Criteria Used in Assessing the Relative Success of a Family Business

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Table of Contents

Introduction
Business description
Criteria in assessing success
Business performance
Quality of products/services
Clientele relationship
Company’s reputation
Technological knowhow
Current financial status
Family governance
Candy and Candy management team
Management Strengths
Management pitfalls
Conclusion
Reference List

Introduction

Over the last one decade, Family businesses have increasingly attracted substantial public attention leading to comprehensive public discussions and augmented family business studies. For several decades, family businesses have proven imperative in economic growth of numerous nations by contributing to great percentages of economical and societal developments (Kachaner, Stalk, & Bloch 2012).

However, according to Tatoglu et al. (2008), prior family-owned business studies have continuously demonstrated business drawbacks with regard to capital management, strategic talent management, as well as effective governance (p.155). On the other hand, some studies have concentrated on how to enhance family relationships rather than the business performance itself (Sharma, Chrisman, & Chua 1997, p.1).

Several studies have highlighted the different issues underpinning growth of family business; however, the world has continued to witness family business related conflicts leading to uncountable losses.

Characterised by lack of extensive knowledge in strategic business management, the situation deteriorates further. Therefore, in the context of the above problem, this paper presents the criteria used in assessing the relative success of a family business.

Business description

Candy & Candy business associates is the main target for this discussion on the critical assessment of the family business success. Candy and Candy is an international company currently operating in prime locations in the globe’s most dynamic towns and cities (Rochowski 2012, p.16). The company operates in London with several branches worldwide thus making it a globally renowned entity for its artistically interior design products.

Candy and Candy interior design and development management Company began operating in the year 1999, four years after Rochowski and Christian Candy received money from their grandparent to renovate a flat in the year 1995.

A team of 60 designers emerged under the Chief Executive Officer (CEO), Rochowski Candy, and the head designers Mathew and Murray rocking the world, especially the famous London for over 13 years now (Rochowski 2012, p.17). There is persistent consumption and high demand of their modest interior products and services across European countries and developing countries with Africa inclusive.

The company specifically deals with interior house designs including furniture as well as commercial designing of ultra-exclusive residential apartment, refurbishing luxurious hotels, and real estate developments.

According to the report by the company’s management, within the Super yacht company project recently dubbed Candyscape II, “there is an abundance of art deco styling, dark wood joinery, and black lacquer work” (Rochowski 2012, p.18). The company has won several international design awards including the most recent International Design and Architecture Awards 2011 for the best residential living Space in London.

The family business by the two brothers has manoeuvred in almost all spheres of life by making substantial responses to business opportunities internationally.

Currently, unlike in the past when the company depended on family workforce to develop and design speculative projects, the company employs over 100 interior designers (Rochowski 2012, p.18). Most of their interiorly designed products compose of precious materials including onyx, black lacquer, and foster glass.

Criteria in assessing success

In the context of this study, two criteria were important in determining relative success of Candy and Candy family business.

The two strategies, which were employed in critical assessment of the success of Candy and Candy interior design and development Management Company, included overall assessment of business performance and the form of business governance practised.

According to Utrilla and Torraleja (2012), possible indicators of a performing business may include “the quality of company products and services, the development of new products, the company’s potential to attract and retain talent, customer satisfaction, management-employee relationships, and relationships among employees” (p.4613).

On the other hand, the study examined business governance or management as a strategy to access relative success of Candy and Candy Company. Factors investigated concerning business governance included examining the consistency in management of Candy and Candy family firm for the past one decade, the social co-ordination of the company, and the overall management strategies.

Business performance

Business performance refers to endeavours or achievements associated with a company from its beginning to a certain level in gradual growth measured in terms of general output.

Duncan, Ginter, and Swayne (1998) assert that family business performance is examinable by comparing the judgements made upon the historical trends of the business, whether its performance represents the strengths or the weaknesses and its current standards relative to other companies.

Mandl (2008) posits, “The entrepreneurship theory suggests dynamic growth of the enterprise in its initial phase up to a certain point of time when the company reaches the mature phase” (p.68). In the context of this study, examining the performance of Candy and Candy Company involved the strategies as the criteria.

The following indicators were useful in measuring success of this company, viz. assessing the quality of products/services, clientele relationship, company’s reputation, technological knowhow, corporate social responsibility, current business challenges, as well as the current financial status.

Quality of products/services

Quality of products or produce is an active determinant of a booming business. In most cases, successful businesses are eminent through the quality of the products produced. Mandl (2008) affirms that it is common for family-owned businesses or firms to channel extensive efforts into production of quality goods, especially if they bear a family name, hence realising the corporate social activities beneficial to their customers.

Talking of the quality of the products, Candy and Candy interior design and development Management Company is renowned primarily due to the quality of its goods since its appearance over a decade ago. This fame comes from the artistically designed interior products and exceptional services. Concerning the nature of products, Candy and Candy Company is a designer of furniture products.

Rochowski (2012) affirms that the designers are dedicated to producing custom-built furniture with properly fitted joinery accepting electrical applications in its use. The company produces furniture of its own designing incorporated with precious materials that normally attract customers.

Clientele relationship

Normally, people predict the success of any business by examining the gradual and existing relationship between the enterprise and clients. This aspect holds because customers drive the prosperity of businesses in that every business depends on clients to manoeuvre. According to Duncan, Ginter, and Swayne (1998), for any business to have and maintain a high competitive advantage, adding value to customers remains paramount.

Customer satisfaction and customer loyalty are the essentials of good clientele relationship. By respecting and adding value to customers, the family business obtains loyal customers who remain the most reliable business partners (Mandl 2008, p.69).

In the context of Candy and Candy interior design and development Management Company, customer relationships have been excellent with people travelling considerable distances to access the products. Rochowski (2012) states, “our job is to reflect our clients’ personal preferences” (p.18) and it is only through good customer care that the company has managed to acquire and retain several clients globally.

Company’s reputation

The company’s image refers to the perceptions build on the population in which the company serves, commonly referred to as public image or public figure. Company’s social interaction with the surrounding communities determines the family image. As an indicator of success in a family business, the company image must remain clean for the current and future success of a business (Utrilla & Torraleja 2012, p.4614).

Assessing the image of Candy and Candy interior design and development Management Company, the company has improved both its regional and international relations by enhancing attractive business opportunities with both regional and international business partners.

Rochowski (2012) declares, “It is this relentless attention to detail, combined with a ruthless business sense that has characterised the meteoric rise of Candy and Candy” (p.18). The company image has enabled further developments outside London with several tycoons seeking for business partnership.

Technological knowhow

As the world endeavours to beat the millennium development goals, family businesses should have a similar focus. In the current world, technological awareness is an important indicator of any successful business including family owned businesses.

Technological acquaintance is one of the factors that determine a company’s competitive advantage since it provides integrative capabilities that enhance opportunities (Duncan, Ginter, & Swayne, 1998, p.13).

Candy and Candy interior design and development Management Company has over 100 employees that are well conversant with the current and upcoming technologies, which have proven important in the company’s operations (Rochowski 2012, p.18).

Currently, with adequate entrepreneurship skills acquired from a degree in business management, Rochowski Candy has managed to incorporate advanced technology into the business practices.

With the enhanced technological perspective, the business has acquired substantial fame in the international market to become one of the biggest designers of excellent yachts, jets, luxurious cars, commercial hotels, apartments, and estate in unique serenities.

Current financial status

Financial wellbeing of a given business is a key assessment factor of business success. Several academicians and researchers have different perceptions on the company’s financial situation as an important factor in the economic and social developments of the business.

However, according to Sharma (2004) in most cases, it is usually hard to tell the financial prosperity of a company or business, although a project run by the business may depict the financial stability of a family business. Nonetheless, the company’s financial positions can be publicly eminent when the management fails to keep the family business financial secrets.

Regarding financial issues, Rochowski (2012) claims that Candy and Candy Company suffered a huge financial blow after investing in super-prime homes that led to losses in some of their property deals including great projects in Beverly Hills, California collapsed and the government decided to nationalise the project.

Family governance

One of the most important criteria used by academicians and researchers in assessing a manoeuvring family business is examining the form of family business governance. Family governance or family business management is a key factor to the development of a family business. Company management can be the cause of success or collapse of any given business including family owned businesses.

According to Frank et al. (2011), corporation among family members largely determines the direction in which a business can take. In the context of family governance, researchers have identified several potential factors that depict the success of any single-family business.

Duncan, Ginter, and Swayne (1998) note, “Potential weaknesses included extremely high debt and financial leveraging, dependency on relatively few and powerful suppliers, and potentially excessive family control” (p.8).

On the other hand, potential strengths may include experienced management team, strong financial and administrative support, and superior information system. The following are some of the highlighted family governance factors.

Candy and Candy management team

Led by the CEO, Nick Candy, the management team has proved significant in the success of the company to fit in the international profile. Strategic management practice as highlighted by Sharma, Chrisman, and Chua (1997), is an important determinant of a prosperous family business entity (p.1).

Strategic management describes the sense by which the management is capable of managing a business or firm or even a company with minimal leakages. This aspect involves strategic management including talent management, knowledge management, and management of employee relations.

In the context of Candy and Candy Company, the management has really been influential in the achievements associated with the company. The management team comprises family members especially the two brothers, Christian and Nick Candy.

According to Rochowski (2012), the management has grown gradually and it currently prides in a good number of managers (p.27). The two brothers have shown extensive dedication to the welfare of the company; however, there are weaknesses in the management.

Management Strengths

Nick candy is the outright Chief Executive Officer of Candy and Candy. Bearing the skills of a business manager with a university degree, Nick Candy has proven competent within the design industry trying to manipulate business ideas available globally.

Rochowski (2012) asserts, “As the company has evolved, so too have the tastes of its CEO: Nick Candy admits that the overtly masculine style of earlier projects has developed into something softer and more feminine” (p.18). The basic management skills, as opposed to designing skills, have propelled the company towards achieving its goals.

Nick admits that the interior designing profession is subjective and only open-minded managers are capable of prospering in this field. Nick Candy and his brother designed the company goal, which reflects the tireless efforts made by the management towards achieving it. The company goal is to create gorgeous and long lasting liberty that attracts positive emotions within the company’s reliable clients, in whatever artistic field.

Through his management skills, Nick, with extensive support from Christian, has managed to attract talents and effectively managed them. According to Utrilla and Torraleja (2012), a strategic management system, being an indicator of prosperity, should demonstrate its ability to attract and retain employee talents.

The ability to attract and retain talents means that the company is capable of considering employees as important company assets who can contribute to business management through informed decision making regarding the business.

Rochowski (2012) affirms that Candy and Candy family company started as a small business unit, but currently has managed to overcome all odds and grown to employ over 100 interior designers and architects. Employees in the company are equally treated.

According to Sharma (2004), family business members should cooperate and share their experiences interactively with other non-family employees to enhance positive cohesion that may influence the performance of the company at certain lengths.

Management pitfalls

Despite numerous achievements, the road to success for the commercial owned by the two brothers has not been smooth as such. Given that the assessment of family governance is one of the best criteria used to determine the relative success of a family business in this study, Candy and Candy interior design and development Management Company has not always walked on soft terrain.

In special attention to project management issues, lack of apparent management skills in the management of yacht building industry became an eminent failure in the management system of Candy designer company (Rochowski 2012, p.20). Despite the fact that project management is part of quality assurance in the company’s primary goals, some projects were mismanaged during the construction of yachts.

Nick now admits that yacht building deserves exponential skills from people who mostly do it due to the passion they have for it. Tatoglu et al. (2008) posit that skills, necessary knowledge, and competencies are essential for the growth and stability of any single business unit (159).

Conclusion

It is quite normal for family businesses to emerge, but subsequent management remains a great challenge. Prosperity in family businesses can be eminent through a comprehensive assessment of the business performance or by examining management practices employed in the family governance (Pearson & Lumpkin 2011, p.188).

The company’s financial position, quality of the products/services offered, technological well-being, and the existing company reputation are possible criteria used in assessing relative success in a family business; therefore, it remains a challenge to academicians to use all these elements, as some tend to be family secrets.

Sharma, Chrisman, and Chua (1997) admit that sometimes it is challenging to use finance as the only determining variable of family business success.

Family governance is quite an imperative aspect in assessing relative success in a family business as family members may positively or negatively influence the outcome of a family business. Therefore, using these criteria the study revealed that Candy and Candy designer company is a relatively successful company.

Reference List

Duncan, J., Ginter, P., & Swayne, L. 1998, ‘Competitive advantage and internal organisational assessment’, Academy of management Executive, vol. 12 no.3, pp. 6- 16.

Frank, H., Kessler, A., Nosé, L., & Suchy, D. 2011, ‘Conflicts in family firms: state of the art and perspectives for future research’, Journal of Family Business Management, vol.1 no. 2, pp.130-153.

Kachaner, N., Stalk, S., & Bloch, A. 2012, ‘What You Can Learn from Family Business’, Harvard Business Review. Web.

Mandl, I. 2008, Overview of Family Business Relevant Issues. Web.

Pearson, A. & Lumpkin, T. 2011, ‘Measurement in Family Business Research: How Do We Measure Up’, Family Business Review, vol. 24 no.4, pp. 287 –291.

Rochowski, N. 2012, Super yacht design: Domus Design in Business Mood Board. Web.

Sharma, P. 2004, ‘An Overview of the Field of Family Business Studies: Current Status and Directions for the Future’, Family Business Review, vol. 17 no.1, pp. 1- 36.

Sharma, P., Chrisman, J., & Chua, J. 1997, ‘Strategic Management of the Family Business’, Family Business Review, vol. 10 no.1, pp. 1-30.

Tatoglu, E., Kula, Y. & Glaister, K., ‘Succession Planning in Family-owned Businesses’, International Small Business Journal, vol. 26 no.2, pp. 155–180.

Utrilla, P. & Torraleja, F. 2012, ‘Family businesses: How to measure their performance’, African Journal of Business Management, vol.6 no.12, pp. 4612-4621.

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