Succession in family business proposal Essay

MSc Entrepreneurship and InnovationSuccession in Family Business: Difference between Indian Family Business and Foreign Family BusinessIntroduction: 542 wordsThe family business is a business in which the dominant part of a business is managed and overseen by family members. Family business is the oldest surviving economic system and is one of the most important forms of business practices nowadays. As the development of the modern family business, scholars give a more boarder definition. Chakrabarty said a family business is a business in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business’ overall well-being.

An organization is said to be family business when a person is controlling shareholder i.e. the person have enough share to assure 20% voting and highest voting rights as compared to others (Chakrabarty, 2009). A family business has different forms like sole proprietorships, partnerships, limited liability companies, regular corporations, holding companies and even publicly traded, albeit family-controlled companies (Hisrich, 2008).

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The world’s oldest family business is Construction Company named Kongo Gumi’ of Japan founded in 578AD and is currently managed by 40th generation (William T O’Hara 2004).In this thesis, I consider there are only three types of family business, the family which controls the ownership and management, the family which controls ownership but hires professional management team and the family which has control over management. The last type may not appear in capitalism countries. Thus family business can be separate in two parts, family owned business and family controlled business. Nowadays, family businesses are a very important part in every country. In the view of research of the Forbes 400 richest Americans, 44% of the member fortunes were determined by being a member of or in relationship with a family business. In the free economic of the world, estimated impact on global GDP of family business is expected to be over 70% (Tharawat Magazine, 2016). And there are many famous, historical, great brands come from family business. For example, Wal-Mart, BMW, Ford Motor, Samsung, LG Electronics, Hermes, TATA Groups, Godrej, Gap, The New York Times, Lenovo are all family-owned or family- controlled. And there also are millions of smaller and less well-known businesses which, however, are just as successful in their own industrial field.According to the CS Family1000, report submitted by Credit Suisse Research Institute (CSRI), India has the third highest publicly-listed family-owned business with 111 companies as China tops the chart with 159 companies followed by US which has 121(Eugene Klerk, 2018). Based on study done by CSRI, in terms of market capitalization, India accounts for around USD 839 billion which is believed to be increase in future. Although India being home for the large number of family businesses, India as well as many other countries are facing succession problem. Generally the primary issue is succession problem. In India, most family businesses belong to small and medium-sized enterprises. In these kinds of enterprises they do not have a professional manager, and they also do not trust people who do not belong to the family. So it is very hard to handle succession problem when their child lacks the ability to take over the family business or their child has no interest in family business. In short, there are many different situations or conditions in India and succession might be a complex problem worldwide.Aim and Objectives of the research: 84 wordsNot all family business that is not passed down to the next generation goes on to close their doors, but many do. Worldwide just 30% of family business could hand over their business effectively. To overcome this problem and solve the ongoing issue, our major objective of research is to study succession in family business, explain family business and later on we will examine the foreign family business and Indian family business by distinction between both across the areas like culture, structure, management, etc. Research questions:day12 Literature review: day3 278 wordsIn the development of the world’s enterprises, family business always has a very important role and the succession problem is also related with the development of the family business deeply. So the succession problem is always the hot topic among the management scholars. How to deal with succession in family business issues will be directly related to the continuing operations of organizations. Nowadays, Indian family businesses enter the peak time of succession. Analysis of the current economic environment and companies’ situation, and making a suitable model for Indian family business is very useful.Even though succession in family business is understood to have influence on long term performance, many family businesses lack clear design and systematic procedure for implementation (Fang, 2015), which is the reason few family business survive beyond first generation. According to some data it is found that only 30% of family business makes to second generation while 10-15% makes it to the third generation. Not only succession but family business faces other major problems like sibling rivalry, internal family conflicts, biased decision making, imbalance between family and business issues. This thesis will consist of five parts. The first part will introduce the main objectives of the thesis. The second part tries to introduce and define the family business. The third part will compare between foreign family business and Indian family business. The last part will define succession and discuss the succession situation and problem in India, then will give a suitable succession model and my own suggestions.This study will try fill to the gap by collecting and analyzing data and make suggestions as most of the Indian family business have less experience on succession.Research methodology:day4 490 wordsBusiness research method can be defined as a systematic process of data collection, compilation, analysis and implication related to organizational problems (Bajpai, 2011). According to Herbst and Coldwell (2004), the two types of research methods are: the quantitative research method and the qualitative research method. Quantitative research method is systematic process of noticeable phenomena through statistical, computational and mathematical techniques. Quantitative data is data which is in numerical form i.e. statistics, percentage, etc. In other words, quantitative research mainly examines relationship between numerically measured factors with use of statistical techniques. The researcher examines the data with help of statistics and expects that number will yield an unbiased result which can be applied to general population. Results can be compared to other data as the outcome is straight forward. Findings of quantitative research are usually easy to present, summarize, compare and generalize as compare to qualitative research method. Although quantitative research gives people fast and simple way to test large group, it also has drawbacks. While researcher has to sample large population, he has to gain access to that population which is costly as well as time consuming. Apart from that data recorded is difficult to put into structure and some useful information may be disregarded while utilizing that data. Sometimes individual wants to share more information, but quantitative research does not allow in-depth study of behavior and attitude, so researcher may not be able to ask detailed question and get hand on that information.Qualitative data collection comes from open-ended question. It collects data in a different way. While quantitative research lies on statistics, qualitative research refers to meaning, characteristics, definition, symbols, metaphor and description. Qualitative research method allows individual to be themselves by asking open-ended questions rather than asking question with specific answers. The main advantage that qualitative data has is it incorporates human experience, as human experience causes to see same event in two different ways it becomes possible to incorporate the complexity of this type of data into conclusion. Qualitative research method is flexible as it seeks authentic data and emotional response as it does not follow any rigid structure and it is cost efficient. However, there are some limitations to qualitative research method. Qualitative research creates data with questionable value as the data collected is based on different perspectives which sometimes even lead researcher to disagree. It is difficult to replicate the result as it based on individual perspective which my change from time to time. And it is time consuming.This thesis will be using mix methodology as the topic requires deep research and accurate data analysis. For the primary data, research strategy chosen is survey method as it fastest and economical way of data collection. Open ended question as well as specific answer based question will be used in questionnaire. For secondary data we will mostly rely on articles, journals and online sources. By using these methods we can make full advantage of resource. Research techniques: day5 259 wordsAs we need to gather all relevant data on our topic we will be using mix method for data collection. For primary data we will use survey method for collecting data as it can be used in both quantitative as well as qualitative studies. We will be collecting data by forwarding questionnaire to individual who are already part of family business and individuals who are planning to join family business in future. Our focus will be on world’s two major economies i.e. USA and China, and Indian economy, as author belongs from India. This data collection method is beneficial as it will help us to collect detailed and appropriate data, from the individuals already part of family business and get reflection of individuals who are planning to join family business. By comparing data from countries with diverse culture we will get more useful information which can be useful for Indian family business as it still lack knowledge in succession planning. However, it might be a little difficult task to collect data from different countries as there will be no physical presence while collecting data and it may take more time than expected.For further research we will depend on secondary data as it can help with to gain more knowledge and make familiar about topic. Secondary data will be obtained from different sources like business journals, books, internet, etc. This data can be considered as a reliable source as it is based on research already done. Gathering of this data is simple and economical as compared to primary data. Data description: day6Validity and reliability:day7 Difficulties: day 8Timescale: day9Budgetary issues:day 10 Appendix:day11

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