Family Firms in Transition: Case Studies on Succession, Inheritance, and Governance

128 Pages·2012·0.425 MB·English

by  Alan L. Carsrud, Malin Brännback (auth.)

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Alan L. Carsrud Malin Brännback
(cid:76)
Family Firms in Transition
Case Studies on Succession, Inheritance,
and Governance
Alan L. Carsrud Malin Brännback
Ted Rogers School of Management School of Business and Economics
Ryerson University Åbo Akademi University
Toronto, Ontario, Canada Turku, Finland
[email protected] malin.brannback@abo.fi
ISSN 2191-5482 e-ISSN 2191-5490
ISBN 978-1-4614-1200-7 e-ISBN 978-1-4614-1201-4
DOI 10.1007/978-1-4614-1201-4
Springer New York Dordrecht Heidelberg London
Library of Congress Control Number: 2011937052
© Alan L. Carsrud and Malin Brännback, 2011
All rights reserved. This work may not be translated or copied in whole or in part without the written
permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York,
NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in
connection with any form of information storage and retrieval, electronic adaptation, computer software,
or by similar or dissimilar methodology now known or hereafter developed is forbidden.
The use in this publication of trade names, trademarks, service marks, and similar terms, even if they
are not identified as such, is not to be taken as an expression of opinion as to whether or not they are
subject to proprietary rights.
Printed on acid-free paper
Springer is part of Springer Science+Business Media (www.springer.com)
Acknowledgments
We are grateful to the Price Center for Entrepreneurial Studies in the Anderson
School at UCLA for their support in the early development of some of the cases in
this volume and to the Ewing Marion Kauffman Foundation of Kansas City, MO for
their support of the development of those cases developed at Florida International
University. Without our students at the University of California, Los Angeles,
Florida International University, Ryerson University, Pepperdine University, and
Åbo Akademi University it would have been impossible to bring these cases to life
and to make these stories available to a wider audience.
v

Contents
1 Introduction ............................................................................................. 1
Children, Succession, and Governance ..................................................... 2
2 Reading a Family Business Case............................................................ 5
About Cases .............................................................................................. 6
3 Case One: The Packard Marketing Group – Letting Children
into the Business ...................................................................................... 9
Introduction ............................................................................................... 9
The Early Years ......................................................................................... 10
Making a Family Decision: Moving to New York .................................... 10
A Son Enters the Business ........................................................................ 11
The Success and Failures of Hiring a Child .............................................. 12
Current Situation ....................................................................................... 12
Future Possibilities .................................................................................... 13
4 Case Two: Gazi Family Constitution – Managing the Family
in a Family Firm ...................................................................................... 15
Introduction ............................................................................................... 15
The Constitution........................................................................................ 15
Definitions ................................................................................................. 15
Explanations .............................................................................................. 16
Mission ...................................................................................................... 16
History: Entry in Education ...................................................................... 17
Strategies for Establishing Success in Education ..................................... 18
Prioritized Values of the Family ............................................................... 18
Responsibilities of the Family to Society ................................................. 19
Standards and Expectations Concerning Family Members ...................... 20
Upbringing of Children ......................................................................... 20
Support for Personal Development and Wealth Education ................... 20
Distribution of Family Resources ......................................................... 21
Working Principles for Family Members .............................................. 22
vii
viii Contents
Family Council and Its Working Principles .............................................. 23
Duties of the Family Council ................................................................ 23
Various Additional Clauses ....................................................................... 24
5 Case Three: Surviving Revolution, But Succumbing
to Succession – The Story of Five Siblings ............................................ 25
The Roots .................................................................................................. 25
Leaving Cuba ............................................................................................ 26
A Little Bit of Foresight Goes a Long Way .............................................. 26
Frustration in Puerto Rico ......................................................................... 27
Starting Over in Miami ............................................................................. 27
Family Troubles ........................................................................................ 28
Finding a Successor .................................................................................. 28
Grandchildren in the Business .................................................................. 29
More Turmoil Occurs ................................................................................ 29
Poor Planning and Death .......................................................................... 30
More Problems Arise ................................................................................ 30
Who Will Own and Run the Business? ..................................................... 31
Reorganization of the Business ................................................................. 32
Future of the Business ............................................................................... 32
6 Case Four: Dodger Baseball – The End of Family-Owned
Major League Baseball ........................................................................... 33
Introduction: January, 1997 ...................................................................... 33
The Ownership Legacy ............................................................................. 34
Dodger Way .............................................................................................. 35
The Farm System ...................................................................................... 37
League Control .......................................................................................... 38
The Owner’s Family ................................................................................. 38
Dodger Stadium at Chavez Ravine ........................................................... 39
Dodgertown and Campo Las Palmas ........................................................ 40
Player Strife .............................................................................................. 40
Hollywood Buys Baseball ......................................................................... 41
Shared Revenue ......................................................................................... 42
Players and Coaches ................................................................................. 42
League Relations ....................................................................................... 43
Family Plans .............................................................................................. 43
Alternative Investments ............................................................................. 44
Estate and Income Taxes ........................................................................... 44
Succession ................................................................................................. 45
Sale Results ............................................................................................... 46
Problematic Alternatives ........................................................................... 47
Conclusion ................................................................................................ 48
Addenda .................................................................................................... 48
Contents ix
7 Case Five: The Vicente Family and Their Santa Maria
Store – Small Business Growth and Succession in Puerto Rico ......... 59
The Early Years ......................................................................................... 59
Work Had To Be Done .............................................................................. 60
When Business Becomes a Family Firm .................................................. 61
Growing the Business ............................................................................... 62
More Growth ............................................................................................. 63
Crisis in the Family ................................................................................... 64
More Unfortunate Things Happen ............................................................ 64
Help From Major Distributors .................................................................. 65
The Children and the Santa Maria Stores ................................................. 65
Time To Retire .......................................................................................... 66
The Succession .......................................................................................... 67
The Transition ........................................................................................... 67
The Uncertain Future ................................................................................ 68
Time Line .................................................................................................. 69
The Players ................................................................................................ 70
8 Case Six: Jacoby Construction, Inc. – Building a Strong
Family Firm on the Sound Foundation of Succession ......................... 71
Introduction ............................................................................................... 71
History, Challenge, and Firm Overview ................................................... 71
Company Divisional Overview ................................................................. 72
Key Management ...................................................................................... 72
The Company, Revenue, and Ownership Structure .................................. 73
Jacoby Manufacturing Division ................................................................ 73
Pile Driving Hammers .......................................................................... 74
Equipment Rental .................................................................................. 74
Jacoby Construction Division ................................................................... 75
Competition............................................................................................... 75
Construction .......................................................................................... 75
Manufacturing ....................................................................................... 76
Historical Financial Review ...................................................................... 76
Financial Results: Income Statement .................................................... 76
Financial Forecasts and Growth Plan ........................................................ 77
Jacoby Construction Division ............................................................... 77
Jacoby Equipment Leasing Company ................................................... 78
Jacoby Engineering Services ................................................................ 78
Consolidated Forecast ........................................................................... 78
Appendix 1: Industry Trends .................................................................... 79
Canadian Federal Government Spending ............................................. 79
Ontario Provincial Government Spending ............................................ 80
Private Sector Spending ........................................................................ 81
Manufacturing Market .......................................................................... 81
x Contents
Appendix 2: Competition .......................................................................... 81
Construction .......................................................................................... 81
Manufacturing ....................................................................................... 82
Rental Business ..................................................................................... 83
9 Case Seven: Mesbo Supermercats – A Traditional
Catalan Firm Facing Its Succession ...................................................... 85
Introduction ............................................................................................... 85
What Do We Do? ...................................................................................... 85
Catalonian Market ..................................................................................... 86
Mesbo Supermercats ............................................................................. 86
Brief History ......................................................................................... 86
Early Growth ............................................................................................. 87
Brotherly Responsibilities ......................................................................... 87
Sharing Responsibilities and Expanding the Pie .................................. 88
Three Families, Ten Cousins ................................................................. 88
Jose’s Family ............................................................................................. 88
Marcos’ Family ......................................................................................... 89
Pablo’s Family ........................................................................................... 89
To the Rescue ............................................................................................ 90
Code of Silence ......................................................................................... 90
Nonfamily Management ........................................................................... 91
Progress Made ....................................................................................... 91
Expectations Expressed ........................................................................ 92
Exhibit 1 .................................................................................................... 92
Exhibit 2 .................................................................................................... 92
Exhibit 3 .................................................................................................... 93
10 Case Eight: JADDCO Laboratories, Inc. – Succession
in a Technology-Based Family Firm ...................................................... 97
Introduction ............................................................................................... 97
Evolution of Technology ........................................................................... 98
Low Vision Products ................................................................................. 98
Problems in Product Development ........................................................... 99
The Lawsuit .............................................................................................. 99
The Business and the Children ................................................................. 100
Julia and the Business ............................................................................... 101
Everyone Gets Involved ............................................................................ 102
A Father’s Reaction ................................................................................... 102
Bring on the Consultant ............................................................................ 103
The Surprise .............................................................................................. 103
Post Board Meeting ................................................................................... 104
Two Months Later ..................................................................................... 105
Exhibit 1 .................................................................................................... 106
JADDCO Laboratories, Inc.: Family, Ownership,
Management Diagram ........................................................................... 106