Week 9: Family owned business in USA

Family owned business in USA

There are 90 percent of business in United States of America are owned by a family business. Based on my observation, in operating family business, there will be more trust, but the arising percentage of the conflict is higher in family business. The family business institute states there are only 12 percent of family businesses that can survive after the third generation of the family. 

It is more complicated and challenging to managing finance in family business.

Family business is not required to have all the member of the business should be from the family member, usually the family member in the family business be the top manager and includes the owner. However, the participation of family member in the top board could help the company for the long-term growth. The usual issues why the family business is collapse, is because the individual wealth maximization.

I will take Cargill Company as the example of the family business. This family business was founded at 1865. The family member controlled the executive position in this company for almost 100 years until there is a non-family member becomes the one of the executive member in Cargill Company during 1960. However, this company still could success in achieving their goal in the long-term period. Cargill company do not suffering a conflict in their business since this company founded.

There is an opportunities of Cargill company to take, which is sales their shares to the public in order to increase their capital to make an expansion for their company. However, usually family business is closer rather than normal business, because they are more trust to their family members. To conclude, I think Cargill family business company should transparent to public and start selling their shares since they are a successful company and it will bring big potential for the investor and finally they can make the strategy for their future plan. In the case if I was the investor, I will dare to buy the shares in Cargill company, because I can see this company already success since a long time ago and they still can survive with the current condition market.