MGT 4550 - Family Business Management STRATEGIC MANAGEMENT OF THE FAMILY BUSINESS Chapter 10 Family Business Management, Concepts and Practice By A. Bakr Ibrahim & Willard H. Ellis Instructor: Dr. Irene Duhaime

Class Schedule - Week 10 (03/29) STRATEGIC MANAGEMENT OF THE FAMILY BUSINESS Reading: Chapter 10 FBM Questions 1, 2, 38-41, 68, 69, 71, 72 FBAB

Question 69 Strategic Planning, mission statements, business plans, how should these concepts apply to a family business?

Question 1 How well is your business doing in your industry and in the context of the current economy?

Strategic Management of the Family Business Planning: systematic evaluation of firm’s mission, objectives, strategy against its capabilities/resources and the environment process, not document continuous and periodic scheduled both direction setting and activity guiding process has content & behavioral outputs

Why Plan ? To anticipate and respond to the dynamic, turbulent and unpredictable environment To allow assessment of the past, present and the future To guide the firm through strategic changes

Question 2 What is the best way to develop a long term strategy, including developing a framework to continue the business over the long haul?

Strategic Planning Long term strategic planning Operational planning Budgeting

The Strategic Planning Process

The Strategic Planning Process - Mission Statement Shared values and vision A clear sense of purpose Says what business your are in and scope of operations Identify competitive advantage Identify expectations of stakeholders Identify industry and or market

The Strategic Planning Process - Planning Long-range Plan Strategic critical to the firms’ survival from generation to generation include succession plan, plan to go public, hiring professional management, diversifying or going international

The Strategic Planning Process - Planning Medium-range Plan business direction for next 2 to 4 years include targets critical to the firm’s survival report on operational plan and performance, quarterly / half-yearly reporting

The Strategic Planning Process - Planning Operational Plan business direction for next 3-,6-, 12- months, financial projections, production schedules, inventory schedules, sales forecast, profit margin forecast. Monthly reporting

Strategic Planning in the Family Firm Early - intuitive longer phase than non-family firms Later - more formal, systematic often at successor generation stage or at professional management stage

The Strategic Planning - The Intuitive Process Planning process is informal and intuitive and is based in gut feel CEO/ Founders with keen sense of judgement and wisdom and vision. Companies facing emerges often blend the intuitive behavior with strategic planning

The Strategic Planning Process - Forecasting Small Firms may use inexpensive and make use of published economic and Industry trends Large forms may use elaborate statistical models or computerized applications (Decision Support Systems)

The Strategic Planning Process - Formulating the Family Business

Strategic Management & Strategic Planning Processes that have content benefits and process benefits Strategies specified to guide operational decision, actions of firm Process is vehicle for communication, value transfer, leadership development

Class Schedule - Following week (04/05) FINANCIAL ISSUES FOR THE BUSINESS AND FAMILY Reading: Chapter 9 Going Public, FBM Questions: 6, 42-51, 79, 97-100 FBAB Cases: Tender Touch Car Wash Ltd., p. 465 FBM