Professional Documents
Culture Documents
Introduction
The family business component is a very crucial segment in the Small Business Category,
due to many reasons. They may be, convenience of starting, more coherence between the
family members (employees), ability to find initial capital easily, easy to make collective
decisions etc. This category, in many countries adds a greater value to their countrys GNP.
The worlds top businesses include many family businesses. These companies now in their
3rd or 4th generation and their share holding been diluted due to increase in business volumes.
On the local scenario, there are so many family businesses which we come across on daily
basis. As most of the times they were all carrying out their business without going for a
public issue of shares, their facts and figures are kept for themselves. Some of them are;
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1.1 The Family Business
This would be a very good proposition to start a small business, but as per the statistics only
6% of family businesses survive beyond the third generation. This is basically a business
runs by members of family and would be passed onto next generation. There could be three
main parts identified in a family business.
a. Family members
These are the family business members, some may be attached to the business others may
not.
b. The business
The business model, initiated by the family, should have a different entity from the owners.
c. Business ownership
When the business comes to its 2nd,3rd generation, with the growth & expansion of the
company, more paid employees would be there in the company, than family members. Later,
with expansion, if it may go for a public share issue, the owner ship would be diluted.
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1.2.2 Cons
Family conflicts In family businesses almost all decisions, relationships are based
on mutual trust and understanding. Once something made this trust been tarnished,
may occur conflicts between family members in the business.
Unstructured governance Internal rules and regulations are loosely administered.
Succession planning Many family businesses, after the leader/ promoter dies or
retires find it difficult to sustain, due to not grooming the 2nd layer.
For any business culture makes a big impact. When the intensity of the coherence is stronger
the impact is much greater. In a family business, as the business rally round the family
members, their cultures are very important. The core values, behaviors, ethics and tacit
knowledge of the leader make a big impact to the company. Some leaders are paternalistic
while some may be authoritative.
The successful performance of the family company depends on the leaders relationships
with the company personnel as well as inter-family relationships. When there are members of
the family in various levels in the business, the relationships with these members and other
employees is vital for improved performance. Further, the business inheritance would make a
turnaround point for the positive side or for the negative side.
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3.2 Nature of business
This company is engaged in tourism industry, as a service provider to find the best matched
tourist destination, with the aspirations of the tourist. They mainly cater to the foreign up-
scaled market. These are super luxury travel destinations and available only for the
Honeymooners and Anniversary celebrities, catering, to a niche market.
The owners of the company had identified the need among honeymooners and anniversary
celebrities to find exclusive tourist destinations to celebrate their sentimental event. As per
them, the tour operators in Sri Lanka would only provide foreign tourists with
accommodation in hotels and other excursions. But there is no such segmentation done as per
uniqueness of tourists demand, such as honeymooners and anniversary celebrities. The
company had found this category would spend lavishly if they have been offered with the
type of facilities as per their expectations or dreams. The company believes they are selling
Experiences for the tourists on their special occasions, not just hotel accommodations.
These experiences vary from one tourist to another. Some may like adventurous tours in wild
safaris or surfing while some may like peaceful, romantic surroundings without any
disturbance. Accordingly, the company have array of destination and accommodation
options, the tourist could select. So, the total itinerary would be selected by the tourist
himself as per his or her desire, not like other tour operators whom arrange a Tour package
with several pre-decided destinations.
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3.4 Business process
The company is a web based one, and their website is www.lexroleisureway.com. The
business process could be indicated as below.
Enquiries Enquiries
Feedback &Suggestions
Effect payment by
the customer
Customer stays in
the hotel
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Any person who wants to celebrate his/ her honeymoon or anniversary could login to
www.lexroleisureway.comand make an enquiry by way of an email. Such emails would be
greeted by the company and replied within 24 hours by providing the suitable tour options.
This would be a more customer oriented interaction, and finally a tour itinerary would be
agreed with the customer. Later, the hotel bookings would be done by the company and the
respective payments be done by the customer to the company.
On the day of the arrival the company would greet the customer, accompany them to the pre-
agreed hotels with a dedicated tour guide. The company has their own tour guides, whom are
relatives of the owners of the company.
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3.7 Areas for improvement
Implement an online payment system: The payment system the company
using at present, is by sending a wire transfer of a bank draft, which are
costly to the customer and also inconvenient. A payment gateway to be
implemented into their web page, in order to settle the payments using
credit cards.
Add another category of markets: A feasibility could be done to add few
other sectors (niches). A good option would be to add retired segment,
who are naturally love to travel and be a sizable market
Agreements with leading local tour promoters: There are many recognized
local tour operators like Jetwing, Aitken Spence etc, operating in multi-
segmented tourists. There would be an opportunity to promote the
companys segment, through these tour operators, may be on commission
basis.
4. Conclusion
Family business is a very good business model for beginners to enter into the business world.
It starts with concentrating to a small captive market, then could be improved and progressed
into a bigger clientele. Family businesses could be started with a comparatively low capital
and it could be sourced by family members and relatives. Family businesss success depends
on leaders capabilities, relationships, company culture, willingness to delegate and ability to
pass-on to the next generation.
References
Athwal, R. (2015). The Advantages and Disadvantages of a Family Business. Retrieved from
Vistage: http://blog.vistage.co.uk/advantages-disadvantages-of-a-family-business