FAMILY BUSINESS ENTERPRISE

TEAM OF LECTURERS
UNIVERSITAS PELITA HARAPAN
Family Business Enterprise | Universitas Pelita Harapan 2016
 MEETING 3:
EXTERNAL AND INTERNAL CHALLENGES FOR FAMILY BUSINESS
Family Business Enterprise | Universitas Pelita Harapan
 TOPICS TO COVER

1. External Challenges for Family Business: Market Dynamics and

Competition (Susanto 2008, 59-65).

2. Internal Challenges for Family Business: Family Desires and

Expectation (Susanto 2008, 67-73; Carlock and Ward 2001, 17-
21).

Family Business Enterprise | Universitas Pelita Harapan

1 External Challenges for Family Business

Fifty years ago, market changed for every 30 years. It means 50

years ago, market is relatively stable.
Twenty five years ago, changed in market happened around 7-10
years. This means market dynamics started to exist.
Ten years ago, changes happened every 18 months.
Now, the changes are ever faster. Laptop in US can change model
every 10 months.

Family Business Enterprise | Universitas Pelita Harapan

 1 External Challenges for Family Business

PAST
25 years ago,
Once every 7-10
years
PRESENT
10 years ago,
once every 18
50 years ago, months
Once every 30
years
Business changes rapidly
Turbulence
Hyper-competition
Family Business Enterprise | Universitas Pelita Harapan
1 External Challenges for Family Business

In the future, whether family business like it or not, rapid changes,

turbulences and hyper-competition will happen on daily basis.
This condition also happening in Indonesia, moving from
monopolistic market to free market.
One main main weaknesses of family business, as stated in
previous chapter, is reluctant to change. This must not be a
mindset for family business today.

Family Business Enterprise | Universitas Pelita Harapan

1 External Challenges: New Competitive Fam Buss Env
Changing
customer
behaviors

Rapid
Consolidati
technology
on of
obsolescenc
distribution
e and
network
advances Drastic and
Rapid
Changes in
Family
Business
Environment Opening up Revival of Family Business:
Killing new Expansion
competition opportuniti
es Merger and Acquisition
Roles Distribution
Competitio
n becoming
more global
Family Business Enterprise | Universitas Pelita Harapan
2
Internal Challenges for FamBuss:
Family Desires and Expectation

Welfare Growth Long-term

Investment

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Family Desires and Expectation

Reputation in Minimized Harmony

Community Change Preservation

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Family Desires and Expectation
Founder create business mainly to create welfare not just for
him/herself but also considering his/her kids and even
grandson/granddaughter (growth). Thus building the business and
its investment portfolio is part of how family business operates
(long-term investment).
Family business also want to create, maintain and increase its
good reputation in the community. Business reputation = family
reputation.
Family Business Enterprise | Universitas Pelita Harapan
2
Internal Challenges for FamBuss:
Family Desires and Expectation
Family business more likely to have higher resistant to change for
many reasons, mainly to preserve long awaited success (as
discussed in previous chapter).
Because family business is run mostly by family members,
preserving harmony between members is another crucial challenge
for any family business. For professional run business, there is no
blood line involves, yet this is an opposite case for family business.

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Likelihood in Operating the Business
Family business orientation is more inward looking, meaning the
way family business works is involving more emotional elements,
nurturing family members, putting higher value in loyalty,
conservative and avoid changes to keep them intact.
Business in general is mostly outward looking, meaning business is
operating to go with changes, future thinking, more liberal, etc.
Thus, combining inward and outward looking in family business is
another challenge in daily operation of family business.

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Family Business is more Secretive
There are many opinions stating that family business is more
secretive in many areas. This condition is not just affecting non-
family members, but also for the family members.

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Family Business is more Secretive
Various reasons why this condition happens:
Fear that internal information about the company might be beneficial for
competitors.
Fear that employees will leave the company if they know the internal situations.
Guilty feeling from founder because he/she (and the family) able to have lots of
money, while this is not the condition for the employees.
Desire to have control over company.

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Planning Strategy Obstacles

Family Business Enterprise | Universitas Pelita Harapan

2
Internal Challenges for FamBuss:
Planning Strategy Obstacles

Family Business Enterprise | Universitas Pelita Harapan

 THANK YOU
FAMILY BUSINESS ENTERPRISE | UNIVERSITAS PELITA HARAPAN 2016

Family Business Enterprise | Universitas Pelita Harapan