Entreprenuership and Family Owned Business

Entrepreneurship and

Family Owned Business

Name: Ritesh ShresthaCA IPCC

Hatemalo Nepali Students Group

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CONTENTS Concept of Entrepreneurship and Entrepreneurial Process

Basic Elements of Entrepreneurship

Concept of Family Owned Business

Current Position of Family Owned Business in Different Economy

Example of Cycle for understanding relation between Family

Owned Business and Entrepreneurship.

About Cyrus Poonawalla and Adar Poonawalla ( India)

Reasons for Starting Business Career from Family Owned Business

About Chaudhary Group (Nepal)

Hatemalo Nepali Students Group Page 2

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Hatemalo Nepali Students Group

Concept of Entrepreneurship

This is the era of entrepreneur! The concept of entrepreneurship has wide range of meanings.

Entrepreneurship is the process of Creating something new of value by devoting (giving) the necessary time and effort Taking necessary financial, psychological and social risk and Finally receiving the resulting rewards be it monetary or personal satisfaction or freedom to do what you want.

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Basic Elements of Entrepreneurship


Concept of Family Owned Business

Any business in which two or more family members are involved and the majority of ownership or control lies within a Family.

It is a commercial venture in which family members are involved.

It is one of the oldest and most common form of business.

Since 1980, the academic study of family business has developed as distinct and important category of commerce.

Family businesses can have owners who are not family members. Family businesses may also be managed by individuals who are not members of the family.


Family owned business paves way for various families to initiate and bring up new ventures which ultimately promotes entrepreneurship.

Some Large business organisation in the form of Family Owned Business:

Wal-Mart USSamsung Group KoreaTATA IndiaFaxconn TaiwanChaudhary Group Nepal


Status of Family Owned Business in different economy.World Family owned business contributes upto 50% of world

GNP.

USAAccording to US bureau of census, approximately 90% of the businesses in the United States are family owned and controlled.They contribute somewhere between 30% and 60% of the nation's gross domestic product (GDP).

IndiaIn India, also almost 90% of business are family owned business. It contributes 79% in private sector employment.

Nepal Largest business houses of Nepal like Chaudhary Group, Golchha Organisation, Khetan Group are also family owned business.


Page 9Hatemalo Nepali Students Group

Example of Cycle

A Kid said, “I can make a cycle in a few second”. Do you think its possible? One day his grandfather saw two stones rolling down the hills. Immediately an idea came in his mind that he also could move like the stones by using a simple machine having two stones under it. He used a flat timber and fixed two stones under it and started to ride on it. He made not only for his own but also started making it for others. When it came to his father, he revolutionized that stone fixed flat timber and made a cycle. And gradually he setup a factory and with the advancing of technology he automated the manufacturing process. He started manufacturing it commercially in large scale. And now the kid can say, “ I can make a cycle in few second”.

From the example of Cycle

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Cycle example is a best example to explain how an idea generated within the family can be improvised and used for commercial purpose.

An idea is generated by one generation, next generation improvises it, next generation adds some value on it and generation by generation it keeps on improvising .

In family owned business, one generation starts a business, struggle for its establishment and next generation not only expands it but also initiates new kind of business to diversify the Family Business.

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Poonawalla Group

About Cyrus Poonawalla and

Adar Poonawalla

• As per Forbes 2014 rankings, Cyrus Poonawalla’s networth is $ 5.2 Billion and is ranked 10th richest person in India and 28th richest person in the world.

• Serum Institute is privately held by Poonawalla Family. It has joined fight against Ebola. Backed by WHO, it is developing a vaccine for the disease on a fast track basis.


Continued..

In 2012, WHO and UNICEF sent the company urgent request to help bridge the anticipated demand-supply

gap in this vaccine category. The profit margin on the product was negligible

but the effort called for was huge since production needed to start in six months.

Cyrus Poonawalla was very skeptical about the project. He felt not to involve in the project.

But his son, Adar Poonawalla (Bachelor in Management from University of Westminster, London) felt it was an

opportunity.


Continued..

Using bulk drugs imported from Indonesia, Serum Institute started production of the oral polio vaccine in Pune in 2013 and the product has been a bestseller.

It has been reported that due to rising demand for its oral polio vaccine, its annual revenue increased by 40%.

NOW, they are known as WORLD’S LOWEST COST PRODUCER OF

VACCINE.Hatemalo Nepali Students Group Page 14

From Ponawalla Group• In spite of skeptical analysis of his father about the vaccine producion, Adar ponawalla takes the decision of producing it which ultimately contributed in increasing revenue.

• The main thing to be focused here is that though there was a different analysis by father and son, a decision was taken which did not part them but strengthen their business.

• Had the son ( Adar Ponawalla) parted from his family and started his own production, today he would not have reached this summit of success.

• Instead he utilized experiences and organization of his own family and expanded the scope of family’s business.


Reasons for Starting Business career from Family Owned Business

• Low Investment• Can be done part time• Risk Free• Flexibility of Time• Freedom of Being Who you

are• Succession



About Chaudhary Group According to Forbes, Chaudhary’s net worth is

$1billion. He has also been ranked the 1,342nd richest people in the globe.

Inspired from his industrious father, Chaudhary always envisioned to become a very big industrialist of Nepal. With more than four decades of continuous hard work, he is living his dreams as he developed the Chaudhary Group to the biggest conglomerate of Nepal which is worth a billion dollars and more.


Generation wise diversification of CG

GrandfatherTextile TraderSmall Textile Store

Father (Lunkaran Das Chaudhary) Transformed the store to Arun Emporium which is considered as Nepal’s First Departmental Store.

Binod ChaudharyConverted the store into conglomerate which is one the

biggest corporate house of Nepal.Now the core area of business is Food and Beverages, Education,

Real Estate, Financial Services, Hydro Power, Infrastructure, Telecom, Cement, Hotels and Resorts.


Continued..• The Group’s Operations in Nepal are headed and led

by Mr. Chaudhary’s eldest son, Nirvana, in his capacity as Managing Director.

• The Singapore arm of CG, Cinnovation and other overseas interests are managed by Chaudhary’s sons Rahul and Varun, both Non-Resident Nepalis.


From Chaudhary Group

After discussing generation wise diversification, we can clearly understand how entrepreneurship is promoted along with succession in family owned business.

Like in Chaudhary Group, in every generation we can see entrepreneurial actions to maintain high returns and keep the family company modern and competitive.


Lastly,

• Today, family businesses are recognized as a vital and distinct organizational form. It has also been vital part of Economy.

• There are several challenges in operation and succession of family owned business. So, it requires succession planning and other strategic planning.

• Entrepreneurship is promoted in family owned business in the form of innovation, diversification and decision making.



Entreprenuership and Family Owned Business

Small Business & Entrepreneurship