Quiz 2: Family-Owned Businesses
Management succession is the process which is used by the company to appoint new employees and internal leaders because old employees get transition from their responsibilities and duties. Management successions plays an important role in small firms because, when the firms don't handle it in an adequate manner, it can create problem in the management quality. It may results into the consumer's loss, which can ultimately force the organization to get out from the business. In a family firm Management successions plays an important role. The family member who want to get rid of from their duties and responsibilities and want to give the authorities to their next generation. But the children don't have enough ability and skills to run business operations effectively. The children require experience, talent and certificates to understand the business operations smoothly. Hence, it is very important in a family firm.
A family-run business is run by the family members, and the family members have the right to take the important decisions related to business. At least two family members must be running the business. When the decisions of any family members are not accepted in a family business, they may get demotivated and hurt or may feel that their opinion is not respected and does not matter. It may also create misunderstanding between family members. Hence, it is not easy to take reasonable decisions in a family business. The organization of family is more complicated in nature. The arguments can lead to personal conflicts in family members. It can create trouble to take the business decisions. The owner of the family business may take decisions for the favoritism of the family member which can create conflict of interest for the other family members.
Key officer is someone who is involved in the key operations of the company. It could be anyone either reporting to the CEO directly or could be the CEO himself. The key officer provides services to the company as a main consultant of the company. The company can face a number of problems when a key officer suddenly leaves: Delay in decisions The company can face number of problems when key officer leaves the office suddenly. It can lead to delay in decision making. The company may not be able to take the prompt decisions. Due to this, the company may not perform their tasks in an efficient manner. Due to delay in business decisions the operations of the business may get suffered. Pressure from shareholders The employees may get pressure from the shareholders for the completion of pending project work in a specified time. It will leads into more pressure on the employees by the shareholders to do work in a specified time and take prompt decisions. Difficult to organize the company's work When a key officer leaves office the business operations get unorganized. The business operations get unsmooth which put effect on the functioning of the company. A key officer know all about the business operations that when he or she will leaves the environment of the company get disturbed.