succession and management.
The success of family businesses rests upon the successful integration of these three
elements (Gersick, et al., 1997; Fletcher 2000).
This paper analyses the case of Kloppers, a South African family business through its
40 years of existence. What is particularly important about this case study, is that the
business evolved through the entire life-cycle (Gersick et al.,1999) from start-up to
being sold to a corporate group, and then was revived again by the second generation
of children.
In this context a number of key areas form the basis for the discussions in this paper.
The first is to understand the impact of the different stages of the life-cycle on the
sustainability of family businesses. The second is to understand how decisions are
made in regard to succession and ownership to support the management of the
business. Finally specific managerial business issues and how these were dealt with
over the life-cycle are discussed.
2. THE IMPORTANCE OF FAMILY BUSINESSES
Family businesses world-wide are contributing increasingly to the economic activity
in their perspective countries. Table 1 provides an overview of the economic
contributions and proportions of family businesses to total businesses, world-wide. As
is indicated in Table 1, about 96% of businesses in the USA are family businesses,
while in that country these businesses contribute as much as 40% to the GNP
(Timmons and Spinelli, 2007).
In South Africa it is estimated that more than 80% of all businesses have family
ownership involvement, and more than 60% of all listed companies in South Africa
comprises family involvement at least during its start-up phase (Dickinson, 2000;
Venter, 2002). However, a large proportion of family businesses in South Africa are
small to medium size enterprises, with nearly 50% employing less than 20 people per
business (Maas, 1999).
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3. Table 1: Worldwide highlights of family businesses (Timmons and Spinelli, 2007)
Country % of FBs GNP
Brazil 90% 63%
Chile 75% 50-70%
USA 96% 40%
Belgium 70% 55%
Finland 80% 40-50%
France >60% >60%
Germany 60% 55%
Italy 93%
Netherlands 74% 54%
Poland 80% 35%
Portugal 70% 60%
Spain 79%
UK 70%
Australia 75% 50%
India 65%
3. CONTEXTUAL APPROACHES TO BUSINESS LIFE-CYCLES
Knowledge of the life-cycle and the specific stage that the business occupies at
various stages of its life can provide a view of the critical decisions and issues facing
family businesses. According to Hanks (1990), a life-cycle can provide a time-table
for structuring the organisation, formalising procedures and systems and revising
priorities in the business. A body of empirical research exists that explain the concept
of life-cycles as an approach to analysing transitions in organisations (Lester and
Parnell, 2004; Solymossy and Penna, 2001; Söderling, 1998; Gersick et al, 1997 and
1999; Ward, 1991; Hanks, 1990; Tagiuri and Davis, 1982).
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4. Lester and Parnell (2004), with specific reference to family businesses, suggested a
five-stage life-cycle model to analyse transitions in family businesses. At the initial
phase (existence phase) they suggested that the focus of the family business is on
viability. In that stage the entire management of the business is in the hands of one
person (the founder) who is responsible for the entire business. At the second phase
(survival) the business focuses on growth and generating sufficient revenue to sustain
the business. Management and power is often shared in this phase as more members
of the family (or non-family members) enter the business. The third phase (success) is
characterized by formalization of the business and its processes and control through
beaurocracy becomes the norm. During this phase the family business grows and
diversifies using specific growth strategies. Phase four (renewal) is defined as the
period where the business desires to return to leaner times, as the business strive for
growth and revival. The final phase (decline) is characterized by the members
becoming more concerned with personal goals than the goals of the business.
Solymossy and Penna (2001) have offered a factorial approach to analysing
transitions in small, medium and micro enterprises, grounded on existing literature
and their own research. These factors can be viewed as conceptual phases of
organisational transition starting with the establishment of written documentation
such as job analysis, procedures and policies relating to formalisation and
standardisation as two dimensions of initial organisational structure, through phases
where the entrepreneur performs multiple functions, including strategy formation. As
the enterprise grows, the need arises for the introduction of multiple levels of
management as the entrepreneur’s capability to manage alone in such growth areas
started to become problematic. Once this occurs, the cognitive processes of the
entrepreneur undergo change as managerial tasks change and as managerial
capabilities are developed. During this phase the changes in the thought processes of
the entrepreneur is reflected in behavior that directly relate to organisational structure
and strategy.
According to the view of Söderling (1998), organisational development can be
described on the basis of three interrelated phases, namely formative growth,
normative growth and integrative growth. Growth is normally of short duration and
highly conceptual during the formative phase. It is in this phase that the rules are
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5. established for growth. During the next phase (normative growth), growth can be
sustained over a number of years. The rules established in the previous phase become
the norm by which the enterprise is managed. The cycle is dynamic and increased
complexity will be realised as growth approaches the integrative phase. It is rarely the
case that an enterprise can make a smooth transition from the normative into the
integrative phase. More often than not, an enterprise's energy will be drawn towards
doing more of the same things better. The old rules will have been superseded without
the new rules becoming clear. The transition period from normative to integrative
growth will be evident when, no matter how many resources are employed within the
old paradigm, performance improvements remain stagnant. A new paradigm is
required to make any significant advancement (Söderling, 1998).
Ward (1991) used an approach to evaluate the evolution of family business from the
perspectives of ownership and management. Tagiuri and Davis (1982) developed a
model that presents the various interactions that occur in family businesses consisting
of three interrelated concepts, namely business, ownership and family as three
subsystems that integrate over time, which they called the Three-Circle model. This
model was transformed by Gersick et al. (1999) to formulate their Developmental
Model that combines the elements of the Three-Circle model with the various stages
of development in family businesses proposed by them (Gersick et al. 1997). This
model (see Figure 1) provides a comprehensive and integrated framework to evaluate
the interaction between the life-cycle of the family business, the family itself, and
ownership aspects. The model consists of three dimensions: family development,
ownership development and business development. Family development comprises
various stages of development ranging from the initial stage of the young family to
the next generation starting to enter the business (where the two generations are
working together) to eventually a phase where the founder family member hands the
business over completely. The ownership development dimension stages starts where
the owner is in total control of the business and takes all decisions unilaterally
(controlling owner). It then evolves to a phase where siblings enter the business and
shares decision making with the founder, (sibling partnership). The final phase is one
where extended family members and/or private individuals are introduced to the
management of the firm, and decision making effectively becomes a shared
phenomenon between family and non direct family members (cousin consortium).
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6. The business development dimension also comprise of three stages namely, start-up,
expansion and maturity, which includes elements of a decline phase.
Figure 1: Developmental Model (Gersick et al., 1999).
Business Development
Maturity
Expansion
Family Development
Start-up
Young Entering Passing
Business The Working The
Family Business Together Baton
Controlling
Owner
Sibling
Partnership
Cousin
Consortium
Ownership Development
As the Developmental Model of Gersick et al. (1999) combines the elements of most
of the models discussed above, and it contains a comprehensive view of the intrinsic
issues and decision requirements facing family businesses over its life-cycle, we used
that as basis for discussion of the results from the case study research conducted in
this project.
4. RESEARCH METHODOLOGY
Case study research can be defined as an empirical inquiry into a contemporary real-
life situation in which multiple sources of evidence are used (Yin, 1984). A number
of types of case studies are reported in the literature. Jensen and Rodgers (2001)
provided a case study typology defining case studies in a number of ways. Snapshot
case studies are defined as a detailed study of one research entity at one point in time.
Longitudinal case studies are a study of a single entity at multiple time points. Pre-
post case studies are a number of case studies written on a single business with
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7. comparative analysis of each case study over time. Patchwork case studies are a set of
multiple case studies of the same entity using either snapshot, longitudinal or pre-post
methodologies. Comparative case studies are a set of multiple case studies of multiple
businesses in order to analyse similar situations across various businesses for
comparative reasons.
The family business that is the subject of this paper is analysed over its entire life of
40 years and therefore a longitudinal cast study method was applied.
A qualitative research approach was used in order to understand the impact of
historical decisions in the family business on the current and future sustainability of
the firm. Qualitative research seeks to provide a deeper understanding of social
phenomena (Silverman, 2001). While quantitative research methods are more useful
in hypothesis testing, qualitative research is used successfully in the description of
organisations (Welman and Kruger, 1999). The kinds of data with which qualitative
researchers are concerned are derived from open-ended interviews that facilitate
understanding, detail and in particular the meanings which human beings attach to
what they do. This project seeks to form an in-depth understanding of the decision
making processes involved in managing the family business over its life-cycle. It is
the socio-organisational phenomena that guide family businesses in their decision
making that become important in this study. For that reason a qualitative approach
was deemed more appropriate for this project.
The approach was to initially understand the context from a secondary research
perspective. Multiple sources of evidence were used, including documents and reports
from the business, printed media reports, and personal interviews. An open ended
questionnaire was constructed and personal interviews with the owners (family
members) were initiated. (An interview with the founder was unfortunately not
possible due to the fact that he had passed away several years ago).
The analysis of the research data was performed using content analysis. Content
analysis is a systematic observation of open-ended questions and unstructured
interviews used to report on the essence of such interviews (Welman and Kruger,
1999).
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8. 5. KLOPPERS CASE STUDY FINDINGS
5.1 Overview of the business
Kloppers is a discount retail family business in Bloemfontein, a city in the central
district of South Africa. The business was started in 1967 by Mr. Willem Klopper and
today sells a diverse range of products predominantly focusing on electrical
appliances, but also including sports apparel, clothing and hardware in their product
ranges. In many ways this family business is the antithesis of the archetype
independent retailer: six brothers working together in evident harmony towards a
common goal; customers lending massive support to an obviously successful
business; and even distributors and suppliers (often the harshest of judges of retailers)
are unanimous in their praise, admiration and expressions of loyalty. Quite a few
suppliers confidently admitted that Kloppers is their single biggest customer
(including chain stores).
The founder had six children (all male) who are all involved in the business. What is
remarkable about the children is that they all studied in different areas after finishing
school- yet all of them joined the family business eventually. The eldest son is an
accountant and practiced for a few years before joining the family business. The
second son became a lawyer, also practiced for some time, and then joined the family
business. The third son became a social worker before he joined the business. The
next son studied agriculture and farmed for a few years before he joined, and the fifth
son became a medical doctor and also practiced for a few years before he joined the
business. The youngest son also became a chartered accountant and worked
internationally before he joined the business.
A brief discussion of the main issues and lessons learnt through its life-cycle using the
Developmental Model of Gersick et al. (1999), are as follows.
5.2 Start-up
At this stage Kloppers was a young family business where the owner was the only
member (controlling owner). At the start-up in 1967 suppliers were very resistant to
the idea of the business selling their brands at a discount. This was at a time that
discount retailing was a new concept in South Africa. Suppliers effectively refused to
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9. supply the business if they continue to pursue the discount retaining concept. As a
result procurement had to be done via wholesalers which exerted pressure on the
profit margins and sustainability of the business model of discounting for cash.
However, as the business grew, customers started to support the concept and the
business was soon so successful that suppliers decided to lift the sanctions. As a direct
result of this issue, the owner later formed a buying co-operative for independent
retailers. This provided him with a substantial amount of buying power.
At this stage the business was just started and was controlled and managed by the
founder and his wife. Decisions focused more on the positioning and management of
the business than on issues concerning succession and family development. It was
critical for the owner to establish a plausible market position early in the life of this
family business. The core focus was to establish effective trade and distribution
channels as soon as possible.
5.3 Expansion
The founder’s eldest son joined the business in the late 1970s and by 1985 three of the
six sons were involved in the business. During these early stages of the family
business, decision making criteria started to revolve around balancing between family
development and business development. The major family developmental issues at
this phase of the business were based on aspects such as how to involve his sons (he
had no daughters) and eventually their wives into the business.
The founder decided that none of his sons will enter the business at senior levels.
They were forced to start at the very bottom, driving delivery trucks, merchandising
shelves, etc. The pecking order was based on the age of the sibling (the eldest is the
most senior in the business). A decision was also made that none of the wives of his
sons will be allowed to become involved in the business. The decision was based on
the fact that, other than their wives, his sons all grew up with him and in a specific
cultural domain that made the management of his business easier.
In early 1980 the discount retailer chain store concept started to grow in South Africa,
and a number of national chain stores opened following the same principles of high
volumes at low prices on a cash basis. Kloppers was now facing fierce competition
from these larger chain stores. In order to ensure continued sustainability the owner
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10. decided to diversify geographically with the view to grow, opening a number of
smaller stores in the city. However, with the geographical diversity came substantial
problems of control over all the stores as non-family members had to be appointed in
the management of some of the stores. The owner had difficulty in controlling the
entire business, and also experienced some fraudulent behavior by some of the non-
family managers. This lack of control by the owner forced him to make a decision to
reintegrate all of his stores into a single, but bigger store. He eventually started to
investigate a number of potential sites in the city, and eventually took bought a very
large department store called Greaterman’s in the central business district of the city
which was for sale at the time. The purchasing agreement, however, forced Klopper to
take over the existing staff and the existing supplier agreements of the Greaterman’s
business. Now the business was operating on a single site, but diversified into a mix
of both discount and non-discount, related and unrelated, products under the same
roof.
During this phase of the life-cycle of the business, the context changed from being a
“pure family business” (owned and controlled solely by the family) to a “family-
owned” business where managerial decisions were diversified between both family
and non-family members. The management of the business was now the responsibility
of a diverse team including the owner, three of his sons, and some of the members of
the original management team of the Greaterman’s business. Control became a major
business issue and eventually the take-over of the Greaterman’s store was
instrumental in the family business’ eventual downfall.
5.4 Maturity
Towards the end of the 1980s the founder was approaching retirement and he started
to ponder over the future of the business. At the time he also started a small unrelated
business in the city selling motorcycles, where his eldest son became involved in.
This business became an instrumental part of the eventual exit strategy of the business
in later years. At the time the family owned business experienced problems with
control as well as fraudulent behavior by some non-family members of their
management team. These and other issues started to exert an enormous amount of
pressure on the owner, and he eventually started to internalise various options of how
to deal with the future of the business. At that time an offer was received from one of
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11. the largest diversified corporate retail groups in South Africa, the PepCor group
(which also started in the late 1950s as a family business) who was seeking
appropriate expansion options in the city, to purchase the Kloppers store as a running
concern. This meant that Kloppers would become part of the Pepcor group. After
deliberating with his sons, the owner decided to accept the offer, and sold the family
business. This decision effectively ended an era of one of South Africa’s most
successful family businesses. Although the trade name of “Kloppers” remained, the
business was now a privately-owned company with no involvement in the business by
any of the Kloppers family members.
The negotiation of the sales agreement included the following:
1) Kloppers would be sold to the PepCor group as a going concern.
2) All the current staff members of Kloppers would be transferred on a
guaranteed continuation of employment principle.
3) The founder (Willem Klopper) and his sons would not be part of the
management of the new Kloppers.
4) Kloppers would become a wholly-owned subsidiary of the PepCor group of
companies.
5) The founder had to sign a restraint of trade agreement, restraining him from
trading in opposition to Kloppers (in PepCor) for a period of at least ten years,
and within a radius of a significant amount of square kilometers from the
existing store.
5.5 Restarting the cycle – the second wave
After the sale of the family business to the PepCor group, some of the Kloppers sons
who had at that stage been involved in the business reverted back to their professions,
while others continued to operate the small unrelated motorcycle store that they
started a few years earlier. The founder, in the mean time, retired from business to a
coastal town in South Africa.
However, after a year the sons decided to start a new discount retail store, which they
called “Juniors”. This store was run on exactly the same principles as Kloppers. As a
result a fierce battle evolved between the PepCor Group and the Kloppers brothers
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12. who operated as “Juniors”. Initially the battle was ensued in court, citing the restraint
of trade agreement, but was lost by PepCor on a technical aspect (the restraint of trade
was an agreement between PepCor and the initial founder (Mr. Willem Klopper)
specifically and excluded his children).
Following the unsuccessful lawsuit, the PepCor group decided to initiate a fierce
marketing battle in order to oust the Klopper brothers from the market, based on an
expensive marketing campaign. The PepCor group eventually lost this marketing
battle due to the substantial customer loyalty that existed towards the Klopper
brothers. The loyalty of the customers that was built over time therefore resulted in a
substantial erosion of business away from the PepCor group store towards the
“Juniors” store. Eventually in 1991, this pressure resulted in the PepCor group
offering the original Kloppers store for sale back to the Klopper brothers at a
negligible price.
The Klopper brother purchased the original family business back from the Pepcor
group, and introducing many of the lessons learnt by the family business over the
years, managed the business back to its original level of success.
After buying Kloppers back from the PepCor group the Klopper brothers, who at the
time was still trading under the name “Juniors” bought a building in the main street of
the city which was occupied by a grocery retailer. They subsequently closed all the
branches of Juniors, and started to do business under the original trade name of
Kloppers again. Four years later, Kloppers took over a large competitor in the city
who sold hardware and paint, which was incorporated into Kloppers. They then traded
on the two sites (the original building in the CBD, and at the newly acquired
property). In 2000, Kloppers decided to expand their operations further and opened an
additional store in the city in an area situated on the boundaries of the central business
district.
During 2002, a new shopping mall concept was built in the city and at the time
Kloppers had to make a decision whether to expand their operations and move into
this shopping mall. The shop space available to them at the new site was in excess of
7500 m², which made it possible for the business to close all their branches in the city
and to operate their entire business under one roof.
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13. Today Kloppers again is a pure family business which are owned and managed solely
by the six Klopper brothers. The store has more than three times the number of
departments that they had in 1984 and is deemed to be one of the most successful
family businesses in South Africa.
The success of Kloppers as a family business is built around a number of key success
factors. The principles of the managing hierarchy are simply based on age. The
pecking order is based on the age of the brothers and the business is operated on the
principles of their family values, in an ethical and trustworthy manner. The basic
principles that was the foundation of the family business since its inception over 40
years ago, are still guiding the decision making criteria of the business today.
Currently the business is approaching the second maturity phase and a number of
issues are facing the 2nd generation. The most common of these revolve around
planning the business for the future, and developing methodologies to accommodate
the 3rd generation of children. The current methodology is to treat the 3rd generation of
children in exactly the same manner as how the current owners (the 2nd generation)
was treated when they entered the business. Again children will start in junior
positions, learning the business before they will be allowed into managerial positions.
However, it is clear that not all of the children will enter the family business, and this
are creating a substantial challenge for the family. It is evident that eventually the
business will have to reconsider the current format of their management model and
start to investigate various options of expansion with the resultant potential
introduction of non-family members in managerial positions.
6. CONCLUSIONS
This study has attempted to isolate the issues that a family business encounters during
the many phases of its life-cycle. Against the background of the objectives of this
study, attention has been given to evaluate the history of the firm since inception to
date with the view to understand the critical aspects that the owners had to deal with
during their transitional phases between the first and second generation of children.
The following is an overview of a number of specific aspects that was concluded from
this study that may assist family business owners and their siblings in managing their
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14. transition over the life-cycle, with specific reference to family and business related
aspects.
6.1 Family related conclusions
6.1.1 Succession
Succession can be defined as the process through which the leadership of the business
is transferred from the outgoing generation to the successor generation, which can
either be a family member or a non-family member (Nieman, 2006). Family business
owners need to ensure that they include the succession aspects into their early
business modeling of the family business. Early identification of succession is an
important element of sustaining the family business over time. Related to this is the
critical decision of timing. When should the next generation be introduced into the
business, and when should the founder family members retire, are critical questions
that need to be planned for early in the life-cycle of the family business.
The Kloppers case explains that seniority is only based on the age of the sibling.
Although this approach worked well for them to date, it may become a fatal flaw that
potentially can harm the sustainability of this business if continued into the era of the
3rd generation. The issue is that then the business will be dealing with all of the
children of the second generation siblings, and age can therefore not be the criteria for
succession. The question arises as to what to decide in the case where the sibling of
the youngest of the current generation is older than the sibling of the eldest (current
managing director). In the case of this business, it is clear that if age is to be the only
criteria for seniority, the business can expect a vast amount of third generation sibling
rivalry. Skills and ability should therefore replace the policy of age as the only criteria
for seniority in the business.
6.1.2 Business skills
Knowledge and experience in business management aspects are critical components
of sustainability of family businesses. In this regard, family members should act as
mentors to siblings in order to create a practical understanding of business
management concepts. This is over and above any potential formal training that the
sibling may have undergone. A specific area that is important is the establishment of
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15. financial prudence early in the experience curve of the sibling as well as to instill
strong cultural values in making business decisions.
6.1.3 Experience
It is important that siblings who may have potential for positions within the family
business are identified early. Apart from ensuring that the correct type of skills are
obtained from a formal training perspective, family businesses also need to ensure
that these siblings obtain early operational experience in the business to shape their
decision making abilities in a related manner once they do enter.
6.1.4 Dealing with uncertainty
As siblings develop there may be a time when they may view entry into the family
business as a risky encounter. Specific attention need to be given in dealing with
uncertainty in succession management. Family businesses need to ensure that an open
and transparent process is in place to make siblings aware of the core elements of the
business and its associated risks at an early time. This should create some higher level
of understanding of the real impact of risk on the future of the business, and may
contribute to alleviate any potential feelings of uncertainty amongst siblings.
6.2 Strategic related conclusions
6.2.1 Understanding the impact of the business environment
One strategic aspect that family businesses need to deal with early in their existence is
to understand the impact of the environment on their sustainability. These businesses
need to establish a plausible market position early and then pursue a successful
pathway to sustain that position. The Kloppers business was very successful after the
decision to move the entire business away from the Central Business District to the
area on the perimeters of the city. They realised in time that the Central Business
District of the city is facing changes that could result in the erosion of customers and
business alike. Realising this, they decided in time to move their business in line with
future market expectations.
6.2.2 Building networks of support
Decisions that were made early in the life of the Kloppers family business have
proved to be important drivers of the longer-term success of the business. Referring to
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16. the retail industry specifically, it was important for the owner to build good supplier
relationships early and to maintain these relationships over the life of the business.
Relationships with related retailing organizations eventually lead to the establishment
of a purchasing group that is currently growing extensively. The benefits include
better control over their input costs (something that is especially crucial for the
sustainability of their business model of selling on a cash basis at a discount).
6.2.3 Diversification during growth
As the family business starts to grow the need arise to diversify the business, either
geographically or through their product offerings. This aspect need to be managed
very sensitively and sensibly. Being bigger does not always mean to be more
successful, and as was found in this study, can lead to substantial problems with
control and management of the business. The results from this project indicate that the
business started to grow successfully only after they decided to close all the different
stores that were operated, and combine the entire family business in a single store.
7. RECOMMENDATIONS
The main recommendations from this case study are the following:
7.1 From a succession and family perspective
1) It is not always feasible for all of the children to be involved in the
management of the business. The fact that they are siblings does not
automatically make them good future managers. Identify the children who will
participate in the future business early, and ensure that they are properly
trained and receive proper skills development.
2) In the event that suitable qualified off-springs are not available in time, family
businesses could develop and implement a seat-warmer succession strategy
where the family appoints one of the family members in a specific position
with the view to develop the offspring for the future in that specific position.
3) A thorough understanding of the entire business environment facing the family
business is required by siblings who wish to enter the business. Do not
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17. promote them into senior levels until such knowledge of the business is
gained.
4) Investment is needed in the continuous development of the people and skills of
the enterprise in order to effectively deal with current global business issues.
7.2 From a business perspective
1) Family businesses need to establish a plausible market position early, and
should build effective trading and distribution channels right from the start.
2) Build effective trading and distribution channels as soon after the start-up as
possible.
3) Geographical diversification decisions should be managed with extreme
caution as such expansion creates control and management problems.
4) Develop an adaptive stance and a preparedness to react to unexpected and
unanticipated events.
5) Guard against diversifying too quickly with a view to grow the business.
Bigger does not necessarily mean more success for family businesses.
6) Stick to the business model that worked early in the life of the business, but
tweak the model in the face of important environmental changes.
7) Map out the cause and effects of early decisions and learn how these will
affected the future of the business.
8. FUTURE RESEARCH
An important aspect that may require further research is to focus on the management
dilemma facing family businesses that cease to exist. In this context, exit management
strategies need to be developed to effectively enhance the pathways for family
members to pursue their futures without the support of the family business.
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18. REFERENCES
Dickinson, T.M. (2000). Critical Success Factors for Succession Planning in Family
Businesses. Unpublished MBA dissertation, University of
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