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The core of the enterprise

At the heart of a successful family business is harmony among its members.
By Yvette Tan |

The prevalent belief is that the family business is a small enterprise, a unique occurrence in the business world. In fact, says De La Salle management professor Elfren Cruz, that belief is an inaccurate one.

 [related|post]“There is no such thing as a non-family business in this part of the world,” says Cruz, professor of Strategic Management at the De La Salle Professional Schools Inc. Graduate School of Business, who is also a newspaper columnist and author of National Book Award winner Setting Frameworks: Family Business and Strategic Management.

The reason for this is that the basic social unit in Asia is centered on the family, whereas in the Western societies it centers around the individual.  “The family business is the business form in the Philippines and in [the rest of] Asia because it is in our culture,” he adds.

 

STRATEGIC PLANNING APPLIES, TOO

A family business is defined as a business that is “owned, controlled or managed” by a family.  “As long as one of those three ingredients is there, it’s a family business,” says Cruz.  This includes everything from a small sari-sari store to a billion peso corporation.

According to Cruz, strategic planning in a family business is no different from a non-family business—there are no management strategies, advantages or disadvantages unique to it—except for the added factor of maintaining family relationships in a business setting.

“Whatever is the relationship in the family extends into the business,” says Cruz.  “The challenge of the family businesses here is how to maintain a relationship which is harmonious, or, failing that, how to separate the relationship in the family from the relationship in the business.”

A lot of a family business’s success hinges on the last statement.  “Most family businesses do not last beyond the second generation,” Cruz observes.  “As the… family becomes bigger and bigger and bigger, the probability of harmony becomes more difficult, so there has to be some institutions or practices in place in order to make sure that the family business remains.”

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