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Advantages & Disadvantages: Family Business - Coggle Diagram
Advantages & Disadvantages: Family Business
Introduction
What is family business?
It is a type of business that is mainly owned and managed by a family.
Popular family business examples
Walmart
An international retail company founded in the United States with branches in 24 countries all over the world.
Hoshi Ryokan
A 46-generation old traditional inn in Japan that was founded in the year 718
Background information
Types
Family-owned businesses
The family business is owned by the family or a member of the family
Family-owned and managed businesses
The family or a member of the family owns the majority of the business and has the choice to decide the objectives, methods, and policies of the business.
Family-owned and led businesses
The family or a member of the family have ownership of most of the business, but also the power to influence the business’s direction, strategies, and plans by having one member of the family member be a part of the board of directors.
Structure
The business structure of family businesses is heavily influenced by emotion
Advantages
Stability
Family businesses are usually made to last for generations, encouraging long-term thinking.
Decreased Costs
Family staffs in family businesses are more likely to be willing to have lower pay to help the business long term.
Loyalty
Since family businesses are heavily influenced by emotion, their staffs and owners are more likely to have strong loyalty and motivation compared to non-family businesses.
Disadvantages
Family Conflict
The conflict between family members could be brought into the family business and create internal issues.
Succession Issues
There are a lot of cases where the older generations are unwilling to let younger generations take over the family business
There are also a lot of cases where the younger generations do not have enough courage or motivation to continue the family business.
Conclusion
Who should own/manage a family business?
Family businesses are suitable for people who have good communication and long-term planning skills.
Reccommendations
Family businesses should have regular communication meetings with the staff and owners.
This increases the unity that is essential for the family businesses to operate smoothly.