Indian Family Managed Business; History,Advantages,Evolution,Challenges

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Family Managed Family Managed Business: Business: Indian Perspective Indian Perspective Presented by: Presented by: Anuranjan Anuranjan 1 YMT's College Of Management

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It's a presentation related to the Indian Family Managed Business; evolution,mechanism,challenges,history,suggestions.

Transcript of Indian Family Managed Business; History,Advantages,Evolution,Challenges

Page 1: Indian Family Managed Business; History,Advantages,Evolution,Challenges

Family Managed Business:Family Managed Business:Indian PerspectiveIndian Perspective

Presented by:Presented by:

AnuranjanAnuranjan

1YMT's College Of Management

Page 2: Indian Family Managed Business; History,Advantages,Evolution,Challenges

FamilyFamily BusinessBusiness

Closely-Held firm whose ownership and policy making are dominated by members of an “emotional kinship group”

Legal Right to the Firm

Legal Right to the Firm’s profits

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Page 3: Indian Family Managed Business; History,Advantages,Evolution,Challenges

33% survive to2nd Generation

15% survive to3rd Generation

The Bad News

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Page 4: Indian Family Managed Business; History,Advantages,Evolution,Challenges

A Brief History/Facts: A Brief History/Facts: Indian Family BusinessIndian Family Business

Traders/money lenders switched to industry-late 19th century

Aggarwals and Guptas in the North, the Chettiars in the South, the Parsees, Gujarati Jains and Banias, Muslim Khojas and Memons in the West, and Marwaris all over India

1950 - 18 Indian and 2 British Family owned 95% business

Tata, Birla, Kirloskar, Shriram, Walchand, Thapar, Mafatlal

Mahindra, Ramkrishnan, Singhania, Lalbhai, Dalmia-Sahu

Jain…….

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Changing business environment and society

Corporate Management

461/500 top companies are family controlled

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Characteristics of Indian Family Business

Loyalty

Family Relationship

Male dominated

Active and non active members

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Passing the Baton

Grooming the new generation

Steady growth of stake

Gradually reach the top

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Two cases in pointTwo cases in point

TATA Group

RELIANCE Group

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Ownership Structures of Tata Sons

Stakeholder Stake FY 95 Stake FY 05

TATA TrustTATA Group AffiliatesP.S. MistryTATA Family

78.0%

Less than 1%17.5%3.5%

65.9%

12.8%18,4%2.9%

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Family Tree Of Reliance Group

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Advantages with Family Businesses

Common Values

Strong Commitment

Stability

Loyalty

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How they control their Empire!

CROSS HOLDING

PYRAMIDICAL STRUCTURE

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Restructured Tata Restructured Tata

Major Group Companies

Tata Sons Stake in Group Company

FY95 FY96 FY05

Tata Iron &Steel 2.3 8.5 19.5

Tata Motors 1.8 2.7 21.9

Tata Power 5.6 6.3 28.7

Tata Chemicals 7.9 8.2 15.2

Indian Hotels 13.3 13.3 12.9

Tata Tea 7.6 8.6 15.8

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challenges/Problems and Recommendation: One on One

Challenge/Problem 1:Challenge/Problem 1:

Family Emotions: Ego clashes, sibling rivalry, feeling of being left out…

Recommendation 1:Recommendation 1:

Open Communication Mentoring the Members

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Challenge/Problem 2:Challenge/Problem 2:

Family or Business what comes first?

Recommendation 2:Recommendation 2:

Sit together and decide the way

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Challenge/Problem 3:Challenge/Problem 3:

Succession Planning and fair to all approach

Recommendation 3:Recommendation 3:

Plan in AdvanceDivide Role not the Family/Group

cotton and jute mills of Birla!

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Challenge/Problem 4:Challenge/Problem 4:

Retaining non-family Professionals:

Recommendation 4:Recommendation 4:

Universal HR Policy:

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Strategic Management “the Family Way”

Two Different SystemsTwo Different Systems

Family system

1. Emotional Concerns

2. Family Needs

3. Maintaining Stability

Business System

1. Business Performance

2. Business Demands

3. Managing Change

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Divide and Rule!

Family councilFamily council

Mission and Values

Next Generation Development Plan

Guidelines for Family Involvement

Ownership and Transfer Policy

Business CouncilBusiness Council

Business decisions

Capital Needs (Family and business)

Leadership team succession

Succession Governance

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Conclusion

“Family is the fundamental unit of every otherinstitution. Business evolved due to symbiotic interaction Between family and society (itself made of families).This symbiosis can be made eternal by strategically managing both the institutions (Family and Business)ensuring that family remains united and business is given full autonomy to chart its way according to thechanging needs of the time.”

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Thank You!Thank You!

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