Ch 5 The Family Business

cousin consortium

A business in third and subsequent generations, when children of the siblings take ownership and management positions.

sibling partnership

A business in which children of the founder become owners and managers.

family retreat

A gathering of family members, usually at a remote location, to discuss family business matters.

family

A group of people bound by a shared history and a commitment to share a future together, while supporting the development and wellbeing of individual members.

family business constitution

A statement of principles intended to guide a family firm through times of crisis and change.

owner-managed business

A venture operated by a founding entrepreneur.

family business

An organization in which either the individuals who established or acquired the firm or their descendants significantly influence the strategic decisions and life course of the firm.

family council

An organized group of family members who gather periodically to discuss family-related business issues.

co-preneurs

Couples teams who own and manage businesses.

socioemotional wealth

Nonfinancial factors in a family firm that affect the commitment of family members to the business.

transfer of ownership

Passing ownership of a family business to the next generation.

organizational culture

Patterns of behaviors and beliefs that characterize a particular firm.

The _________ commitment of family members refers to ties that extend beyond the financial rewards of being in the business. They include things like solidarity, identification with the family, and a sense of history.

Socioemotional

nepotism

The practice of employing relatives.

In a family business, the founder's core values may become part of both the business culture and the family code. a. True b. False

True

Which of the following is a characteristic of a family business? a. A business that passes from one generation to the next b. A large publicly traded company c. Independence of management and family concerns d. Ownership and involvement by majority non-members of the family

a. A business that passes from one generation to the next

Which of the following is a consideration in the transfer of ownership in the family firm? a. Consideration of tax laws b. Fair treatment of community members c. Delay of transfer of ownership until the death of the founder d. Planning and discussion of taking the firm public

a. Consideration of tax laws

A formal organization in which family members discuss strategic planning and other issues pertaining to the family business is called a family _________ a. retreat b. council c. consortium d. enclave

b. council

The practice of employing relatives is referred to as-- a. a family council. b. nepotism. c. co-preneurs. d. a transfer of ownership.

b. nepotism.

Which of the following is NOT a consideration in the transfer of ownership in the family firm? a. Consideration of tax laws b. Fair treatment of all children c. Delay of transfer of ownership until the death of the founder d. Planning and discussion of the transfer of ownership

c. Delay of transfer of ownership until the death of the founder

Which of the following is NOT a potential problem in the succession of a family business? a. Reluctant parents b. Ambitious children c. The type of business conducted by the firm d. Lack of understanding between parent and child

c. The type of business conducted by the firm

Recent research findings suggest that companies that are successful in making the transition from one generation to the next are: a. Those that instill a sense in succeeding generations that the founders' way of doing business is sacrosanct. b. Run by intricate operational guidelines that specify every detail of day-to-day work. c. Those whose new leaders act on their own, take risks, and support innovation. d. Those in which the culture keeps "creative" members in line.

c. Those whose new leaders act on their own, take risks, and support innovation.

Family businesses are best described as: a. Companies that sell products and services appropriate for all ages. b. Businesses that hire only family members. c. Businesses that cater to families. d. Those in which the strategic direction of the firm is influenced significantly by family members.

d. Those in which the strategic direction of the firm is influenced significantly by family members.