SlideShare a Scribd company logo

Corporate Governance and Family business

The Family Business Importance, it´s Ownership And Control and the most common Corporate Governance Issues and Solutions

1 of 22
Download to read offline
Family BusinessCorporate Governance
THE AGENDA FOR TODAY
Family Businesses Importance
Corporate Governance Issues
Wallenberg Business
Dealing with challenges
1
Ownership And Control
Family Business
3
Indicators
What is a family business?
A firm of any size is a family business if:
• The majority of decision making rights are the
possession of the natural person(s) who:
• Establish the firm
• Acquired the share capital of the firm
• Are family members of the above (spouses,
parents or direct heirs)
• The majority of decision-making rights are direct
or indirect
• At least one representative of the family or kin is
formally involved in the governance of the firm
• Listed companies meet the decision-making
rights mandated by their share capital
Source: Expert report on Family Businesses, European Commission, Nov 2009
4
• Family businesses constitute the world’s oldest
and most dominant form of business
organizations
• Family firms account for 2/3 of all businesses
around the world (HBS);
• An estimated 70%-90% of global GDP annually
is created by family businesses;
• In Portugal family business have a share of
60% to 70% of the GDP
• Between 50-80% jobs of the majority of
countries worldwide are created by family
businesses (European family businesses, 2012).
The Family Business Importance
Examples of family businesses: Salvatore Ferragamo, Benetton, and Fiat Group in Italy; L’Oreal, Carrefour Group,
LVMH, and Michelin in France; Samsung, Hyundai Motor, and LG Group in South Korea; BMW, and Siemens in Germany;
Kikkoman, and Ito-Yokado in Japan; and Ford Motors Co, and Wal-Mart Stores in the United States
5The Family Business Importance
1. More profitable over the long term;
2. Family business generally take a long term view
and thus balance short-term rewards with long-term
sustainability and prosperity;
3. Generally, they are better for the communities in
which they live and invest more in their communities
both for business investment and in terms of
philanthropic activities;
4. People trust family businesses more than other
kinds of companies;
5. Score significantly higher on things like worker
motivation and leadership, though they lag slightly
on innovation
This form of enterprise has significant benefits to the economy and society at large:
The long-term view of family busniesses performance
Source: Harvard Business Review “What you can learn from family businesses”

Recommended

Introduction to Family Businesses
Introduction to Family BusinessesIntroduction to Family Businesses
Introduction to Family Businessescommandeleven
 
FAMILY & BUSINESS SUCCESSION PLANNING
 FAMILY & BUSINESS SUCCESSION PLANNING FAMILY & BUSINESS SUCCESSION PLANNING
FAMILY & BUSINESS SUCCESSION PLANNINGNewport Board Group
 
Family business succession & growth
Family business succession & growthFamily business succession & growth
Family business succession & growthRikitacjdd
 

More Related Content

What's hot

A Guide for Family Business Succession Planning
A Guide for Family Business Succession PlanningA Guide for Family Business Succession Planning
A Guide for Family Business Succession PlanningDr. Wm. (Chip) Valutis
 
Strategy Implementation and Control
Strategy Implementation and ControlStrategy Implementation and Control
Strategy Implementation and ControlPrashant Mehta
 
Ethical issues in accounting
Ethical issues in accountingEthical issues in accounting
Ethical issues in accountingDyann Barras
 
Business Policy and Strategic Management
Business Policy and Strategic ManagementBusiness Policy and Strategic Management
Business Policy and Strategic ManagementPrashant Mehta
 
TYPES OF STRATEGIC MANAGEMENT
TYPES OF STRATEGIC MANAGEMENTTYPES OF STRATEGIC MANAGEMENT
TYPES OF STRATEGIC MANAGEMENTAnkit Prajapati
 
Family Business - Entrepreneurship Development
Family Business - Entrepreneurship DevelopmentFamily Business - Entrepreneurship Development
Family Business - Entrepreneurship Developmentdamleaj
 
The Family Business Power Point Presentation
The Family Business Power Point PresentationThe Family Business Power Point Presentation
The Family Business Power Point PresentationRonaldFilian
 
Corporate governance
Corporate governanceCorporate governance
Corporate governanceKanchanbawa
 
Models of corporate Governance presented by Dushyant Maheshwari
Models of corporate Governance presented by Dushyant MaheshwariModels of corporate Governance presented by Dushyant Maheshwari
Models of corporate Governance presented by Dushyant MaheshwariDUSHYANT MAHESHWARI
 
Business Growth
Business GrowthBusiness Growth
Business Growthtutor2u
 
strategy implementation
strategy implementationstrategy implementation
strategy implementationArun Kumar
 
10 Great Questions for Family Business Governance
10 Great Questions for Family Business Governance10 Great Questions for Family Business Governance
10 Great Questions for Family Business GovernanceG. Li & Company Ltd.
 
Corporate Governance
Corporate GovernanceCorporate Governance
Corporate GovernanceAarti Mishra
 
corporate governance and role in strategic management
corporate governance and role in strategic managementcorporate governance and role in strategic management
corporate governance and role in strategic managementzeba khan
 
Japanese model in corporate governance
Japanese model in corporate governanceJapanese model in corporate governance
Japanese model in corporate governanceSundar B N
 
strategic financial management
strategic financial managementstrategic financial management
strategic financial managementDevansh Thapa
 
Acquiring an established venture
Acquiring an established ventureAcquiring an established venture
Acquiring an established ventureNijaz N
 

What's hot (20)

Family business
Family businessFamily business
Family business
 
A Guide for Family Business Succession Planning
A Guide for Family Business Succession PlanningA Guide for Family Business Succession Planning
A Guide for Family Business Succession Planning
 
Strategy Implementation and Control
Strategy Implementation and ControlStrategy Implementation and Control
Strategy Implementation and Control
 
Family business
Family businessFamily business
Family business
 
Ethical issues in accounting
Ethical issues in accountingEthical issues in accounting
Ethical issues in accounting
 
Business Policy and Strategic Management
Business Policy and Strategic ManagementBusiness Policy and Strategic Management
Business Policy and Strategic Management
 
TYPES OF STRATEGIC MANAGEMENT
TYPES OF STRATEGIC MANAGEMENTTYPES OF STRATEGIC MANAGEMENT
TYPES OF STRATEGIC MANAGEMENT
 
Family Business - Entrepreneurship Development
Family Business - Entrepreneurship DevelopmentFamily Business - Entrepreneurship Development
Family Business - Entrepreneurship Development
 
The Family Business Power Point Presentation
The Family Business Power Point PresentationThe Family Business Power Point Presentation
The Family Business Power Point Presentation
 
Corporate governance
Corporate governanceCorporate governance
Corporate governance
 
Characteristics of a Family Business
Characteristics of a Family BusinessCharacteristics of a Family Business
Characteristics of a Family Business
 
Models of corporate Governance presented by Dushyant Maheshwari
Models of corporate Governance presented by Dushyant MaheshwariModels of corporate Governance presented by Dushyant Maheshwari
Models of corporate Governance presented by Dushyant Maheshwari
 
Business Growth
Business GrowthBusiness Growth
Business Growth
 
strategy implementation
strategy implementationstrategy implementation
strategy implementation
 
10 Great Questions for Family Business Governance
10 Great Questions for Family Business Governance10 Great Questions for Family Business Governance
10 Great Questions for Family Business Governance
 
Corporate Governance
Corporate GovernanceCorporate Governance
Corporate Governance
 
corporate governance and role in strategic management
corporate governance and role in strategic managementcorporate governance and role in strategic management
corporate governance and role in strategic management
 
Japanese model in corporate governance
Japanese model in corporate governanceJapanese model in corporate governance
Japanese model in corporate governance
 
strategic financial management
strategic financial managementstrategic financial management
strategic financial management
 
Acquiring an established venture
Acquiring an established ventureAcquiring an established venture
Acquiring an established venture
 

Viewers also liked

Family Governance
Family GovernanceFamily Governance
Family Governanceswazzy33
 
The Concept of Corporate Entrepreneurship - Intrapreneurship
The Concept of Corporate Entrepreneurship - IntrapreneurshipThe Concept of Corporate Entrepreneurship - Intrapreneurship
The Concept of Corporate Entrepreneurship - IntrapreneurshipGaurav Singh Bisen
 
Family Business: Workshop
Family Business: WorkshopFamily Business: Workshop
Family Business: Workshopfurryboots
 
Managing family own business
Managing  family   own    businessManaging  family   own    business
Managing family own businessAditya Mehta
 
1478248 634783659982565000
1478248 6347836599825650001478248 634783659982565000
1478248 634783659982565000Neha Yadav
 
How to Start a Business in the Philippines
How to Start a Business in the PhilippinesHow to Start a Business in the Philippines
How to Start a Business in the PhilippinesPhilstar Portal
 
Role of Entrepreneur
Role of EntrepreneurRole of Entrepreneur
Role of EntrepreneurNaveen Minj
 

Viewers also liked (12)

Family Governance
Family GovernanceFamily Governance
Family Governance
 
Ownership, Succession and Family
Ownership, Succession and FamilyOwnership, Succession and Family
Ownership, Succession and Family
 
Informe Filipinas 2014
Informe Filipinas 2014Informe Filipinas 2014
Informe Filipinas 2014
 
The Concept of Corporate Entrepreneurship - Intrapreneurship
The Concept of Corporate Entrepreneurship - IntrapreneurshipThe Concept of Corporate Entrepreneurship - Intrapreneurship
The Concept of Corporate Entrepreneurship - Intrapreneurship
 
Why is Family Business Important - and what is Cornell doing about it?
Why is Family Business Important - and what is Cornell doing about it?Why is Family Business Important - and what is Cornell doing about it?
Why is Family Business Important - and what is Cornell doing about it?
 
Family Business Event 27th Jan 15 PwC & DCU CFB
Family Business Event 27th Jan 15 PwC & DCU CFBFamily Business Event 27th Jan 15 PwC & DCU CFB
Family Business Event 27th Jan 15 PwC & DCU CFB
 
Family Business: Workshop
Family Business: WorkshopFamily Business: Workshop
Family Business: Workshop
 
Managing family own business
Managing  family   own    businessManaging  family   own    business
Managing family own business
 
1478248 634783659982565000
1478248 6347836599825650001478248 634783659982565000
1478248 634783659982565000
 
How to Start a Business in the Philippines
How to Start a Business in the PhilippinesHow to Start a Business in the Philippines
How to Start a Business in the Philippines
 
Corporate entrepreneurship
Corporate entrepreneurshipCorporate entrepreneurship
Corporate entrepreneurship
 
Role of Entrepreneur
Role of EntrepreneurRole of Entrepreneur
Role of Entrepreneur
 

Similar to Corporate Governance and Family business

Governance mechanisms for unlisted family businesses
Governance mechanisms for unlisted family businessesGovernance mechanisms for unlisted family businesses
Governance mechanisms for unlisted family businessesBrowne & Mohan
 
Jessica · SlidesCarnival.pptx
Jessica · SlidesCarnival.pptxJessica · SlidesCarnival.pptx
Jessica · SlidesCarnival.pptxSurveyCorpz
 
Capital n Tax mgmt session 1&2.pptx
Capital n Tax mgmt session 1&2.pptxCapital n Tax mgmt session 1&2.pptx
Capital n Tax mgmt session 1&2.pptxSurbhiJain137608
 
Les MUST of Family Businesses- HOT EXECUTIVE TOPS.pdf
Les MUST of Family Businesses- HOT EXECUTIVE TOPS.pdfLes MUST of Family Businesses- HOT EXECUTIVE TOPS.pdf
Les MUST of Family Businesses- HOT EXECUTIVE TOPS.pdfSalim Hajje
 
Deloitte-family-business-survey-2019
Deloitte-family-business-survey-2019Deloitte-family-business-survey-2019
Deloitte-family-business-survey-2019Paperjam_redaction
 
Tips for professionals who work with family businesses
Tips for professionals who work with family businessesTips for professionals who work with family businesses
Tips for professionals who work with family businessesDr. Wm. (Chip) Valutis
 
Governance mechanisms that work in a family business
Governance mechanisms that work in a family businessGovernance mechanisms that work in a family business
Governance mechanisms that work in a family businessBrowne & Mohan
 
Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...
Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...
Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...enterpriseresearchcentre
 
Roles & Responsibilities: A Primer
Roles & Responsibilities: A PrimerRoles & Responsibilities: A Primer
Roles & Responsibilities: A PrimerFinancial Poise
 
A family business is a business in which one or more members of one or more f...
A family business is a business in which one or more members of one or more f...A family business is a business in which one or more members of one or more f...
A family business is a business in which one or more members of one or more f...offnow321
 
Mercer Capital's Value Matters™ | Issue No. 2 2018
Mercer Capital's Value Matters™ | Issue No. 2 2018Mercer Capital's Value Matters™ | Issue No. 2 2018
Mercer Capital's Value Matters™ | Issue No. 2 2018Mercer Capital
 
Mercer Capital's Value Matters™ | Issue No. 2, 2018
Mercer Capital's Value Matters™ | Issue No. 2, 2018Mercer Capital's Value Matters™ | Issue No. 2, 2018
Mercer Capital's Value Matters™ | Issue No. 2, 2018Mercer Capital
 
Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...
Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...
Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...Financial Poise
 
future of family run businesses POV FINAL
future of family run businesses POV FINALfuture of family run businesses POV FINAL
future of family run businesses POV FINALJanice Darling
 
Activities involved in succession process 3
Activities involved in succession process 3Activities involved in succession process 3
Activities involved in succession process 3John Johari
 
Roles & Responsibilities a Primer
Roles & Responsibilities a Primer  Roles & Responsibilities a Primer
Roles & Responsibilities a Primer Financial Poise
 
Roles & Responsibilities: a Primer
Roles & Responsibilities: a PrimerRoles & Responsibilities: a Primer
Roles & Responsibilities: a PrimerFinancial Poise
 

Similar to Corporate Governance and Family business (20)

Governance mechanisms for unlisted family businesses
Governance mechanisms for unlisted family businessesGovernance mechanisms for unlisted family businesses
Governance mechanisms for unlisted family businesses
 
Jessica · SlidesCarnival.pptx
Jessica · SlidesCarnival.pptxJessica · SlidesCarnival.pptx
Jessica · SlidesCarnival.pptx
 
Capital n Tax mgmt session 1&2.pptx
Capital n Tax mgmt session 1&2.pptxCapital n Tax mgmt session 1&2.pptx
Capital n Tax mgmt session 1&2.pptx
 
Les MUST of Family Businesses- HOT EXECUTIVE TOPS.pdf
Les MUST of Family Businesses- HOT EXECUTIVE TOPS.pdfLes MUST of Family Businesses- HOT EXECUTIVE TOPS.pdf
Les MUST of Family Businesses- HOT EXECUTIVE TOPS.pdf
 
Deloitte-family-business-survey-2019
Deloitte-family-business-survey-2019Deloitte-family-business-survey-2019
Deloitte-family-business-survey-2019
 
Tips for professionals who work with family businesses
Tips for professionals who work with family businessesTips for professionals who work with family businesses
Tips for professionals who work with family businesses
 
Family business by Mackinsey
Family business by MackinseyFamily business by Mackinsey
Family business by Mackinsey
 
5 attributes
5 attributes5 attributes
5 attributes
 
Governance mechanisms that work in a family business
Governance mechanisms that work in a family businessGovernance mechanisms that work in a family business
Governance mechanisms that work in a family business
 
Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...
Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...
Entrepreneurial Households: Resourcing and Managing Diverse Enterprises. Sara...
 
Roles & Responsibilities: A Primer
Roles & Responsibilities: A PrimerRoles & Responsibilities: A Primer
Roles & Responsibilities: A Primer
 
A family business is a business in which one or more members of one or more f...
A family business is a business in which one or more members of one or more f...A family business is a business in which one or more members of one or more f...
A family business is a business in which one or more members of one or more f...
 
Mercer Capital's Value Matters™ | Issue No. 2 2018
Mercer Capital's Value Matters™ | Issue No. 2 2018Mercer Capital's Value Matters™ | Issue No. 2 2018
Mercer Capital's Value Matters™ | Issue No. 2 2018
 
Mercer Capital's Value Matters™ | Issue No. 2, 2018
Mercer Capital's Value Matters™ | Issue No. 2, 2018Mercer Capital's Value Matters™ | Issue No. 2, 2018
Mercer Capital's Value Matters™ | Issue No. 2, 2018
 
Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...
Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...
Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp 2020...
 
Family2
Family2Family2
Family2
 
future of family run businesses POV FINAL
future of family run businesses POV FINALfuture of family run businesses POV FINAL
future of family run businesses POV FINAL
 
Activities involved in succession process 3
Activities involved in succession process 3Activities involved in succession process 3
Activities involved in succession process 3
 
Roles & Responsibilities a Primer
Roles & Responsibilities a Primer  Roles & Responsibilities a Primer
Roles & Responsibilities a Primer
 
Roles & Responsibilities: a Primer
Roles & Responsibilities: a PrimerRoles & Responsibilities: a Primer
Roles & Responsibilities: a Primer
 

Recently uploaded

Invest in Waaree Energies Unlisted shares.pdf
Invest in Waaree Energies Unlisted shares.pdfInvest in Waaree Energies Unlisted shares.pdf
Invest in Waaree Energies Unlisted shares.pdfPrecize Formely Leadoff
 
PDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / Techcrunch
PDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / TechcrunchPDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / Techcrunch
PDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / TechcrunchHajeJanKamps
 
BeMetals Presentation_February_15_2024.pdf
BeMetals Presentation_February_15_2024.pdfBeMetals Presentation_February_15_2024.pdf
BeMetals Presentation_February_15_2024.pdfDerekIwanaka1
 
Medirom Healthcare Technologies Inc. Investor Presentation
Medirom  Healthcare Technologies Inc. Investor PresentationMedirom  Healthcare Technologies Inc. Investor Presentation
Medirom Healthcare Technologies Inc. Investor Presentationssusera2656e
 
Actionable Fundraising Planning - Slide Presentation.pptx.pdf
Actionable Fundraising Planning - Slide Presentation.pptx.pdfActionable Fundraising Planning - Slide Presentation.pptx.pdf
Actionable Fundraising Planning - Slide Presentation.pptx.pdfBloomerang
 
Cracking The Corporate Politics Code.pptx
Cracking The Corporate Politics Code.pptxCracking The Corporate Politics Code.pptx
Cracking The Corporate Politics Code.pptxWorkforce Group
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access
 
Trending Topics for events Presentation.pdf
Trending Topics for events Presentation.pdfTrending Topics for events Presentation.pdf
Trending Topics for events Presentation.pdfgaju619
 
Hershey Presentation at 2024 CAGY Conference
Hershey Presentation at 2024 CAGY ConferenceHershey Presentation at 2024 CAGY Conference
Hershey Presentation at 2024 CAGY ConferenceNeil Kimberley
 
New Zealand Franchising Confidence Index | January 2024
New Zealand Franchising Confidence Index | January 2024New Zealand Franchising Confidence Index | January 2024
New Zealand Franchising Confidence Index | January 2024Franchize Consultants
 
KJPoppe DG AGRI Certification as a tool to reduce administrative burdens
KJPoppe DG AGRI Certification as a tool to reduce administrative burdensKJPoppe DG AGRI Certification as a tool to reduce administrative burdens
KJPoppe DG AGRI Certification as a tool to reduce administrative burdensKrijn Poppe
 
Truths and Myths of Innovation and Entrepreneurship
Truths and Myths of Innovation and EntrepreneurshipTruths and Myths of Innovation and Entrepreneurship
Truths and Myths of Innovation and EntrepreneurshipYannis Charalabidis
 
Communications Trends for Fundraising Success in 2024.pdf
Communications Trends for Fundraising Success in 2024.pdfCommunications Trends for Fundraising Success in 2024.pdf
Communications Trends for Fundraising Success in 2024.pdfBloomerang
 
How to Get Around Sales Objection | The SMART Sales Systems
How to Get Around Sales Objection | The SMART Sales SystemsHow to Get Around Sales Objection | The SMART Sales Systems
How to Get Around Sales Objection | The SMART Sales SystemsSalesScripter
 
DBX Investor Presentation - Q4 and FY 2023
DBX Investor Presentation - Q4 and FY 2023DBX Investor Presentation - Q4 and FY 2023
DBX Investor Presentation - Q4 and FY 2023Dropbox
 
The Design Thinking Playbook: Mindful digital transformation of teams, produc...
The Design Thinking Playbook: Mindful digital transformation of teams, produc...The Design Thinking Playbook: Mindful digital transformation of teams, produc...
The Design Thinking Playbook: Mindful digital transformation of teams, produc...Diego Riobo Cabot
 
PEPSICO Presentation to CAGNY Conference Feb 2024
PEPSICO Presentation to CAGNY Conference Feb 2024PEPSICO Presentation to CAGNY Conference Feb 2024
PEPSICO Presentation to CAGNY Conference Feb 2024Neil Kimberley
 
Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...
Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...
Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...Supavadee(Noi) Tantiyanon
 

Recently uploaded (20)

Invest in Waaree Energies Unlisted shares.pdf
Invest in Waaree Energies Unlisted shares.pdfInvest in Waaree Energies Unlisted shares.pdf
Invest in Waaree Energies Unlisted shares.pdf
 
PDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / Techcrunch
PDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / TechcrunchPDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / Techcrunch
PDT 84 - 16m - Series A - Equals for Pitch Deck Teardown / Techcrunch
 
BeMetals Presentation_February_15_2024.pdf
BeMetals Presentation_February_15_2024.pdfBeMetals Presentation_February_15_2024.pdf
BeMetals Presentation_February_15_2024.pdf
 
Medirom Healthcare Technologies Inc. Investor Presentation
Medirom  Healthcare Technologies Inc. Investor PresentationMedirom  Healthcare Technologies Inc. Investor Presentation
Medirom Healthcare Technologies Inc. Investor Presentation
 
Actionable Fundraising Planning - Slide Presentation.pptx.pdf
Actionable Fundraising Planning - Slide Presentation.pptx.pdfActionable Fundraising Planning - Slide Presentation.pptx.pdf
Actionable Fundraising Planning - Slide Presentation.pptx.pdf
 
Cracking The Corporate Politics Code.pptx
Cracking The Corporate Politics Code.pptxCracking The Corporate Politics Code.pptx
Cracking The Corporate Politics Code.pptx
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024
 
Trending Topics for events Presentation.pdf
Trending Topics for events Presentation.pdfTrending Topics for events Presentation.pdf
Trending Topics for events Presentation.pdf
 
Hershey Presentation at 2024 CAGY Conference
Hershey Presentation at 2024 CAGY ConferenceHershey Presentation at 2024 CAGY Conference
Hershey Presentation at 2024 CAGY Conference
 
New Zealand Franchising Confidence Index | January 2024
New Zealand Franchising Confidence Index | January 2024New Zealand Franchising Confidence Index | January 2024
New Zealand Franchising Confidence Index | January 2024
 
KJPoppe DG AGRI Certification as a tool to reduce administrative burdens
KJPoppe DG AGRI Certification as a tool to reduce administrative burdensKJPoppe DG AGRI Certification as a tool to reduce administrative burdens
KJPoppe DG AGRI Certification as a tool to reduce administrative burdens
 
Truths and Myths of Innovation and Entrepreneurship
Truths and Myths of Innovation and EntrepreneurshipTruths and Myths of Innovation and Entrepreneurship
Truths and Myths of Innovation and Entrepreneurship
 
Communications Trends for Fundraising Success in 2024.pdf
Communications Trends for Fundraising Success in 2024.pdfCommunications Trends for Fundraising Success in 2024.pdf
Communications Trends for Fundraising Success in 2024.pdf
 
How to Get Around Sales Objection | The SMART Sales Systems
How to Get Around Sales Objection | The SMART Sales SystemsHow to Get Around Sales Objection | The SMART Sales Systems
How to Get Around Sales Objection | The SMART Sales Systems
 
DBX Investor Presentation - Q4 and FY 2023
DBX Investor Presentation - Q4 and FY 2023DBX Investor Presentation - Q4 and FY 2023
DBX Investor Presentation - Q4 and FY 2023
 
The Design Thinking Playbook: Mindful digital transformation of teams, produc...
The Design Thinking Playbook: Mindful digital transformation of teams, produc...The Design Thinking Playbook: Mindful digital transformation of teams, produc...
The Design Thinking Playbook: Mindful digital transformation of teams, produc...
 
PEPSICO Presentation to CAGNY Conference Feb 2024
PEPSICO Presentation to CAGNY Conference Feb 2024PEPSICO Presentation to CAGNY Conference Feb 2024
PEPSICO Presentation to CAGNY Conference Feb 2024
 
Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...
Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...
Decoding Generative AI-AI Playbook for Marketing Students_UPower DUGA_Supavad...
 
Pan Dhoni - Modernizing Data And Analytics using AI.pdf
Pan Dhoni - Modernizing Data And Analytics using AI.pdfPan Dhoni - Modernizing Data And Analytics using AI.pdf
Pan Dhoni - Modernizing Data And Analytics using AI.pdf
 
Authentically Social by Corey Perlman (MyBOD)
Authentically Social by Corey Perlman (MyBOD)Authentically Social by Corey Perlman (MyBOD)
Authentically Social by Corey Perlman (MyBOD)
 

Corporate Governance and Family business

  • 2. THE AGENDA FOR TODAY Family Businesses Importance Corporate Governance Issues Wallenberg Business Dealing with challenges 1 Ownership And Control
  • 4. 3 Indicators What is a family business? A firm of any size is a family business if: • The majority of decision making rights are the possession of the natural person(s) who: • Establish the firm • Acquired the share capital of the firm • Are family members of the above (spouses, parents or direct heirs) • The majority of decision-making rights are direct or indirect • At least one representative of the family or kin is formally involved in the governance of the firm • Listed companies meet the decision-making rights mandated by their share capital Source: Expert report on Family Businesses, European Commission, Nov 2009
  • 5. 4 • Family businesses constitute the world’s oldest and most dominant form of business organizations • Family firms account for 2/3 of all businesses around the world (HBS); • An estimated 70%-90% of global GDP annually is created by family businesses; • In Portugal family business have a share of 60% to 70% of the GDP • Between 50-80% jobs of the majority of countries worldwide are created by family businesses (European family businesses, 2012). The Family Business Importance Examples of family businesses: Salvatore Ferragamo, Benetton, and Fiat Group in Italy; L’Oreal, Carrefour Group, LVMH, and Michelin in France; Samsung, Hyundai Motor, and LG Group in South Korea; BMW, and Siemens in Germany; Kikkoman, and Ito-Yokado in Japan; and Ford Motors Co, and Wal-Mart Stores in the United States
  • 6. 5The Family Business Importance 1. More profitable over the long term; 2. Family business generally take a long term view and thus balance short-term rewards with long-term sustainability and prosperity; 3. Generally, they are better for the communities in which they live and invest more in their communities both for business investment and in terms of philanthropic activities; 4. People trust family businesses more than other kinds of companies; 5. Score significantly higher on things like worker motivation and leadership, though they lag slightly on innovation This form of enterprise has significant benefits to the economy and society at large: The long-term view of family busniesses performance Source: Harvard Business Review “What you can learn from family businesses”
  • 7. 6The Family Business Strengths and Weaknesses + Commitment – family usually shows high levels of dedication to the business grow, prosperity and to get passed to other generations Knowledge continuity – Families make it a priority to pass their knowledge, experience and skills to the next generations Reliability and pride –as family name is usually associated with the business they do their best to increase quality of the output of their business (product, service,…) Partnership – families usually try to maintain a good and close relationship with their customers, suppliers, community, employees,…) Survival– Many family business fail to be sustainable in the long term. Only 30% survive into the second generation, 12% into the third and 3% make it into the fourth and beyond Complexity - Family businesses are usually more complex in terms of governance due to the addition of the family emotions and issues Informality – as families usually run the business themselves there is little adoption of business practices and procedures Lack of discipline - many family businesses do not pay attention to succession planning, family member employment, and attracting and retaining talent outside family members -
  • 9. Ownership Family Ownership And Control 8 Principal: Shareholders Control Agents: Board of Directors Senior Management Control Mechanisms: Pressure from Markets Regular Meeting with ShareHolders Financial Press Scrutiny Performance related pay • Separating ownership from management not a natural in family business. In the beginning ownership and management are closely linked • Family business leaders soon become the bottlenecks for the development of the business and risk narrowness and weakening the business they created • Over time, family business leaders can start stepping back from operational responsibilities and assume fully their role as owners (setting the strategic vision which guides investment decisions). • It is helpful to create a professional board with a few independent members to bring new perspective and expertise. • Family business leaders should then be fully-engaged owners of the business, no longer managers.
  • 10. 9Stages of Growth in a Family Business Ownership Family This model views family businesses as a complex system comprised of three overlapping subsystems: Ownership, Family and Business. It is a useful tool to understand the different Dynamics at work in any family businessBusiness
  • 11. 10Stages of Growth in a Family Business
  • 12. 11Notes slide 9 • In the developmental theory, family business ownership moves from a Controlling Owner stage (stage 1) to Sibling Partnership (stage 2), Cousin Consortium (stage 3) and then distant relatives (stage 4): • Stage 1: This is the initial step of the family business. The business is entirely owned • and managed by the founder(s) who usually take the majority of key decisions. This stage is characterized by a simple governance structure, the control and ownership are in the hands of the same person. • Stage 2: This is the stage where management and ownership have been transferred to the • children of the founder(s). As more family members are now involved in the company, • governance issues tend to become relatively more complex, • Stage 3: At this stage, the business governance becomes more complex as more family members are directly or indirectly involved in the business. • In the long run (stage 3 and 4) it becomes necessary for the family business to set up the right governance structures and mechanisms that will allow for efficient communication and a clear definition of the roles and expectations of every person involved. Source: IFC Family Business Governance Handbook
  • 14. 01 Succession & Survival Often the successor is not the fittest choice. The stock market reacts negatively to the appointment of family heirs as managers. Follow the family vision and mission. 30% survive into the 2nd generation, 12% into the 3rd and 3% make it into the 4th and beyond 02 Conflicts and communication Managing internal conflicts within the family. Maintaining teamwork and harmony. Keeping family members informed about major business accomplishments, challenges and strategic directions. Keeping focus on same objectives and interests. 03 Market capitalization Family businesses have lower stock market capitalization (lower market value) mostly due to control issues – whereas markets downgrade prices due to higher risks for business (e.g. Tunneling) 04 Professionalization Few adopt professionalized business practices and procedures and control mechanisms, maintaining improper procedures and lack of internal controls 05 Interconnections The existence of an additional layer of relationship that the owning/controlling family brings to the business. Family participation and role 06 Capital allocation and growth Allocation of corporate capital: dividends, debt, and profit. Family-controlled firms often face a difficult choice as they confront the need to fund growth by attracting equity Six Keys for the SuccessCorporate Governance Issues 13
  • 16. Wallenberg Business • Separate return (income) from how the company is run (control) • Use a Trust or foundation • Cash-Flow Right differs from Voting/Control Rights • Dual-class shares (eg. voting caps, cross- shareholdings, golden shares, staggered boards) 15 The biggest challenge for family companies is how to preserve family control while competing with public companies that can draw on capital markets Wallenberg have the dual-class commons structure already called as the “Swedish capital structure.”
  • 18. 17 Wallenberg Pyramid • The Wallenberg family owns 40% of the value of the Swedish Stock Exchange – 30% of GDP • Through dual-class shares exercise control over many companies e.g. 4% by value but 39% by votes • Wallenberg ownership is exercised through the Wallenberg foundation • Companies dominated by investor are run by professional managers with their own board of directors Source: Reproduced from Sundin and Sundqvist (1996).
  • 19. Wallenberg Business 18 Why are Wallenberg traded at discount? • The reason for discount is the use of dual-class shares. They give the family more control, but tend to diminish the value because other shareholders suspect the controlling family will take special benefits for themselves or start strategic changes to help their own interests rather than the other investors interests (e.g. tunneling or overinvestment costs) • Sweden has resisted to end this use of dual-class shares because it helps keep companies under Swedish ownership under an open economy • The family claim that they deserve their special rights because of the family´s role in successfully founding and developing Swedish companies over the years and their tradition of strong and involved ownership. Also due to social responsibility and natural integration in the Swedish market.
  • 21. Dealing with challenges 20 Develop a family governance structure to bring discipline among family members, prevent potential conflicts, and ensure the sustainability of the business. The main components of a family governance structure are: • A family constitution that clearly states the family vision, mission, values, and policies regulating family member´s relationship with the business. • Family institutions, to deal with conflicts and communication issues, e.g. family assembly, family council, and other family committees. CORPORATE GOVERNANCE
  • 22. SUCCESSION Handling the succession issue: Marrying intelligent partners who can help them run their companies, and put efforts in the education of the next generations. More exotic Asian-based concepts include adopting. CONFLICTS & COMMUNICATION Develop strong family cultures that not only serve the companies (eg. storytelling) but also to handle internal family conflicts. Family meeting and retreats PERFORMANCE Developing high-performance teams, including managers outside the family circle, that stick together for years; PROFISSIONALIZATION Adopt business practices that oblige collateral, information transparency and defined procedures. That can be done by growing through stock market capital – that due to covenants and obligations oblige companies to have procedures in place (e.g. Sarbanes and Oxley Act) CAPITAL GROWTH MAINTAINING CONTROL Trough some concepts already discussed: pyramiding, dual-class shares, Trusts Foundation, cross sharing. CONTROL MECHANISMS Performance related pay willingness to integrate outside individuals in the Boards Dealing with challenges 21