Strategic planning in any organization entails generating goals that a company wishes to accomplish over a given period in line with its mission and vision. The strategic plan also outlines the necessary inputs and steps that the management and operation functions of the company should take to realize these goals. The aim of these strategies is to create value for customers, increase business value, and maximize profits. In generating these plans, the relevant stakeholders have to analyze the current competitive environment and other economic factors that affect the company.
Unlike typical Ventures, the management of family run businesses have an extra task of ensuring that the firm will continue into future generations. Consequently, there needs to exist a unique level of communication between family members, management, and the board concerning business matters. This ensures that decisions made in the present do not become impediments in the future once the organization is handed over to a new generation of family members. Additionally, this communication ensures that the right management team is employed if the interest of intended family-heirs conflicts with the benefit of the company or current head of the business. For example, although BioHit is majorly family run, its CEO Osmo Suovaniemi intends to delegate primary management tasks to a nonfamily member majorly because his would-be heirs do not share in his vision or the companys strategy. Consequently, it would be detrimental to the future of the business to insist on a family member running it due to predictable disagreements across generations.
Another important factor to consider in Strategic Planning of Family Businesses is the unique business model that is achieved by value evaluation and creation. Unlike typical companies, family-run companies have unique sources of value that hinder and promote their growth. Business value can result from, financial resources, physical assets, product line, brand equity, and organizational capabilities. Financial resources and physical assets often limit family businesses since unlike public companies whose liability is spread across diverse stakeholders family businesses have a limited pool of risk insurance. A clear testament is a setback that Osmo faced in having to sell Labsystems and Eflab due to inadequate financial coverage. However, similar to BioHits products, family run businesses generate a lot of value from their products. They enjoy brand recognition more than other companies owing to unique patents, and technology used. This is evidenced by the income BioHit has made in selling its diagnostic systems and tailor-made electronic pipetting systems. Therefore, in strategic planning, ensuring the trans-generational survival of the business and promoting a unique business model is key.
Ch 7: CEO succession
Another aspect of a family run business that plays an important role in the success and sustainability of a company is succession. In particular, the CEO plays arguably the most important role of the organization and his or her succession ought to be handled delicately t ensure smooth transition and sustainability. He or she is responsible for driving the entire organization to achieve its strategic objectives through planning, leading, organizing, and controlling. However, in family-run businesses this function is often diluted as members of the family take up various tasks associated with the CEO role. Consequently, a healthy family with good communication dynamics translates to a healthy business. Unlike typical organizations where the CEO has very authority concerning his exit or stay in office, consolidation of voting rights in family run business ensure that CEOs in such institutions often have total control of their tenure. It is, therefore, imperative that they handle these power with the utmost regard for the well-being of the company. Ideal CEOs should lead for a limited time, ensure successor is trained and moves on as is characteristic of governor-style exits. Moreover, they should ensure that there are enough support structures in place to guide the incoming manager.
Osmo has accomplished most of all requirements pertaining o succession in his family run business. Although the intended successor is not from the family, he has the adequate know-how and experience in the field having served in a similar capacity in one of the companys subsidiary. Moreover, Mr. Suovaniemi intends to stay as full-time board member and innovation which will act as the best support system possible for the new manager. Besides, his wife Oili who plays an important role as a Business Partner, Chief Trust Officer, and Senior Advisor/Keeper of Family Values in the company will be available.
Ch 14: The Role of Non-family Management.
As much as the family has 70% ownership and 88% voting rights of Biohit, the company similar to other businesses needs the help of external entities in management, marketing, financing, and strategic development. However, family businesses need to critically evaluate the positions they ought to delegate if the company is to remain a family business while still maintaining a delicate balance between professionalism and family ethics. There should be distinctions between the board of directors, family council, family assembly, shareholders meetings and management meetings. Although, some of their roles may overlap, there needs to be a balance between family interest t and the business interest t, which is achieved by having a balanced amount of family and nonfamily members in the relevant councils as BioHit, has managed to do.
In determining the role of family and non-family members in the management of a family-owned business, it is imperative that the commitment of all parties be evaluated. Although most times it is in the best interest of the company that the top management positions be reserved for family members, lack of personal commitment or professional competence on their part may be detrimental to the organization. Therefore, personal commitment in a family member may place him/her in a strategically sound position to lead the company regardless of his/her professional orientation. However, if the business deals in a highly specialized trade, technical and professional expertise is mandatory for the top managers if the organization is to be run efficiently and more effectively.
In BioHit's case, all Mr. Osmos sons have some sought of technical knowledge of the business since Vesa has a medical education while Joel and Ville have had intimate interaction with the trade of the company in some capacity. However, Vesa, who being the eldest and having run a subsidiary of the enterprise in the USA, was poised to succeed his father, lacked personal commitment and instead pursued his career. Though it would have been in the best interest of the family that he takes over, such a move would have been disastrous to the business. Additionally, Joel does not have the personal commitment needed as his focused is dived between studies and the company. In such a case Joel would be better poised to run the company, but his professional experience in the business field is limited hence Mr. Osmos choice to hand over the reins to a non-family member upon retirement.
If you are the original author of this essay and no longer wish to have it published on the SuperbGrade website, please click below to request its removal:
- Effective Strategies for Nursing Leadership from an Ethic-of-Care Perspective
- Industry Profile: CJ America
- Filiz and Smith's Coffee Shop Expansion to Reykjavik, Iceland
- Cognitive Hierarchy Theory
- Paper Example on Construction Project of University of Exeter Business School
- United Parcel Service Organization and Operations
- Essay Example on Project Management