Case analysis by Alvin Bilolo - The Entrepreneurial Clans in Asia

THE ENTREPRENEURAL CLANS IN ASIA: The Addition, Multiplication, Subtraction and Division of Family Conglomerates - Alvin Bilolo

Situation Analysis

The three entrepreneurial clans in Asia gives us a lot of ideas and insights with what was happening in a usual family conglomerates. There are indeed additions, multiplications, subtractions, and divisions that are happening within those corporations. These corporations should then be united in order to maintain the ownership of the businesses that was established by their forefathers.

The Raiva siblings and their spouses of Thailand, Tunku Abdullah and his royal brood of Malaysia, and the three generation lineage of Indonesia’s Ibu Mutiara Djokosoetono ‘s stories gives us an insight that indeed businesses were passed on to their next generations in order to maintain ownership and control of the company. This is also done since the name of the founder usually serves as a trademark of their businesses in the long run. This is true for an instance since the successes of their forefathers are usually associated with the success of the successors in particular fields.

Problem Analysis

The usual problem for a family conglomerate that is common with the three entrepreneurial clans in Asia is the challenge of keeping the business alive and within the control of the members of the family (their supposed to be successors). For once, businesses such as the one tackled in this case were established to last for the benefit of next generations. There is indeed a problem of transferring the management of the business to their successors and keeping it alive and productive.

Another thing that is worth noting here is the challenge of improving the current set up of the business, its operations, managements, and products by its successors. Those successors usually have a greater responsibility to meet the expectations of the public – expectations that was set by the founders of their conglomerates.

Alternative Generation

The three families have different strategies in transferring the businesses to their next generation. The Raivas added more enterprise to their conglomerate by exploring different related industries such as restaurant and bakery business. They have their focus in business and they prosper what they know to improve the operations. They have multiplied their business in a more concentrated manner and focus on their core restaurant and bakery operations. They have eliminated those cost that will tend to pull business operations and put more emphasis on effectiveness and efficiency. They disseminate their businesses according to functions and product lines. In this way, members of the family can freely choose as to what department they are willing to handle. With this, they will have what they want and will be able to focus on their line of interest.

The Melaware group on the other hand adds enterprise using a shotgun approach. They are getting every opportunity that came their way wherever they may be coming. Tunku Iskandar and Tunku Yaacob expanded their respective empires through acquisitions and natural growth. This opportunistic and aggressive approach bound them to some failed projects. Nevertheless, this family conglomerate had the strategy of keeping the ownership of their companies within by holding 80 percent of industry groupings that they have. They were able to obtain additional capital by selling 20 percent of their company to others, which will then benefit them as a whole since new ideas may come up. In times of need, they may then immediately buy the 20 percent minority stocks from others.

The conglomerate of Ibu Mutiara which is ‘Blue Bird’ then straddles on the two extremes. This family really has no focus on what business they want to stand on. Their businesses just lay on common denominator which is wheels and whatever is attached to it. Growth is then limited and not diverse. Because of the focus that they have, they prosper and multiply a lot. Unlike the two families earlier, Ibu Mutiara ensures that every member of the family will have a piece of the pie. Everyone will benefit from the business. Though her three children are all professionals and need not manage the business, she still pursues and even trains her grand children to manage the business. She strives hard to transfer the ownership to her next generations.

Decision Analysis

The entrepreneurial clans in Asia are all successful in their own rights. However, to continually improve their operations and businesses, as well as to transfer it to their next generations, they should focus on their market and strength. They should not go beyond their competency and should continue to transfer their vision and mission to next generations. All members of the family should keep their focus and think of ways to improve and prosper the business ideas that they have. With this, family conglomerates will then be sustained for long period of time.

Action Analysis

At the end of every alternatives and decisions enumerated above, family conglomerates will always be influenced directly and indirectly by the charisma of patriarch and matriarch. This is the first factor that may cause success or failure of the existence and transfer of conglomerates. This will also be influenced by the education and professional independence of the second generation, as well as proper briefing and transfer of knowledge that they have to the next generations. It is very vital then that all knowledge and techniques be transferred and honed. This will keep the business going and will keep the ownership to the family for a long period of time. Everyone should take personal accountability and should not take for granted the effort and strategies set by our forefathers.