The
family- owned enterprise is one of the most common forms of business
around the world. In many countries they generate more than half of
the Gross National Product (GNP).
Family
owned enterprises have been the norm in India for a long time and it
is only in the recent past that we are seeing a spurt in other forms
of businesses. India has a host of examples ranging from the giants
(such as TATAs, Birlas, Ranbaxy and Godrej) to small enterprises in
every Indian town.
Distinguishing
features of a Family Owned Enterprise are:
1.
Employee support in family enterprises is usually stronger when compared
to other forms of businesses.
2. Most family-owned
business has a strong community orientation.
3. For the
younger generation in such enterprises, there are a host of learning
opportunities, while they are making their way into the business.
4. Family
enterprises have a strong orientation for customer service through which
customer loyalty is generated.
5 . Family
firms are resilient because of the high degree of trust, security and
sacrifice that exist within the family.
Members
of such enterprise draw a very thin line between their personal lives
and their business lives. Crucial business decisions can suffer if there
are inter personal issues and family problems. Very often transition
of the business from one generation to the next causes complications.
This could be because of a new way of operating the business, or even
fresh concepts or thoughts applied for better performance that are not
easily accepted by the previous generation.
The
changing business environment has led to doubts about how some of these
enterprises will survive. Communication is the key to survival. Members
of the family have to discuss issues in the open in a proactive manner
before problems arise. Many family enterprises fail because they have
not adapted management practices and organisational principles such
as human resource management and marketing in their day-to-day operations.
In such establishments, there often is a stifling of professionals within
the organisation and regimented control over independent thought and
action.
As
a business model, entrepreneurs who wish to start a medium or small-scale
business favour the family enterprise. The family can raise the resources
and also share the profits within. This enterprise, if it works, offers
security of employment for future generations to come.