FAMILY BUSINESS

Family Business

Family Business

Introduction

In today's rapidly changing business and technological environment, Family businesses are safe from crisis in comparison of normal businesses. Ernst & Young conducted a study with 280 people working in a family business in 33 countries. The study shows that 60% of respondents reported a growth of more than 5% between July 2011 and June 2012. One in six is even reported a growth of at least 15%. According to this study, three-quarters of these companies are located in the United States or Europe, where the crisis is clearly felt. However, the research shows that the model of the family business remains strong face of adversity (Aronoff et al., 2011). This is all the more important that these companies represent more than 60% of all enterprises in Europe and Americas with 50% of employment.

The family business also has a major competitive asset side funding: it has retained earnings to shareholders more abundant than other companies, and is used to strengthen its independence from the capital markets. It is the favourite method of financing. In addition, most of the family businesses focus more on innovation, which is a key to development rather than the need to meet quarterly expectations of shareholders (Pete & Weber, 2012). Even companies based in Western Europe, which is more traditionally funded through banks have an advantage because they have a level of growth that allows them to obtain loan rates very interesting.

Discussion

Family and Family Business

The family is defined as a natural and fundamental group or unit of society that is entitled to protection by society and the State. It is important to discuss that a family is usually recognized by the ties of affinity derived from the establishment of a connection of two people. This social connection is recognized as the marriage, which allows the union between two people with the bonds of kinship (Hoffman & Carmack, 2011). This suggests that a family contains the ties between parents and children and also develop ties between brother and sisters of same father. In addition, a family can also differentiate by degree of kinship among its members.

A family business is any business in which most of the ownership or control, is under the control of a family and two or more members thereof directly involved in business operations. The entrance or recruitment may be only for reasons of birth, contrary to a non-family business where recruitment is based on the experience, expertise and potential that the person has. This can be seen as a complex organization where members belong to family business (Aronoff & Ward, 2010). We can find in the entity; parents, sons, uncles, cousins and grandparents, who at one time may be president, vice presidents, general managers, operations managers, managers production controllers, sales and marketing managers, in flowchart the company. The president of the family business is not necessarily person who is in charge, as the daily operations of the company can be in the hands of another family ...