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CASE ANALYSIS ON
FAMILY BUSINESS SUCCESSION IN ASIA

A Case Analysis Report

Submitted by: Team Bond

Submitted to:
Mrs. Sabina Tuladhar
Faculty of Human Resource Management
SAIM College

In Partial Fulfillment of the Requirements for the

Kathmandu, Nepal
February, 201
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Family Business Succession in Asia

Introduction (Synopsis)
The article is about Wang group based in Singapore, who had positioned its business as a
family Firm. Company was stated by Alfred Wang with concept of trading business which
was transform into industrialized concept inform of real estate as well as investment
management concept of mining to portfolio management concept under the succession of
his son Charles Wang. It was widely perceived in china that no family business could run
above third generation which created constant fear in mind of business holders. However,
Charles Wang, a charismatic leader had greater visionary ideas, he wanted firm to have
long term strategic plan i.e. complex business model focused more on environmental
adaptation with strong cultural value. Wang wanted to reduce his involvement in business
and give chance to younger generation, he was in dilemma whether to hire professional
person or pass it on to his children. His children were not ready for it so with on value of
family perspective he hired professional CEO to run a firm and he himself remain in
advisory body. New CEO hired team who called themselves as “integrators” who worked
on building Wang group into strategic and organized firm. They start to work it from
beginning setting organizational culture, vision, mission and structure. In spite of being in
advisory group Charles Wang played major role in decision making which created lot of
chaos later recession of 2008 more hurdle where new CEO and team had to laid off who
complained that despite of giving responsibilities major authority was still in hand of
family owners which created the problem. Eventually, Charles had to take business in hand
again, this time worked on increasing family involvement in business.

Issues and Problem in Case

 Matching family oriented value with professionals.

 Centralized power and authority

Analysis
The main issue in the case deals with theme of Corporate Governance, Wang group is a
family based business so adding of professional manager in a family enterprise is quite
difficult. Major issues Wang should have covered before handing over the business are
vision, mission, strategy and structure of business. Selection of person comes in later part
so foremost he should have work in implementation part of changing his ideologies and
make plan set up of what he actually want to gain.

The term organizational culture has been defined in various terminologies which generally
triggers atmosphere expected in an organization. Even in this case cultural and family
oriented value has been given more emphasis. Charles Wang wants to shift his
concentration of business to non-family managers however do not want to shift his concept
of family mindset. Family oriented business is a norm of an organization, if Wang wants
other employees feel to be part of organization this concept should be changed.
Organization culture should be generalized like “Equality for all” or “Employees
Empowerment”. Similarly, with expansion of business into complex model proper vision
and mission of an organization has to be set which is to ensure of welfare of society rather
than being profit oriented. These are the things to be done before hiring CEO or employees
so that a person entering into organization has clear concept of what is actually expected
from them. However Wang here has done completely opposite first hired the body then
went on developing vision and mission of organization.

Other part which has been phenomenal point in family oriented businesses that control
remains in hand of owners even though there are professional managers, owners try to
overpower them due to intensive care towards their foundation business which in other
hand create various issues regarding employee and management relation which can be
found in Wang Group. Even after disseminating power, Charles Wang’s over interference
caused chaos as well as confusion. On top of that in such style of business, top managers
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do not have guarantee about the job as there is no aspiration for career growth and any time
family members could join the business which also creates problem regarding loyalty and
commitment of staff in organization. The situation could be other way round too like due
to 2008 economic crisis new CEO and his team way laid off which shows lack of security
in organization. So Wang should have set of plans to retain professional bodies as such
situation might may occur again in future.

With Wang’s expansion of business, complex model has been formed so foremost it is
essential to set organizational structure i.e. formation of board of trustees, issues regarding
involvement of family members as well as outsiders, power of board and what would be
their matter of concentration so that it won’t clash with role of CEO and any other member
in the organization. Similarly proper specification on role of CEO like what should be it
role and responsibilities, how much span of control it has, compensation strategy as well
policy to retain such personality for longer period. This help in defining selection criteria
as well as defining role of leader.

Regarding correct time for succession, there is not exactly right phase or time, if managing
body feels that it’s time to make new amendments they should start making progression
for it. Rather than handing over immediately, phases of succession should have been
determined which was not done by Wang.

Recommendation

 Organization vision, mission and organization culture should be pre planned and
disclosed
 Formation of family enterprise governance model
 Sketch a new organizational structure with proper job designing, specification
regarding roles and responsibilities
 Selection of candidate should be based on behavioral context
 Analyze the capacity and creativity of insider and decentralize the power
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 Employees should be given prospective of future career growth also security and
assurance like employee financial ownership provision
 Succession planning should be done i.e. it is not necessary to hire professional form
outside, loyal employees within the organization can be groomed for the position.

Conclusion
To put in nutshell, Wang Group of Company is a traditional company which had been in
phase of change from family ownership to professional managers however lack of proper
planning and strategies regarding organization policies, culture , vision, role dissemination
and other global issues could not implement the change and take over business in family
ownership again. Now to achieve success further at most he need to form Board of trustees
including family member and managers so that each has power to take decision and there
won’t be any trust issues and misunderstanding as well as issues regarding turnover ,
selection of person should be done on basis of behavior and ideology of person, Proper
mode of channel of communication should be set and before handing over the business,
phase wise planning of succession should be done i.e. slowly grooming of person for the
position which can be loyal employee within the organization or new employee.
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ANNEX

Family Holding
Companies Committees

Managerial Family
Committees
Forum office

Adviory
Board Formal Board of Directors Family
Council

Office of
CEO

Operator of
companies

1.1 Family Enterprise Governance model

Source:( http://pervinfamilybusiness.com/library/aptaps/enterprise-family-

org.pdf)