1、Family Business -Case Analysis and Enlightenment to China Good afternoon, Ladies and gentlemen. Today we will present the topic of family business to you. First of all, please allow me to introduce my teammates to you. My name is Li Xingyun, I am the captain of our team. Our team consists of four ha
2、ndsome boys. The first one is ShiLi, the second one is Li Dingming, and the last one is Zhang Wenzuo. Introduction of Family Business Now let me begin our todays presentation. First i will explain the definition of family business and the reasons why some family enterprises can survive for ages and
3、some became extinct soon. First of all, I will give you a brief introduction of family business; include its definition and the position. Moreover, I will introduce the situation of the development of family business in China and the USA. There are several definitions of family business. One is that
4、 family business is that in a enterprise the founders and the copartners own most of the stock rights and they keep a close relationship with professional managers and keep the right to manage top company managers. KelinE.Gersick, American scholar, assumes that to Judge that whether a company is a f
5、amily business or not, is not based on the enterprise with the family to naming, or they have several relatives in the enterprises tallest leadership institution, but according to a family ownership generally on the basis of who owning the stock and the stock magnitude. This definition highlights th
6、e ownership of the enterprise. Scholar Sunzhiben regards the enterprise management right as the essential characteristics of family business. He maintains that family enterprises should keep the management as the core, and this is just a family business when one family or several families which have
7、 close connection master directly or indirectly one enterprise management. As the worlds most common meaning of enterprise organization form, the family business in the world economy has a pivotal position. Every country in the world, regardless of developed and developing, Family enterprises are in
8、 strong growth and the development. KelinE.Gersick acknowledges that family owning or managing enterprises account for between 65% and 80% in the world enterprise especially the most conservative estimate. In the fortune 500 enterprises world-wide there is 40 percent owned or managed by family. Fami
9、ly business has become a significant force in Chinese economic field. In China family business accounts for more than 95 percents of Chinese enterprises. Enterprise master age distribution In China family enterprise focus on 20 to 49 years, of which 30 49 years old accounted for 74%, 50 years old ac
10、counted for only 5.5%. The United States business owners median age is 54 years old, 29.3% business owners over the age of 60 years, 41 years old of the following accounts for only 11.2%. Enterprise master degree distribution In China education of the owner of family enterprises focused on high scho
11、ol and technical secondary school (41.9%) and University (33.5%), master only accounted for 3.2%. The family business owners and executives in the university education amounts to 47.8%, postgraduate education accounted for 20.8% in USA, is several times than that in China. Enterprise master family c
12、omposition Family-run shop and father-son factory is the common form of family enterprise in China. The family business owners in the blood or adoptive relationship account for 79.8%, affinity relationship account for 13.9% in family enterprise of the USA. Family enterprise life cycle Family enterpr
13、ises can be said to be an ancient and “transient“ of enterprise organization form. Saying it is ancient, because it is the form of an enterprise with a long history. Saying it “transient “, because of the family business in life cycle, which had developed so far, has a “rich, but three generations”
14、sustainable rule. According to a family enterprise research institution in the USA shows that, about 70% of the family business failed to pass to the next generation, 88% failed to the third generation, only 3% of the family business in fourth generation and later still operating. Data shows in Chin
15、a, the average life span of family enterprise is 24 years, happen to same with the average length of service enterprise author; 30% of the family business can be inherited to the second generation hands, however of which have less than 2/3 of the enterprise can be inherited to the third generation,
16、the latter in about 13% enterprises to pass third generations. While the Chinese family private enterprise can survival even less life cycle. According to these data, we can infer that few can survival continuously. Recently many of family businesses face the challenge of the inheritance since the s
17、uccessors of the second generation are so young that they cannot deal with the management hierarchy properly, which also is the problem they should reflect. Success Case-Rockefeller Family Good afternoon, Ladies and gentlemen. Next I will talk about the Rockefeller family business! As the wealth leg
18、end that spread around the world, the Rockefeller family is the symbol of wealth in peoples minds. For one hundred and fifty years, the development of the Rockefeller family has become a microcosm of the US economy. And people who are interested in pursuing wealth view it a myth. The family begins w
19、ith a man named John D. Rockefeller who was born in an ordinary American family. When he was 16 years old, he got first job in a small company with $ 17 a month. In 1870, he founded the Standard Oil Company, formally entering the petroleum industry. After a few years of development, the standard oil
20、 company has merged oil companies in many places, becoming the monopoly of the oil industry in the United States. In 1880, 95% of oil production in USA is owned by the Standard Oil Company. In the meantime, the companys operation has spread over many countries in the world and John D. Rockefeller ha
21、s also become the worlds first billionaire. When he died in 1937, his possessions is around $1.4 billion at a rough estimate, which is $300billion in todays value. The GDP of US was just $92billion at that time Today, the Rockefeller familys heritage has been more than six generations; meanwhile the
22、 wealth legend is passed more than six generations. The Rockefeller family holds a big stake of 50 important companies. Standard Oil is also separated into Exxon Mobil Oil, Standard Oil of California, and Standard Oil of Indiana. Chase Manhattan Bank whose 5% stock is held by the Rockefeller family
23、has 28 overseas branches and 50,000 worldwide banking subsidiaries. The wealth of the Rockefeller family has been too big to be estimated accurately till now Among all the factors that lead the Rockefeller family to success, there are 3main points which we should pay more attention to. They are a go
24、od family relationship, outstanding successor cultivating mechanism and professional management team. A good family relationship is the teacher of the family development. For the Rockefeller family, harmonious family relations come from unconditional obedience, the same as that in army. In another w
25、ord, the wrong must listen to the right. In turn, the right should also help the wrong to correct. Only under such obedience can The Rockefeller family has a positive family environment. It is the obedience and mutual assistance which harmonious family relationship built on that lead the Rockefeller
26、 family keep growing. Outstanding successor cultivating mechanism is the other reason that make Rockefellers wealth continues. Nelson Rockefeller was an outstanding statesman, who had been elected as the Vice President. The Lawrence Rockefeller was known as the father of venture capital. David Rocke
27、feller is the chairman of the Chase Manhattan. The world is not accidental but rather inevitable especially for the Rockefeller family. Each one in Rockefeller family is born to create wealth. Old Rockefellers experience on educating his children is widely popular among people. Besides an outstandin
28、g successor cultivating mechanism, the Rockefeller family has a professional management team selected from the most excellent people all over the world, which is the reason that the Rockefeller familys wealth can be continued and preserved to the largest extend. The Rockefeller family has a nearly 2
29、00 asset managers, who are responsible for handling the assets controlled by the Rockefeller family directly or indirectly. Thank you. lets welcome the next speaker. Failure Case-Dow Jones &Company The Bancroft is a family of publicly-reclusive Boston socialites who inherited The Wall Street Journal
30、 from Clarence W. Barron, who as a publisher built up the reputation of that newspaper. Upon Barrons death in 1928, control of the company passed to his stepdaughters Jane and Martha, children of his wife Jesse Waldron. Barrons son-in-law and Janes husband, Harvard-educated lawyer Hugh Bancroft, ran
31、 the company and the paper for the next five years. Suffering from depression, Bancroft committed suicide in 1933 at the age of fifty-four. The family members maintained ownership of the company through ensuing generations, though management was placed in the hands of capable professionals, like Jou
32、rnal editor Bernard Kilgore. The Bancroft family rarely met to discuss the family business. Even the times of meeting is such few, it always host by one governing auspice. In addition, the family members take the attitude that they will be no doubt of the management. No matter when and where, whoeve
33、r dares to question or criticize the operation mode of Dow Jones Company will be regard as treachery. Crawford Hill, a family member, revealed that except supporting the management powerfully, who attempt to doubt the management, business strategy and the family role will be marked the stigma of “he
34、resy”. This family not only did not invest in human capital for the enterprise, but also provide minimal financial support. While Dow Jones Company brought a lot of return to the members of the Bancroft family, for decades, the Bancroft family gains high dividends which are even more than the profit
35、s of the company in some years. Undoubtedly all of these capital consumptions weakened the competitive position of the enterprise. It is absolutely that weaknesses exist in the Dow Jones Company. The Wall Street Journal used to be a small company owning just 3.2 billion dollars market capitalization
36、 in 1990s, which is focused on financial and business news. In the past 30 years, the Bancroft family prefers the policy of non-interference and entrusted the control of the business to the management who does not belong to the family members. Unfortunately, these managers are reporters instead of c
37、orporate strategist. The Dow Jones Company missed quantities of sufficient opportunities in financial information market as their narrow horizons. Inter-generational lift is very obvious when facing the problem that whether to sell the company. The younger members aware of they have to make a choice
38、 that is either to sell the company or provide positive support for the enterprise and at the same time re-develop strategies for the entrance into new market about financial information. However, the elders prefer to protect the integrity of journalism, rather than ensuring the competitiveness and
39、economic viability of the enterprise or invest their funds to enterprise. Due to lack of consensus about investment and ownership, the price of the sale of Dow Jones Company is lower than its value when a decade ago. Summary and Enlightenment to China Now we come to the last part. As is shown above,
40、 there exists both advantages and drawbacks in family business. On one hand, during the start-up stage, family business can quickly develop with lower cost, and leadership of patriarchal authority makes speed of decision making faster. On the other hand, it is hard to keep talents stay, and build a
41、modern corporate governance structure. As Chinese youth, we have to consider a question: What can Chinese family businesses learn form that? After the reform and opening up, private enterprises have a rapid development in China70% 80% of which are Family businesses. Now the founders are worrying about handing over the company to the next generation.
