The Journey of a Family Business
This article is discussing about managing family business by the group CEO of KHIND, Cheng Ping Keat. The article is mainly on managing a family business which is known as Khind. Khind is an international company founded by Cheng Ping Keat’s father Cheng King Fa, aged 72. Under his vision and guidance, the business has grown into one of Malaysia’s leading local electrical products manufacturer. When Cheng King Fa needed help as the business grew, he seconded his brother, Cheng Hup to join in. Khind initially started out as a family business which eventually grew and expanded throughout time. This article discusses about the advantages and disadvantages of running a family business and the author had highlighted the conflicts which rise throughout the process of the business.
A family business is basically a company managed by family members. According to the author, running a family business has more advantages in the early stages as compared to starting a business with a partner with no blood ties. The author believes that the bond of trust and common interest within family members has a huge impact on the growth of the business.
According to Cheng Ping Keat, there are few strengths and weaknesses of a family business for comparison. According to the author, there are few benefits of starting a family business. One of them being, having a low start up capital without any interest payment. Besides, having management personnel who are trustworthy and willing to share the gains or losses of the business is also an advantage. The author mentions that the probability of success during the early stages of the business is quite high. However, he also emphasizes on the weaknesses of family business. The first example mentioned is the lack of a consistent supply of capital for the business especially when the business starts to expand. He justifies his point by giving an example which was the challenge faced by Khind when a factory is required to be built and increase cash flow during one point throughout the growth of the company. However, Cheng Ping Keat’s father and uncle were quite lucky as they were able to obtain the capital due to several fortuitous events at that time. Even so, he greatly emphasizes that these kinds of opportunities are very rare.
In this article, it is also mentioned by the author that every enterprise will stumble upon some problems regarding the management of the company. In his opinion, if these issues are not resolved accordingly, it could be a huge disadvantage to the business. He also feels that leaders of the company should be capable and responsible in order for the company to operate smoothly.
The author illustrates that members of Khind each have their own branch of family. Based on the history of Khind itself, a family business is prone to conflicts due to different interest of family members. This is a very common situation as each individual has different needs to provide for their own family. He also states that the passing on of the business from one generation to another often causes internal disputes. These cases are usually due to the different mindset, education and lifestyle of the younger generations. He then mentions that it was due to the internal dispute in 2001 that caused Khind to suffer its first loss since being established.
Managing a family business is like balancing a balance between family and company. Cheng documents clearly in his article three different management models which could possibly be used and the possible corresponding outcomes. He showed that a bias towards either side of the balance, which is either toward the family or towards the company, will eventually lead to many negative outcomes, and if not handled correctly and in time, will have a negative impact on the business.
From the article, it is found...