UNIT 2 preintermediate

Vocabulary Track 20

Relentlessness : acharnement the fact of continuing in a cruel, severe,

or extreme way

Track 22

mission statement : a formal summary of the aims and values of a company,

organization, or individual.

A mission statement defines what line of business a company is in, and why it
exists or what purpose it serves.

Business English Activity E P. 17

There are advantages and disadvantages to running any business, from a small business to a
larger, publicly traded company. However, family firms come with their own unique
advantages and challenges. Here we delve into the pros and cons of running a family
business, along with tips to capitalise on the positives, and overcome the negatives.

https://blog.vistage.co.uk/advantages-disadvantages-of-a-family-business

What are the advantages of a family-run business?

There are many advantages to running a family business, such as:

Stability
The leadership of a family business is normally determined by the position of each individual
in the family. As a result, there is generally longevity in leadership, which ensures overall
stability within a family-run business. In many family-owned companies, the business leader
will stay in the position for many years, with life events - such as illness, retirement or death
- being the trigger for change at the top.

Commitment
Family firms tend to have a greater sense of commitment and accountability at their heart
than non-family firms, as it is not just the needs of the business at stake, but the needs of
the family too. This desire for both the family and business to stay strong fosters additional
benefits, including a greater understanding of the industry, the organisation and the job;
stronger customer relationships; and more effective sales and marketing.

One of the oldest surviving family businesses in the world is Hoshi Ryokan: a Japanese inn-
style hotel which was founded in 718 and which has been in the same family for 46
generations. This longevity has led to an incredible understanding of the business and its
history, which anyone outside of or relatively new to the business would simply be unable to
replicate.

Elsewhere, the Ford Motor Company managed to stay afloat during incredibly tough
economic times, when other large businesses like Chrysler and GM were desperate for
bailouts. It is likely that there are several reasons for their success, but with the Ford family’s
name, reputation and financial standing on the line, it is likely that this encouraged their
fighting spirit.

Flexibility
Working in a family-run firm requires a lot of flexibility. While non-family businesses tend to
have very clearly delineated responsibilities for every role, family members will sometimes
be required to wear several different hats, taking on tasks outside of their formal remit
where needed.

In a now-famous quote, Estée Lauder, who formed the famous cosmetic firm with her
husband in 1948, once said of her company’s success, “I have never worked a day in my life
without selling. If I believe in something I sell it, and I sell it hard”. The only woman on Time
magazine’s list of the century’s business geniuses in 1998, Lauder was involved in every
element of her business: preparing pots of face cream, giving free product demonstrations,
designing product packaging, training saleswomen and more.

Long-term outlook
Non-family firms draw up their goals for the next quarter. Family firms, however, think years
- or even decades - ahead. A longer-term perspective is a good way to foster a culture of
clear strategy and decision-making throughout the business.

Second-generation CEO of German multi-billion dollar retailer, Otto Group, has used this
long-term outlook for serious success. He took over the business - founded by his father in
1949 - in 1981, and almost immediately began to investigate the possibilities that computer
technology could offer. As a result, the brand moved into ecommerce in 1995, becoming
profitable in its online sales activities by 1998. The company has never been publicly traded,
and still remains a family affair.
Decreased cost
Economic downturns and other challenging times can be a struggle for many businesses,
where the board of directors needs to work out how to keep the business afloat while still
paying staff. In family firms, however, it will often be the case that family members are
willing to contribute financially to keeping the business afloat during times like these.

It may be that this involves taking a temporary pay cut, contributing some of their own
finances, or pausing the payment of dividends while the company gets back on its feet. For
the family behind the business, long-term business success is crucial to their financial
survival, which gives more flexibility where finances are concerned.

What are the disadvantages of family-run businesses?

While it is clear that there are plenty of benefits to family-owned companies, they also have
their downsides:

A lack of family interest

In a family business, there can be a great deal of pressure on future generations to keep the
business going, even if they have no real interest in doing so. This can result in a workforce -
or worse, a management - consisting of family members who are apathetic, unenthusiastic
and disengaged.

In any other business, it is likely that such an approach would see employees having their
contracts terminated. In a family business, this is more of a challenge.

Conflict between family members

The dynamic between different family members, family (and business) history and a blurred
boundary between family life and work life can all cause conflict within any family-run
business. And the family connections can often make such issues difficult to resolve.

When Dhirubhai Ambani, founder of Indian petrochemical manufacturing company Reliance

Industries, died in 2002, he left no will. His older son, Mukesh, was made chairman and
managing director, while younger son Anil became vice-chairman. The feud between the
two brothers became public and, in 2005, their mother demerged the company, leaving
Mukesh in charge of the petrochemical business, and Anil responsible for Reliance Energy,
Reliance Communications and Reliance Capital.

A lack of structure
Family businesses rely firmly on trust - but trust alone may not be the best way. It is still vital
to take rules seriously - both internal rules, and external corporate law.

In 2008, Samsung Group chairman Lee Kun-Hee was forced to hand in his resignation after
being convicted of tax evasion, in addition to being investigated for selling stock to his son at
unfairly low prices - demonstrating how good structure and management can make an
enormous difference.

Nepotism
Some family businesses can fall into the trap of promoting family members to senior
management roles, even when it may be clear that the individuals within these roles do not
have enough education, experience or skills to fully embrace their responsibilities. In these
situations, it would be far more sensible to place more qualified non-family members in
these positions - but is this possible without causing friction within the family?

While it can be a challenge to balance family relationships and expectations with finding the
right person for the job, a lack of competence at a senior level can have a huge impact on a
company’s success, as well as on talent retention.

Succession planning
Research reveals that 62% of employees say they would be “significantly more engaged”
with their role if they knew their employer had a clearly defined succession plan in place.
However, many family business owners fail to create succession plans, be this whether they
feel that it is not needed until further down the line, or because they refuse to admit that
the time will come when someone else will need to take the reins.

The reality is that illness, death or even scandal can require a family business to appoint a
successor in a very short space of time. Without the right plans in place, it can be very hard
for a business to move forward in such an event.

While family-owned companies clearly have plenty of advantages, their very nature can also
make sustaining them in the long-term a challenge. The goal for any family business owner
should, then, to be clear about what the strengths and weaknesses of a family business can
be, in order to determine how to ensure future success.
 Key Considerations:
1. Build a long-term vision for the family business that is compelling and gives purpose to why
you are doing this.
2. Consider the type of family business structure you want to build and test out whether it can
last three generations.
3. Understand what family conflicts are brewing that need to be resolved with some
professional mediation and coaching. In a future article, I’ll introduce you to the DNA Model.
I’ll show you how to ensure you have all the strands necessary to develop a successful
business and how to weave those strands together to ensure your business is strong,
enduring, and successful.
These three considerations are an extract from a book by global family business advisor, Reg
Athwal - Unleash Your Family Business DNA: considerations for family businesses that will
help to ensure their survival. But what do they actually mean? Inspired by Reg, here are our
thoughts.

How can I build a long-term vision for a family business?

For any business, a large part of future success will be down to creating great products and
services, as well as drawing up a business plan that is flexible enough to move with any
market changes. However, in family-run businesses there is another vital consideration to
make: ensuring that the next-generation talent is there, and that it knows what to do and
how to do it to continue the business’ growth.

Some businesses may be fortunate enough to have the next generation raring to go and with
the skills and attitude needed to take the business forward. Others may have family
members who are keen but who they do not feel are right to take on the business going
forward, while others may have a next generation who simply has no desire to continue in
their family’s footsteps.

The key to developing the next generation of talent is to start early. Each
year, approximately 100,000 family businesses are handed down to the next generation -
and around a third of these businesses will subsequently fail. Part of the problem is a failure
to plan early: by deciding on your successor early and briefing them on their hypothetical
role, you will ensure that they are ready for the switch and know what to do, whether they
take the reins next week or several years down the line.
 It could be that you create a “family council” - separate from business leadership meetings -
where you discuss the business, its objectives, its issues and more with the entire family, so
that everyone is aware of its current and likely future position. It could be that children are
brought into the business in their secondary school years to shadow existing team members.
Not only will this ensure that the whole family has a better understanding of how the
business works, it will also help you to establish which of the next generation will be a good
fit for the company.

Whatever you do, it is also important to document your succession plan, your company
goals and more so that when the time comes, the takeover is as smooth as it can possibly be.

Which structure is right for my family-run business?

A successful family business will need to be built upon an appropriate structure - and this
structure may shift as it moves from generation to generation, or as the market evolves.
Generally, there are five different business structures that a family business will choose
from:

 Owner-operator. A business with a single owner, who runs the day-to-day operations of that
business. In family businesses, the challenge here can be in deciding fairly who will take over
this role when the current owner-operator retires.
 Partnership. An approach where two or more partners have ownership of the business, and
these owners are the people who benefit from any profits. While it works well for some
family businesses, determining who will succeed current partners can be problematic.
 Distributed. A popular model for many family businesses, the distributed model avoids the
tasks of having to choose new partners as successors. Instead, business ownership is passed
down to the family’s descendants - whether or not they actually work within the business.
However, the family may define a compensation policy that ensures that those who do
contribute to the success of the business are better rewarded. However, the very existence
of such a compensation policy can cause arguments between those who are involved in the
business, and those who aren’t.
 Nested. “Nested” refers to the fact that in this type of business model, certain assets are
owned by individual branches of the family, with other assets owned by the family as a
whole. The core business is run as a profit-making enterprise, with dividends paid to the
family branches so they can create their own profit-making ventures. While it can be a good
approach to reduce tensions between family members, some may find that it can be a
challenge to balance the needs of the core business with the dividends being paid to the
smaller operations.
 Public. This model may mean that some or all of the shares in the business are traded
publicly. However, it may also mean that the business simply behaves like a public company,
with business owners playing a minimal role, and professional managers brought in to run
 the business. This approach can work well when the business is looking for a large amount of
external funding, or when its owners simply don’t have the time, resources or inclination to
be involved on a day-to-day basis. However, it may not work so well if the owners want to
maintain significant control over how the business is run.
Once a business model is chosen, it can be changed - and some family business owners will
change their approach should they feel that the business has stagnated, or that
developments within the family require it.

 Want to build a family legacy that will last for generations? Buy Reg Athwal’s book for
some fantastic advice!

How can I best resolve conflicts within a family-run small business?

Conflict is likely in any business setting. However, in family businesses - where personal
histories, family relationships and potential quarrels between family and non-family staff can
be involved - conflict can often be far more difficult to manage, and far more detrimental.
Without handling disputes and conflict within a family business carefully, they have the
potential to become far more serious problems, impacting on both the business itself and
family relationships. While the ideal solution would be for these conflicts simply not to
occur, this is unrealistic - which is why it makes sense to have formal processes in place to
deal with disagreements as and when they arise.

There are a number of strategies that family-run businesses can adopt to ensure that
conflicts are recognised, aired and resolved before they become too great:

 Regular communication. By fostering an environment where all employees are encouraged

to communicate about issues they face, speedy resolution is more possible. In some
businesses, however, it may be that certain team members would prefer a more formal way
of communicating their concerns, which brings us on to…
 Family councils. Family council meetings offer a formally structured means of expressing
concerns, issues or anything else that family members want to discuss with the wider
business. It may be that these councils include management, it may be that they are
designed as a space where people can discuss issues without management’s involvement:
different solutions will work for different businesses. The important thing is to ensure that
your family members within the business know that they can safely air any concerns, and
that they will be listened to with no judgment.
 Separating work life and family life. In a family business, keeping work at the workplace can
be a challenge. However, keeping work life and home life as separate as possible can help to
reduce the likelihood of serious family conflict. Some businesses choose to make certain
times of the day “no-business zones”, or set ground rules that say that business issues can
only be discussed in the workplace and not at home.
 External mediation. If a conflict has reached the stage where it seems unresolvable, then
bringing in a trained mediator can make a big difference. An external mediator will help a
family to discuss issues without emotion clouding judgments, focusing on the key issues that
need to be addressed for the conflict to be resolved.

Every single family firm will come with its own set of unique advantages and challenges. But
in order to be successful, business leaders must capitalise on these advantages, and
overcome these challenges to avoid becoming one of the 70% of businesses that does not
survive past the first generation.

Peer support from other family business owners can be an incredible way to push your own
family business forward. Join Vistage today to benefit from our diverse, experienced
network of members and mentors.

12 Reasons Family Owned Businesses Should

Consider Outside Leadership
https://smallbiztrends.com/2016/01/leadership-in-family-owned-business.html

“If you run a family-owned business, should you bring in

outsiders for leadership positions? Why or why not?”
Here’s what YEC community members had to say:

1. Bringing in an Outsider Reduces Key-Man Risk

“By using outsiders within your business, you are more likely to reduce key-man risks by
making the position more replaceable. It is hard to replace a family member. It isn’t as hard
to replace an outsider. Using outsiders early on will give your business more scalability and
more flexibility as it grows.” ~ Mark Daoust, Quiet Light Brokerage, Inc.

2. Bringing in an Outsider Gives You a Different Perspective

“I am the President and CEO of my family–owned business, but my COO is not
a family member. He always manages to bring a perspective to the table that we may not
have in the family dynamic (I work with my brother and two sisters as well). I also feel that
he can be that voice of reason between us family members on any and all situations. It’s
been working out great.” ~ Kristy Knichel, Knichel Logistics

3. Bringing in an Outsider is Good for the Dynamic

“I definitely think there needs to be outside influence in a family dominated organization. No
matter how much family members think they can keep their business and personal lives
separate, there is always bound to be an issue. Having an outsider’s perspective always helps
manage conflict and, in a lot of cases, prevents it. With that said, I love working with
my family!” ~ Drew Gurley, Redbird Advisors
4. Bringing in an Outsider Can Help the Company
“It’s a nice idea to keep a business in the family, but keep in mind that just because someone
is related to you does not mean he or she has the right combination of skills and experiences
to do a certain job effectively. Outside leaders may be better equipped to supplement your
strengths, and they are also more likely to be objective because they are not as emotionally
invested in the situation.” ~ Alexandra Levit, Inspiration at Work

5. Bringing in an Outsider Will Improve Communication

“Family can be complicated enough without adding a business and millions of dollars of
revenue. Creating a clear set of roles for everyone from the beginning is key. Bringing in
outside team members to act as managers will help everyone communicate more clearly and
effectively. They will have a unique view on the business and may provide a different point
of view.” ~ Curt Revelette, Jonathan’s Grille / Vet On Demand

6. Bringing in Outsiders Can Give You Perspective

“Family companies are great for the loyalty, but that loyalty can also mean everyone refusing
to admit when someone isn’t a fit for the position. It’s great to work with family, but assess
whether it might be clouding how you see your employees and their performance, and
whether that might be causing problems. Outsiders can give you perspective.” ~ Adam
Steele, The Magistrate

7. Bringing in an Outsider to Amplify Your Leadership

“Yes, I strongly recommend you bring in an outsider for leadership. However, you have to
firmly state his or her position as the leader so everyone understands this person is a vehicle
for carrying your own leadership further and making it better. That way, your leadership gets
amplified, and you establish an exemplary role model for others to follow.” ~ Kevin
Xu, Mebo International

8. Bringing in an Outsider to Ease Potential Conflict

“I grew up amidst a family business. I’ve allowed partners to hire their family. Never have I
seen this not create toxic elements in the company culture and place undue strain on
those families. But if you have to do it, yes, you need to hire outside leadership. If nobody
with a different last name can do the job better, which I already don’t believe, do it to
demonstrate fairness.” ~ Corey Northcutt, Northcutt Inbound Marketing

9. Bringing in an Outsider Can Provide Needed Balance

“The only thing that should stop a family business from hiring an outside leader is if
the family matriarch or patriarch is not ready to step aside. Other than that, having some
kind of outside voice and influence can often provide the balance necessary to run a
business, a neutral third party in a way.” ~ Kevin Henrikson, Outlook iOS & Android @
Microsoft
10. It Depends
“If your family–owned business has been and is still a good business and you are sure
the family members involved — and the ones that will be involved in the future — know
how to manage it, it isn’t necessary to bring anyone else on board. But if you notice
the family is starting to harm it, then you should. ” ~ Murray Newlands, Due.com

11. Analyze the Health of Family Relationships First

“Family–owned businesses can be as dysfunctional as the family that owns the business.
Success for outsiders is not only dependent on their skills in the industry, but also their skills
in navigating the environment of the family business. The healthier the relationships
between the family members in the business is, the more likely outside leaders will find
success and contribute to company growth.” ~ Christophor Jurin, Construct-Ed, Inc.
12. Bringing in an Outsider Can Help Raise New Issues
“Running a family–owned business can raise issues that outsiders are not accustomed to
handling. For this transition to work successfully, a family–owned business and the outsider
need to be fully transparent about the needs, values and overall vision. While bringing in an
outsider to head a family–owned business may not be a viable option for some, every
business should definitely consider it.” ~ Anthony Pezzotti, Knowzo.com

UNIT 2 listening Track 19

For information

1. Food miles
Food miles is a term which refers to the distance food is transported from the time of its
production until it reaches the consumer. Food miles are one factor used when assessing
the environmental impact of food, including the impact on global warming. The concept
of food miles originated in the early 1990s in the United Kingdom. It was conceived by
Professor Tim Lang, at the Sustainable Agriculture Food and Environment Alliance and
first appeared in print in a report “The Food Miles Report: The dangers of long-distance
food transport”, researched and written by Angela Paxton. Some scholars believe that an
increase in the miles food travels is due to the globalization of trade; the focus of food
supply bases into fewer, larger districts; drastic changes in delivery patterns; the increase
in processed and packaged foods; and making fewer trips to the supermarket. At the
same time, most of the greenhouse gas emissions created by food have their origin in
the production phases, which create 83% of overall emissions of CO2. A range of studies
compare emissions over the entire food cycle, including production, consumption, and
transport. These include estimates of food-related emissions of greenhouse gas 'up to
the farm gate' versus 'beyond the farm gate'. In the UK, for example, agricultural-related
emissions may account for approximately 40% of the overall food chain, whereas
greenhouse gases emitted in transport account for around 12% of overall food-chain
emissions. The goal of environmental protection agencies is to make people aware of the
environmental impact of food miles and to show the pollution percentage and the
energy used to transport food over long distances. Researchers are currently working to
provide the public with more information.