Family Managed Family Managed Business: Business: Indian Perspective Indian Perspective Presented by: Presented by: Anuranjan Anuranjan 1 YMT's College Of Management
Family Managed Business:Family Managed Business:Indian PerspectiveIndian Perspective
Presented by:Presented by:
AnuranjanAnuranjan
1YMT's College Of Management
FamilyFamily BusinessBusiness
Closely-Held firm whose ownership and policy making are dominated by members of an “emotional kinship group”
Legal Right to the Firm
Legal Right to the Firm’s profits
YMT's College Of Management
33% survive to2nd Generation
15% survive to3rd Generation
The Bad News
YMT's College Of Management
A Brief History/Facts: A Brief History/Facts: Indian Family BusinessIndian Family Business
Traders/money lenders switched to industry-late 19th century
Aggarwals and Guptas in the North, the Chettiars in the South, the Parsees, Gujarati Jains and Banias, Muslim Khojas and Memons in the West, and Marwaris all over India
1950 - 18 Indian and 2 British Family owned 95% business
Tata, Birla, Kirloskar, Shriram, Walchand, Thapar, Mafatlal
Mahindra, Ramkrishnan, Singhania, Lalbhai, Dalmia-Sahu
Jain…….
YMT's College Of Management
Changing business environment and society
Corporate Management
461/500 top companies are family controlled
YMT's College Of Management
Characteristics of Indian Family Business
Loyalty
Family Relationship
Male dominated
Active and non active members
YMT's College Of Management
Passing the Baton
Grooming the new generation
Steady growth of stake
Gradually reach the top
YMT's College Of Management
Two cases in pointTwo cases in point
TATA Group
RELIANCE Group
April 8, 2023 8YMT's College Of Management
April 8, 2023 9YMT's College Of Management
April 8, 2023 10YMT's College Of Management
Ownership Structures of Tata Sons
Stakeholder Stake FY 95 Stake FY 05
TATA TrustTATA Group AffiliatesP.S. MistryTATA Family
78.0%
Less than 1%17.5%3.5%
65.9%
12.8%18,4%2.9%
Family Tree Of Reliance Group
April 8, 2023 11YMT's College Of Management
Advantages with Family Businesses
Common Values
Strong Commitment
Stability
Loyalty
YMT's College Of Management
How they control their Empire!
CROSS HOLDING
PYRAMIDICAL STRUCTURE
YMT's College Of Management
Restructured Tata Restructured Tata
Major Group Companies
Tata Sons Stake in Group Company
FY95 FY96 FY05
Tata Iron &Steel 2.3 8.5 19.5
Tata Motors 1.8 2.7 21.9
Tata Power 5.6 6.3 28.7
Tata Chemicals 7.9 8.2 15.2
Indian Hotels 13.3 13.3 12.9
Tata Tea 7.6 8.6 15.8
YMT's College Of Management
challenges/Problems and Recommendation: One on One
Challenge/Problem 1:Challenge/Problem 1:
Family Emotions: Ego clashes, sibling rivalry, feeling of being left out…
Recommendation 1:Recommendation 1:
Open Communication Mentoring the Members
YMT's College Of Management
Challenge/Problem 2:Challenge/Problem 2:
Family or Business what comes first?
Recommendation 2:Recommendation 2:
Sit together and decide the way
YMT's College Of Management
Challenge/Problem 3:Challenge/Problem 3:
Succession Planning and fair to all approach
Recommendation 3:Recommendation 3:
Plan in AdvanceDivide Role not the Family/Group
cotton and jute mills of Birla!
YMT's College Of Management
Challenge/Problem 4:Challenge/Problem 4:
Retaining non-family Professionals:
Recommendation 4:Recommendation 4:
Universal HR Policy:
YMT's College Of Management
Strategic Management “the Family Way”
Two Different SystemsTwo Different Systems
Family system
1. Emotional Concerns
2. Family Needs
3. Maintaining Stability
Business System
1. Business Performance
2. Business Demands
3. Managing Change
YMT College Of Management
Divide and Rule!
Family councilFamily council
Mission and Values
Next Generation Development Plan
Guidelines for Family Involvement
Ownership and Transfer Policy
Business CouncilBusiness Council
Business decisions
Capital Needs (Family and business)
Leadership team succession
Succession Governance
YMT's College Of Management
Conclusion
“Family is the fundamental unit of every otherinstitution. Business evolved due to symbiotic interaction Between family and society (itself made of families).This symbiosis can be made eternal by strategically managing both the institutions (Family and Business)ensuring that family remains united and business is given full autonomy to chart its way according to thechanging needs of the time.”
Thank You!Thank You!
YMT's College Of Management