BA 567 - Family Business Management

Spring 2008

Instructor: Robin Klemm, Ph.D.

A. E. Coleman Chair in Family Business

Interim Executive Director, Austin Family Business Program

Office:             201 Bexell Hall

                        Austin Family Business Program

Office Hours:  Tuesday 2:00 pm to 3:00 pm

                        Thursday 1:00 pm to 2:00 pm

                        Other times by appointment

Phone:             737-6017

                        737-6019

For appointments please call Melissa Elmore, AFBP Office Manager 737-3326                    

E-Mail:            robin.klemm@bus.oregonstate.edu

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Purpose and Scope of the Course

Family businesses are characterized by distinct core competencies that can result in unique competitive advantages and challenges that threaten their continuity. The challenges are primarily the result of issues presented by the interaction of family, management, and ownership—particularly where the family wishes to perpetuate its influence and/or control from generation to generation. Family firms seem to be as agile in one generation as they are fragile across generations. The course explores and analyzes family business continuity challenges and best management, family (and governance practices and the challenges to these practices) for leading family-owned businesses. Since the focus is on pragmatic, action-oriented, management, governance, and family/business leadership skills, the course will be taught primarily through live and written cases, discussions, lectures, and a project experience with your family business.

Learning Outcomes

The course addresses the management of established family business. It examines succession, values, life cycles, marketing strategies, conflict resolution, communications, legal, and financial aspects, estate planning, governance, philanthropy and other topics that uniquely touch family business management. It will convey the characteristics that differentiate family businesses from other businesses.  Upon completion of this course, students should understand:

• the impact of family business on economic activity worldwide
• the unique assets and vulnerabilities of family enterprises.
• the role of the CEO in governance, management, and the transfer of power
• the relationship between the role of the board, the family council, and top management in providing effective governance for family business continuity
• key family dynamics

and be able to:

• Identify the various stakeholders and the role of trust among family members and their impact on succession and continuity
• Discuss the developmental needs and challenges of next generation leaders
• Analyze the effect of estate taxes on ownership transfer across generations of family business owners and the implications of ownership structures on the competitive advantages of family businesses
• Explain the importance of strategic planning to family business continuity
• Explore the critical role and challenges that non-family managers play in family-owned operations
• Analyze the impact of family culture, family communication, family conflict, and family unity and explore their interaction effects on the family business

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Textbook

Poza, E. J. Family Business, Second Edition. Mason, OH: Thomson South-Western, 2006.

Reference Periodicals

Family Business and Family Business Agenda - each published quarterly.  Philadelphia, PA:  Family Business Publishing Company.  (e newsletter available 2x monthly)

Families in Business – published 6x year.  UK:  Campden Publishing Ltd. (supported by the Family Business Network)

Family Business Review – published quarterly.  Boston, MA:  Family Firm Institute, Inc.  “The Family Firm Institute (FFI) is an international professional membership organization dedicated to providing interdisciplinary education and networking opportunities for family business advisors, consultants, educators, and researchers and to raising public awareness about trends and developments in the family business field.”

Reference Books

Gersick, K. E., Davis, J. A., Hampton, M. M., and Lansberg, I. Generation to Generation: Life Cycles of the Family Business. Boston, MA: Harvard Business School Press, 1997.

Jaffe, D. T. Working with the Ones You Love: Conflict Resolution and Problem Solving Strategies for a Successful Family Business. Berkeley, CA: Conari Press, 1990.

Lansberg, I. Succeeding Generations: Realizing the Dream of Families in Business. Boston, MA: Harvard Business School Press, 1999.

Poza, E. J. Smart Growth: Critical Choices for Family Business Continuity. Cleveland, OH: University Publishers, 1997.

Ward, John L.  Keeping the Family Business Healthy.  San Francisco, CA:  Jossey-Bass Publishers.

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Late papers:  no!

Given the availability of technology and connectivity, it is hard for me to conceive of a reason for a late paper but I am sure someone will find one.  I will only consider cases that are brought to me before the due date.

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 Case analyses

All case assignments will be written and turned in at the beginning of the class. Within 4–6 pages, you are asked to designate the decisions and/or actions you would take in the situation if you were the CEO or individual responsible for the firm, and the analysis which supports your decision(s). Some cases will require addressing specific questions as listed in the assigned case.

Written assignments will be graded on the basis of the quality and scope of the analysis, and the practicality (capacity for implementation) of the recommended actions.

Speaker write-ups

Speakers from family businesses and family business service providers will be frequent guests of the class.  You are required to:

• Prepare three questions for each speaker and have them ready for the speaker’s presentation.

· In a 2-3 page analysis of the presentation, please apply the theoretical frameworks from your readings and class discussions.  Please do not just tell me what the speaker said.  These papers are due the class following the speaker. 

Final Exam

There will be a comprehensive final exam on June 10.

Participation

This course requires active engagement by all participants in order to fully understand the complexities of family business. Everyone has a family and you all have experience in business--this means that your ideas matter and add value to the conversation. So it is extremely important that you share your ideas, experiences, thoughts and questions as we sort out the family business enterprise. Furthermore it is your responsibility to be prepared and open to participating in active learning within the classroom that may challenge your ideas and comfort level.

So obviously if you are not in class your grade will suffer and if you do not actively engage in a meaningful productive way your grade will suffer also. From time to time you will have in class activities that are intended for you to engage in active learning. These will be simple assignments that will be completed during class time.

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Evaluation

Grading

Case analyses (written)           40%      (Ferre, Sigma, Cousins, Reliance, Vega, and Fasteners)

Speaker write-ups                   20%

Class participation                   10%

Final Exam:                             30%

Grading Scale

A         92% - 100%                B         82% - 87%      C         72% - 77%      D         62% - 67%

A-        90% - 91%                  B-        80% - 81%      C-        70% - 71%      D-        60% - 61%

B+       88% - 89%                  C+       78% - 79%      D+       68% - 69%      F    Lower than 60%

NOTE: Your grades are your responsibility.  It is up to you to keep up with the status of your grades.

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BASIC CLASS POLICIES

1. All assignments must be typed.
2. All assignments must be turned in at the beginning of class.
3. Assignments will not be accepted after the due date.
4. Show respect for yourself and your fellow classmates.  It is expected that at times you will disagree. Just do so in an agreeable manner.
5. Turn off your cell phones and your laptops.

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STUDENTS WITH DISABILITIES:

Accommodations are collaborative efforts between students, faculty and Services for Students with Disabilities (SSD). Students with accommodations approved through SSD are responsible for contacting the faculty member in charge of the course prior to or during the first week of the term to discuss accommodations. Students who believe they are eligible for accommodations but who have not yet obtained approval through SSD should contact SSD immediately at 737-4098.  

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ACADEMIC INTEGRITY AND CHEATING POLICY:

Any case of academic dishonesty will result in a grade of F for the course.  This action is allowed by Academic Regulations and Procedures as described in the Schedule of Classes.  I expect you to know and understand these policies and regulations.  If you have any questions about what constitutes academic dishonesty, review the Academic Dishonesty section under Student Conduct Regulations on the OSU Student Conduct & Community Standards web site (http://oregonstate.edu/admin/stucon/achon.htm). 

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Class Schedule

There will be changes and additions to this schedule. If you should miss a class, you are responsible for checking with classmates or the instructor for up-to-date assignments.

April 1:           THE FAMILY BUSINESS: WHAT IT IS, WHAT MAKES IT UNIQUE

Introduction to objectives and experiences of class members and faculty

Organization and conduct of class

The family business: what it is, its assets, and vulnerabilities

April 8:           AGENCY, RESOURCE-BASED AND SYSTEMS THEORY PERSPECTIVES & GREAT FAMILY BUSINESSES: LESSONS FROM CENTENNIAL FAMILY COMPANIES

Assigned Reading: Family Business, 2e, Chapter 1-2, pp. 1–50

Case: The Ferré Media Group, pp. 92–105

Suggested Readings:

Schulze, W., Lubatkin, M., & Dino, R., Exploring the agency consequences of ownership dispersion among the directors of private family firms. Academy of Management Journal, 46(2), 2003, pp. 179–194.

Cabrera-Suarez, K., De Saa-Perez, P., & Garcia-Almeida, D., The succession process from a resource and knowledge-based view of the family firm. Family Business Review, 14(1), 2001, pp. 37–47.

April 15:         FAMILY SYSTEMS PERSPECTIVES & SUCCESSION PROCESS AND SUCCESSION PLANNING

Assigned Reading: Family Business, 2e, Chapter 3-5, pp. 51-136

                        Working with the Ones you Love, Chapter 3:  “Getting things straight:  clear communication & Conflict resolution” pp. 84-118.

Assignment: Complete a family genogram for your own family.

Visit: www.genogram.com and www.humanmetrics.com

Case: Sigma Motion, Inc., pp. 159–171

Suggested Readings:

Barnes, L. B., Incongruent hierarchies: Daughters and younger sons as company CEOs. Family Business Review, 1(1), 1998, pp. 9–21.

LaChapelle, K. & Barnes L. B., The trust catalyst in the family-owned business. Family Business Review, 11(1), 1998, pp. 1–17.

April 22:         SUCCESSOR DEVELOPMENT

Web Case: The Cousins Tournament

Assigned Reading: Family Business, 2e, review Chapter 4, pp. 73–88

Suggested Reading:

Malone, S. C., Selected correlates of business continuity planning in the family business. Family Business Review, 2(4), 1989, pp. 341–353.

April 29:         STRATEGIC MANAGEMENT OF FAMILY AND BUSINESS

Assigned Reading: Family Business, 2e, Chapter 7, pp. 173–190

Assignment:  Fire Drill

Case:  Reliance

May 6:            NONFAMILY MANAGERS AND THE FAMILY-OWNED BUSINESS

Assigned Reading: Family Business, 2e, Chapter 9, pp. 207–222

Suggested Reading:

Poza, E. J. & Alfred, T., What the silent majority thinks (but may not tell you). Family Business, Fall 1996, pp. 16–21.        

May 13:          ESTATE PLANNING—TAX AND CONTINUITY CONSIDERATIONS

Assigned Reading: Family Business, 2e, Chapter 8, pp. 191–206

Suggested Readings:

DeVisscher, F., Happiness is stock liquidity. Family Business, Spring 1995, pp. 29–33.

Nager, R. & Danco, L., The 10 deadly sins in estate planning. Family Business, Spring 1993, pp. 35–39.

May 20:          INTERGENERATIONAL AND SIBLING/COUSIN RELATIONSHIPS

Case: The Vega Food Company, pp. 328–336

May 27:          FAMILY BUSINESS GOVERNANCE: THE ROLE OF THE BOARD

Case: Fasteners for Retail: A Question of Succession (Part A), pp. 310–326

Assigned Reading: Family Business, 2e, Chapter 10, pp. 223–249

Suggested Reading:

Magretta, J., Governing the family-owned enterprise: An interview with Finland’s Krister Ahlstrom. Harvard Business Review, 76(1), 1998, pp. 113–123.

June 3:            FAMILY BUSINESS GOVERNANCE: THE ROLE OF FAMILY MEETINGS

Web Case: Fasteners for Retail: A Question of Succession (Part B)

Assigned Reading: Family Business, 2e, Chapter 9, pp. 207–222

Suggested Reading:

Jaffe, D. T., Working with the Ones You Love: Conflict Resolution and Problem Solving Strategies for a Successful Family Business, Chapter X. Berkeley, CA: Conari Press,1990.

June  10:         FINAL EXAM