Problems Faced By Family Businesses

Problems Faced By Family Businesses

Family businesses have both strengths and weaknesses. Their strengths are a sense of belongingness and a common purpose, which usually lead to better performance. They also have greater flexibility because of the unity of the management and the shareholders. They can quickly decide on urgent matters and implement swift changes. But family businesses have their share of weaknesses. They are usually prone to these problems. Unresponsive to change. The common cause of failure of family businesses, resistance to change is worsened by diminishing vitality of founders growing old. The third generation, usually exposed to fresh ideas and technology, feel restricted by the controls of the founders. Better career and more choices. Higher education and exposure to new developments have made the third generation attracted to exciting careers in multinational firms. Or they would rather enter into joint ventures outside their family businesses. Inward-looking management. This usually results in the exclusion or poor use of skills of persons outside the family circle. Thus, the family becomes insensitive to the demands of the market and unwilling to get outside managers. At times, they dislike an outside person, even if he’s better for the job, to be the boss of a family member. Conflict between growth and ownership. Founders usually are controlling, viewing the company as extension of themselves. Third generation family members would also like to be the boss because they have gotten used to an environment where the founders’ authority is unchallenged. Happy, go lucky attitude. Often an extravagant lifestyle breeds spoiled brats. The third generation wallow in the comforts of family fortune without desire to join or manage the...

Anticipating the Real Estate Bubble?

MANAGE YOUR GROWTH DURING UNCERTAINTIES Seminar Details: The property sector has been on upswing for years. But some fear the bubble would burst anytime. Uncertainties are unavoidable. Prepare yourself for the worst. Attend, participate and get the best advice from two of the country’s most sought-after real property experts, Prof. Eric Soriano III and Danny Antonio. Date: September 25, 2015 Time: 9:00 AM to 4:00 PM Venue: AIM Conference Center, Makati...
Gokongwei’s Cebu Pacific Offers More Flights

Gokongwei’s Cebu Pacific Offers More Flights

Cebu Pacific, the country’s premier budget carrier, said it will increase its flights in different locations in the country beginning December to help the country’s tourism industry, a report in the Business Mirror said. The family-owned company said it will launch direct flights from Manila to Fukuoka, Japan; from Cebu to Taipei, Taiwan; and from Davao to Singapore, on December 17. Cebu Pacific vice president for marketing and distribution Candice J. Iyog said the firm is bullish on the country’s tourism industry. Further, she said Cebu Pacific will enhance its hubs to enable local and foreign tourists to have reliable, comfortable and affordable flights. She said the Manila-Fukuoka route will be have three weekly flights while the Davao-Singapore route has a twice per week schedule and Cebu-Taipei route will be three flights a week. With the addition of these new routes, Cebu Pacific now carries 63 destinations on 97 routes. Cebu Air Inc. (CEB), operator of budget carrier Cebu Pacific, earned P5.2 billion in net profits during the first half of the 2015, up by 63.6-percent from the P3.18 billion the year earlier. Meanwhile, 9.2 million passengers used Cebu Pacific and sister airline Cebgo during the six-month period, experiencing an 8.2 percent hike against the 8.5 million customers in 2014. CEB is the largest carrier in the Philippine air transportation industry, offering low-cost services to more destinations and routes with higher flight frequency within the Philippines. Its president and chief executive officer is Lance Gokongwei, the son of the company’s founder, John Gokongwei. It  pioneered the “low fare, great value” strategy in the local aviation industry. The company was...
Ayala’s AC Holdings Inc. Ventures in P1.3B Solar Energy Project

Ayala’s AC Holdings Inc. Ventures in P1.3B Solar Energy Project

AC Energy Holdings, Inc., a subsidiary of family-owned Ayala Corporation, will begin a P1.3-billion solar power project in Negros Oriental with Bronzeoak Clean Energy, Inc., according to a Manila Bulletin report. The project will have an initial capacity of 40 megawatts (MW). It will open in March 2016. AC Energy Holdings, Inc. and Bronzeoak Clean Energy, through its joint venture Monte Solar Energy, Inc. (MonteSol), will develop, construct and operate a solar power farm in Bais City, Negros Oriental. The project’s initial phase will have a capacity of 18 MW, which will increase to 40 MW in the second phase. Its completion in March 2016 is the cut-off date set by the government for solar ventures that can avail of the next round of feed-in-tariff (FIT) incentives. FIT is a premium rate of electricity fed into the electricity grid from a renewable electricity generation source like a rooftop solar panel system. MonteSol is affiliated to the Zabaleta family’s pioneering solar developments of 45 megawatts under San Carlos Solar Energy, Inc. (SaCaSol). AC Energy president and chief executive officer John Eric Francia said the project will expand the Ayala Group’s involvement in renewable energy as technology costs have improved over the years. The Ayala Group earlier planned an investment in solar energy in Mindanao. But it didn’t push through because solar technology costs were still prohibitive. Bronzeoak president Jose Maria Zabaleta said MonteSol will increase its target capacity to 200 megawatts. AC Energy Holdings, Inc. develops and operates power generation facilities that generate power using solar, wind and mini-hydro energy. It was formerly known as Michigan Power Inc. and changed its...
Driving Economic Growth

Driving Economic Growth

In most countries, family businesses have been driving economic growth, creating wealth and building nations. Small to large, private or public, they have contributed to the countries’ coffers. Economic dominance. Today, family businesses account for almost half of the world’s revenues from goods and services, provide jobs to millions, and contribute a sizeable market capitalization. Although many small and medium enterprises (SMEs) exist, some large family businesses dominate retail, manufacturing, construction and housing industries. In the US, it is estimated that 90 percent are family-controlled businesses. In the European Union, 85 percent of businesses are family-owned. Entrepreneurial. In the Philippines, many Filipinos are entrepreneurial because of poverty, which drives them to own their businesses. SMEs account for 99 percent of all business establishments and 60 percent of export firms in the country. (www.internationalentreprenership.com/asia) They employ 55 percent of the labor force and 30 percent of total domestic sales. In developing countries such as the Philippines, family businesses generate better access to market capital because they create a degree of trust. They also provide a higher degree of human capital. Family businesses are more inclined than other types of businesses to reinvest in themselves in order to perpetuate wealth to succeeding generations. They can resist pressures of security analysts to maximize short-term returns because they usually set their sights on the long-term. Commitment to quality. Family businesses usually have strong commitment to quality which is related the soundness of the family name and concern for employees who are likened to an extended family. Some have fought for wealth and control. Others have experienced splits, which happen because of sociological, economic and political...