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MBA4703 Business Strategy – Shipping & Logistics

Coursework 1: Family Businesses

Your Name: Oleksandr Matsupa

Your Student Number: M00429069 

Questions to be answered:

1. What are classic family business issues that all family firms must face? 2. What insights can you gather on how family enterprises compete and think differently? (compare the family business to the non-family owned business) 3. What is your diagnosis or interpretation of the situation they face? 4. From your cultural perspective and your family experience, what recommendations would you offer the Klaveness family? 5. Identify the changes that occurred in the group’s ownership structure, after 2010 6. What effect will these changes have on the group’s competitiveness in the global shipping industry?

Your answers:

Question 1

Consulting the case study of the Torvald Klaveness Group it is possible to draw several issues that family business may face. Family business is usually a creation of one charismatic person, who invested all his time into developing and growing the assets for the future generations. As the time goes the founder has to retire and must prepare a plan for the future development of the company. The following problems may arise and threaten the stability:

* Bad succession planning & qualified future successor – it is necessary to plan in advance how, when and to whom the company will be handed over. This approach requests from founder to involve his family members, who want to join family business to start from the lower levels in company to gain the experience in practice from the ground and naturally grow to the managerial position exploring the experience and future possibilities offered and hidden on different levels of company’s activity. This idea TK determined in the agreement passing “the management and the majority of ownership to Tom Erik over a 12-year period”[1] and also stipulating that “descendants must work for company for 5 years, 2 in a leadership role”[2]. Such approach can be also considered toward non-family members.

* Corporate governance – usually family business has little complexity at the beginning, with little formalization and standardization of the processes, but eventually business becomes complex and working without structure in the dynamically changing business environment can lead the company to a deadlock. The company needs a formalized governance of the enterprise.

* Lack of interest by Successors – it may happen that the younger generations don’t see themselves making career or serving the interests of the family business. The correct approach would be not to force them to be involve in the family business, they can explore the professional opportunities and get knowledge elsewhere and maybe after return or set up in the family business, merging own experience with family vision and plans. As the case of The Klaveness shows “Siri, Helle and Hanne received a financial settlement. Tom Erik..had been active in the business for years. Morten, had left Norway and his interests did not appear to include shipping. Trond was an unknown quantity.” [3]

* Lack of communication between family members – effective communication is the cornerstone of success business. An example is to make regular family meetings which must be attended by all family members involved in the business. The character of the open discussion is very important, since everyone should feel free to put on the table and discuss sensible issues. Sometime the challenge may get emotional settings, so the communication should be supported by an external arbiter to keep discussion on track and get the beneficial outcomes. Such fact reflected in the summer brainstorming meeting held in 2002 and as mentioned “although the brothers enjoyed a cordial relationship and had come to know each other better through their work at Klaveness, third-party intervention would make the...
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