You Are a Business Consultant Providing Advice to a Family

Multiple Choice

You are a business consultant providing advice to a family company based in Alexandria, Egypt with 250 employees, involved in the design and manufacture of children's clothing. The company has identified an opportunity to expand into production of certain lines of adult clothing. They are trying to decide whether to invest in development of this new area of the business, and seek your advice.
-You notice that there is good cooperation among family members at the top management level, but it is organized in a very informal way. There is no identifiable board of directors. You advise the company to establish a board of directors for all of the following reasons except______ .

A) Family members who are not involved in the business are likely to be reassured that the company is being efficiently.
B) A logical management structure is necessary in order to retain family loyalty.
C) A family business is the same as any other business in that its success depends on having clear systems, processes and structure.
D) The absence of a clear organizational structure and board is likely to result in problems and affect performance.
E) It will lead to greater transparency because the board will account for decisions to external stakeholders.