Lessons learned from 30 world business families With the 6C formula for success and (not) success in Thai family businesses (Part 2)

In the last article I wrote about family business of Japan is the Hoshi Ryokan business, which has been passed down for 46 generations and has learned lessons. family business of two US companies, Estee Lauder and the Bancroft family, which were former owners of Dow Jones, which was taken over by Rupert Murdoch, with both success and failure.

If I were to take away 30 lessons from family business You may have to write several articles or compile them into one book. Therefore thought of changing the method of presentation.

Next, lessons will be learned from failed family businesses. or not successful In the business founder And family members cannot even own that business. will remain profitable and expand What is the cause? and analyzed together with the 6C formula that will help prevent How did the failure of the family business occur?

In this regard, I have brought together examples of 10 business families that have experienced similar events to draw lessons from. which if including the Dow Jones family business that was written in the previous issue It will be combined into 11 companies. And if there is a Thai family business facing the same problem, how should it be solved? It will be a lesson learned together.

If the reader will read the details in the book Business Family “Lessons from 30 business families behind world-class family businesses” by Professor Dr. Kritlert Samphantharak. and my book on Thai family business success formulas in a world of change Taken together, it will give you additional knowledge that can be applied to family businesses in Thailand according to the situation.

Family businesses that are experiencing problems and are considered failures in inheriting the family business from the book Business Family, there are another 10 companies:

1. Family businesses Puma and Adidas: Siblings quarrel.

The owner of the world's largest sports shoe business has two siblings who ran the business together from their parents. But they quarreled The Dassler family business, separated from the business started by Rudolf or Rudi Dassler, the older brother of Puma, and Adolf or Adi Dassler, the younger brother of Adidas, due to the personalities of the two brothers being different. Both methods of working and political opinions

It is a way of separating business operations from each other as enemies rather than friendship and competition. And finally, the business was sold to a French businessman in 1989 and 1990, respectively (see the book Business Family, pages 35-43). At present, family members no longer hold shares or act on the board of directors.

lesson learned

If the business of these two brothers There is appropriate structural management. The 1st C has a good shareholding structure and a family constitution that requires siblings to have generosity and kindness towards one another. This is the 5th C: Care & Compassion. The problem of life-and-death quarrels. It probably won't happen. And if the separation of doing business is friendly without competing or quarreling with each other growing apart

There may be a Holding Company for everyone in the family and dividing it up to the heirs who manage it to have personal shares and manage it according to their own aptitudes and styles. It might make these 2 businesses the largest in the world today. And members of the family still own the majority of the shares. They may list their companies on the stock exchange and expand through M&A, so they can grow. (See the recipe for success book, pages 171-198)

2. The Gucci family business : Self-interest knows no bounds; lack of good governance.

The Gucci family business is an example of the conflict between family heirs and the lack of governance of the Gucci family, which was the creator of the global leather goods brand until the recent film House of Gucci. Study in many books Until the family no longer held shares in the business that the family had created.

The conflict arose over the brothers' shares being divided equally after purchasing shares from another father's wife. But I was dissatisfied and felt that my younger brother was not doing anything useful to the business. And the younger one found that The older brother also tried to transfer the business to a subsidiary in which he held a small share. There is a conflict of interest in releasing the product. There was a lawsuit. Including doing business that competes with family businesses. Relatives were removed from administration. By bringing the issue of tax evasion to the prosecution. Until the heir finally sold his shares to an outside fund in 1986, and eventually the family business had to sell all of its shares, including in 1993, as well as the tragedy of the murder of a family member as well.

Competing for benefits from the company without taking into account the interests of the public and competition among heirs of families that do not have rules As a result, this family business is owned by someone outside the family, similar to the case of Adidas and Puma (see Business Family book, pages 44-55).

lesson learned

The 6C's can be applied to all Gucci family businesses, but the most important C's are: legal structure To set up a suitable family company and lack of good governance Incorrect transfer of benefits or taxation that is used as a tool to bully family members Fair and appropriate allocation of shares determining the family constitution Regarding the prohibition of doing business with conflicting interests, communication

Especially being generous. and the kindness of the heirs, which should be developed and created when the business begins to prosper or consider taking the business on the stock exchange. At that time, it may cause some family members to can still hold shares But leave it to professionals to handle. Even if you don't manage it. (See the recipe for success book, pages 59-72)

3. Bombardier family business : Fast but not prudent.

It is a business owned by the Bombardier family in Canada. The family started out manufacturing Snow Vehicles and developed it into Ski-Doo snow mobiles and have used the agility of being a family business to expand the business until it was successful. M&A, the Canadian government's acquisition of the business of the aircraft manufacturer CANADAIR, was able to develop into the world's seventh-largest commercial aircraft manufacturer, as well as having a financial business called Bombardier Capital Inc.

During the period 1995 to 2000, Bombardier's stock price rose 100 times until the World Trade Center 911 crisis occurred, resulting in aircraft orders falling to the point of loss. There was an attempt to recover from the situation by selling some businesses, leaving only 2 businesses: rail transport. and aircraft business But the two businesses do not have synergy to complement each other. Had to sell aircraft production business to Airbus. Currently, Bombardier has only one business remaining, which is aircraft production. For the expensive luxury market

The failure of the Bombardier family business that had been revived during the crisis. But the wrong decision to expand the business was made by a family member. Even though there are those who oppose it. Including not adapting to business changes that should have synergy with each other. Decisions to expand the business or make various investments Because the family holds large shares It is based on the owner's investment decisions and is therefore not audited. or clearly controlled Such families thus failed to create sustainable family business success (see the book Business Family, pages 148-159).

lesson learned

The Bombardier family business may not have good risk management and not respond to changes that occur, or the sixth C called Change. When obstacles and damages occur, even in the beginning, the business can be recovered for a period of time. But in the end it was a failure. Because of lack of good corporate governance By relying on the rights of majority shareholders to make wrong business decisions. structuring Holding shares or the first C of a business organization is therefore very important. And having professionals come in to help inspect and advise on good governance is therefore extremely important.

Family business in Thailand enough to compare with the Bombardier business that has failed Most of them are family businesses that collapsed during the Tom Yum Kung era. Because there is a lack of good governance or good governance and business. Including those family businesses unable to change their business to keep up with the changes in the world.

Or nowadays it may be compared to the television business. At one time it was prosperous in bidding for free TV. Many business families decide to submit bids. But changes in digital technology As a result, most of these family businesses face losses. Had to sell to many families including technological changes In the media that happened causing the once prosperous television business to decline Because there may not be time to adjust to the event. (See the recipe for success book, pages 217-242)

4. Samsung, a family business: A business where family members were imprisoned for lack of good governance.

It is a business group called Chaebol Group that Lee Byung Seol, 1st Generation, is the founder of. It relies heavily on its relationship with government and politics. Even now this business is growing and is very profitable. The Samsung family business still separates the business into 4 large groups:

1) Samsung Business Group 2) Hansol Business Group which is the largest paper production business and electronics, chemical, logistics and construction businesses 3) CJ CheilJedang Business Group which is in food, medicine and biotechnology business and 4) Shinsegae Business Group which is in the department store business. The oldest, taking care of fashion, accommodation and travel. by each heir There are a total of 8 people, 3 men and 5 women, and many of their descendants are married to influential politicians and business families in Korea.

The Samsung family business has relied on political connections to expand its business. until political power changes The 2nd generation heir named Lee Gun Hee (the 3rd son who was not prepared to take over the business) was indicted on charges of bribing politicians, prosecutors, and judges, and was imprisoned for 3 years on charges of money laundering. and evade taxes But the court suspended the sentence and imposed a fine of $98 million.

Later, President Lee Myung-bak granted a pardon, which was later pardoned by President Buck. was sued for accepting bribes from the Samsung group. Later, Lee Gun Hee, after being released from prison, had a heart attack and became seriously ill, causing Lee Jae Yong, his son, to become an executive, but he is still being sued for corruption. and bribed President Park Geun-hye who was jailed.

Later there was a pardon. and returned as chairman of the company even though the Samsung business had progressed But the relationship with politicians and being prosecuted Giving bribes is still a sin for the Yi family. Stay for a long time (see Business Family book, pages 184-194)

lesson learned

lack of good governance Offering bribes to government officials of the heirs of the Samsung family because they went close to the center of power or politics in order to gain business results It is considered a mistake. As a result, two of his heirs were imprisoned, despite a pardon. But it shows abuse of power Such events should not occur.

Therefore, the rules are laid down in the family constitution. The heirs in the family are prohibited from being involved in politics, which should help.

In Thailand, some family businesses therefore prohibit family members from becoming politicians. And there are also examples of family businesses that do not interfere with politics, and there are also examples of lawsuits. (See the recipe for success book, pages 145-167, 217-235)

5. Barilla Family Business : Unchanging Values.

It is a family business from Italy. which started producing famous bread and pasta and is passed down from generation to generation Especially the situation of 3rd generation Thai family members who have come to inherit the business. Grow your business quickly Until financial problems were encountered and the business had to be sold. And after 9 years he went back and bought the business. returned from outsiders Barilla has a market share of almost half of the Italian consumer market.

But the mistake of a business owner interviewed was that there would be no way for LGBT gay couples to appear in the company's ads. As a result, the public and the media were angry and slammed the business group and were later boycotted, causing sales to fall, although not so much that the value of the brand decreased (see the book Business Family, pages 208-217).

lesson learned

Although the incident was not considered a failure of the family business, the brand value was lost. Which is a lesson to teach the mind. Adhering to the long-standing values ​​or culture of the family business By not responding to changes in cultural traditions in each era, which corresponds to the 6th C, which is the word Change or change that can be controlled. Therefore, do not be so attached to various ideas and values ​​that you refuse to change according to the situation. (See the recipe for success book, pages 68-71)

Examples of Thai businesses with problems like this In the case of Luk Kai Thong Restaurant and "Pang Cha Menu" becoming famous restaurants, many people who know them have filed lawsuits against the restaurants that reuse them. Claiming to claim ownership of the copyright to "Pangcha", no one is allowed to use it after registering the copyright with the Department of Intellectual Property. and there was a huge backlash on social media.

6. Shaw Brothers Studio, a family business: There was no plan for succession, so it came to an end.

is a martial arts movie maker and founder of Hong Kong radio and television station 3BB, which Sir Run Run Shaw's family did not plan. In inheriting the business until he was 103 years old, he then gave it to his 79-year-old wife to manage, which is different from his brother's business. The two younger brothers, who have heirs to take over the business, continue to operate it (see Business Family book, pages 232-240).

lesson learned

Family business owners who do not plan for family business succession There will be problems because no one will continue the business. Therefore, creating a family constitution Company regulations specifying the mechanism for family business succession. and determine the working period of the business owner and the person starting the business Therefore, it is necessary and family business owners must let go in order to pass on the business to the next generation. In the world of changes that occur if family business owners do not plan for succession. Ultimately, the family business could not survive.

I believe that if a Holding Company were established, the Shaw family's business would likely expand even more. and there are descendants of the siblings' family members. and have professionals able to continue doing business (See the recipe for success book, pages 327-337)

(Follow part 3)