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Since the family decides who will run or manage the company, stability is one of the advantages of running a family business. Commitment is a benefit that is also present. Because the requirements of the family are at risk, running a family business requires more responsibility and dedication. One of the main advantages of running a family business is flexibility, as family members are prepared to take on diverse duties that go outside of their job definitions. Operating a family business also has the advantage of lower costs because family members are always prepared to contribute financially to make sure the company is successful in the long run (Von Schlippe & Frank, 2013).
However, operating a family business or working with a family business has various potential challenges. One of such challenges is the possibility of family conflicts due to the contempt that arises from familiarity among the family members that may result in long-lasting bitter quarrels and fights. The viable solution to the conflict in a family business is allowing compromise and embracing other members’ opinions (Salvato & Moores, 2010).
Another potential challenge of working with a family business is unstructured governance within the organization. That is because, in family businesses, various governance issues such as internal rules and hierarchies, as well as the ability to follow various corporate regulations, tend to have less consideration. The solution to such a challenge requires the family business workers to understand the framework of operating a business, as well as the rules and regulations that govern business operations. It also requires the need to understand the consequences of failing to abide by the corporate laws that govern business operation (Webb, Ketchen, & Ireland, 2010).
Nepotism is another potential challenge of working with a family business since most family businesses are always reluctant in allowing outsiders into the company’s top management. As a result, people find themselves handling jobs for which they do not have the right skills and experience. The solution to such a challenge requires the family businesses to consider allowing competent outsiders to help them in management so as to improve the company’s performance (Salvato & Moores, 2010).
Salvato, C. & Moores, K. (2010). Research on Accounting in Family Firms: Past Accomplishments and Future Challenges. Family Business Review, 23(3), 193-215. http://dx.doi.org/10.1177/0894486510375069
Von Schlippe, A. & Frank, H. (2013). The Theory of Social Systems as a Framework for Understanding Family Businesses. Family Relations, 62(3), 384-398. http://dx.doi.org/10.1111/fare.12010
Webb, J., Ketchen, D., & Ireland, R. (2010). Strategic entrepreneurship within family-controlled firms: Opportunities and challenges. Journal Of Family Business Strategy, 1(2), 67-77. http://dx.doi.org/10.1016/j.jfbs.2010.04.002
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