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DIPLOMA IN BUSINESS STUDIES

Family Business Management

Tutorial 4
(for week beginning 13 May 2013)

Managing The Family Business I

Discussion Questions

1. Why is the understanding of family conflict important to family-owned businesses?

2. Emily’s family runs a lucrative F & B business selling beef noodles. She is about to take over the running of the empire when her father retires later this year. However, she is worried that family conflicts may erode their very successful business. Applying what you have learnt in your Family Business Management course, advise Emily on the following:

(a) Explain to Emily five possible sources of family conflicts that are associated with family-run companies.

(b) Discuss the approach that Emily’s family business must focus on when managing and resolving family conflicts? Propose three informal mechanisms that can be adopted.

Case Study A

Power Play at the Inn
(Ernesto J Poza and Mary S Daugherty, Family Business, 4th Edition, 2013, South-Western Cengage Learning, Pg 77.)

Fronting on the Pacific Ocean, the Inn at the Wharf boasts 410 guest rooms and suites, two dining rooms, a lobby bar, and the lively Gull’s Nest nightclub. The inn’s annual revenues are $15 million.

Robert May, 57, purchased and remodelled the inn in 1970. His wife Katherine, although not now active in the business, has assisted in decorating and menu design. They have three children: Jake, 35; Amy, 30; and Andy, 24.

Three years ago, Jake and his wife Elaine, wanting to settle down from their life as rock musicians and start a family, were welcomed back. Jake manages the Gull’s Nest. Elaine, a stabilising force for Jake, especially during the stress of on-the-road tours, is interested in using her art skills at the inn.

Business degree in hand, Amy took over office management 5 years ago, including computer operations, for the inn. She and her husband, who is not involved at the inn, have a son.

Andy will soon receive his degree in hotel and restaurant management and expects to work at the inn upon graduation.

Today, Robert arrived home looking haggard. Questioning him, Katherine soon discovered that Amy had come into Robert’s office and burst into tears. Jake had been through her office with an old buddy who represented a computer company and informed Amy that he was considering purchasing a new computer system for the inn. “And besides that, Dad, I’m pregnant again. Can I handle my job and two children?”

Robert called Jake to his office and inquired about the computer decision. Much to Robert’s surprise, Jake pulled out his wallet and presented a new business card: “Jacob May, General Manager, Inn at the Wharf.”

Discussion Question

Analyse the family business dilemma and discuss the critical issues. Suggest how Robert could resolve these issues.

Case Study B

‘Milk King' fights sons for power
“The hearing into the lawsuit between Malaysia Dairy Industries founder Thio Keng Poon and his family resumes today after five days of trial last week. Mr Thio has to decide whether he wants to make the unusual move of getting any of the three daughters he has sued to testify for him. Selina Lum sums up what has emerged in court so far. IN 1963, Mr Thio Keng Poon started the dairy company that made household names out of Vitagen and Marigold. Four decades later, in late 2007, he found himself ousted from the board of Malaysia Dairy Industries, accused of double-claiming travel expenses. Two months ago, the 77-year-old's lockout became literal: He was barred from entering the company's premises in MacPherson for having verbally abused his youngest son and a senior employee. Mr Thio has accused his eldest son Syn Pyn, 51, and youngest son Syn Wee, 45, of instigating his wife and four other children into systematically removing him from the company he built from scratch. He said in his affidavit: 'As a father, I am profoundly aggrieved by the...
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