Exam 5: The Family Business

John is more likely to pursue a long-term career in the family business if he is motivated by _____ commitment

An advantage of a family business is that because key employees are related and trust one another, a firm can spend less on systems designed to reduce theft and to monitor employees' work habits.

Fran and Bob Smithers (wife and husband) own and manage a cleaning service. A potential advantage of this arrangement is that

A founder of a family business is contemplating turning the business over to his five children. One possibility, the founder believes, is to divide ownership equally among the children. This would

In the declaration of succession stage the son or daughter is named president/general manager of the business and the parent is completely out of the decision making process.

A family firm's special patterns and beliefs comprise the firm's organizational culture.

When a son or daughter begins working at the family business full-time, he or she is in _____ of the process of succession.

Even if family members lack the capability to run the business, an entrepreneur should always select a successor from this pool of talent.

You Make the Call-Situation 1 Though they are brothers, you might not know it by watching them interact. Even a simple "Good morning" at the start of a workday seems to be more than anyone can manage. No one is happy to be at the office. The three Patton brothers-John, Richard, and Bill- have been in business together for 25 years, running the janitorial services company that was started by their father. Most of the years were happy ones, but the good times have now faded into distant memory. What could have gone so wrong? The conflict started when the founder's grandchildren got involved in the business. Today, John's oldest son manages the employees who work with residential accounts, Richard's daughter does most of the bookkeeping, and Bill's son is an outside salesperson for the company. Despite differences in their personal goals and interests, and even in their long-term vision for the company, the cousins get along very well. But the Patton brothers disagree about who should lead the company in the future. As the oldest brother with the most experience in the business, John believes his son is best positioned to take over the reins of the company when the time comes, but Richard and Bill realize that this means opportunities for their kids will be limited. Bill is convinced that his son shows more managerial promise than his nephew, and Richard believes that his daughter is underpaid and underappreciated, even though she is "obviously" the financial mind behind the machine. This is no small matter to the Patton brothers. Early on, the arguments became so heated that the brothers nearly came to blows. Today, the disagreements are mostly unspoken. Though the business is in no immediate danger of failing, it has not been doing all that well during the last 18 months or so. More importantly, the Patton brothers need to make some major decisions that will position the company for the future, but these are being neglected as the brothers continue their war of silence. Under the circumstances, progress is impossible. What can be done to get this family business back on track?

The process of preparing a family member to take over a family business typically takes about one year.

You Make the Call-Situation 3 Siblings Rob, 37, and Julie, 36, work in their family's $15 million medical products firm. Both are capable leaders and have experienced success in their respective areas of responsibility. Compared to Julie, Rob is more introverted, more thorough in his planning, and much better on detail and follow through. In contrast, Julie is more creative, more extroverted, and stronger in interpersonal skills. Since childhood, they have been rather competitive in their relationships. Their 62-year-old father is contemplating retirement and considering the possibility of co-leadership, with each child eventually holding a 50-percent ownership interest.

A family business involving two or more children may experience either sibling cooperation or sibling rivalry.

An inherent problem for couples involved in a family business is that

Nonfamily employees in a family business may be caught in the crossfire between feuding family members.

A primary benefit deriving from the strength of family relationships is the willingness of family members to

Family owned businesses are almost exclusively small businesses and represent less than five percent of the S&P's 500 Index firms in the United States.

Husband-wife teams that own a business are popularly referred to as co-preneurs.

Which of the following is not an advantage of a family-owned business?

Stage III in the process of succession is the

The spouse of the head of a family business may serve the family firm by