Three Entrepreneurial Clans in Asia: The Addition, Multiplication, Subtraction and Division of Family Conglomerates
A case analysis by Arlo Cristobal
Situation Analysis
The Ralva Siblings and Spouses, Tunku Abdullah and His Royal Brood, and the three generations of family from Ibu Mutiara are three clans in Asia that has proven to have successfully establish and grow their enterprises at an astonishing rate. All of them have kept their businesses in the hands of their family members, despite of their businesses' enormous size.
The Ralva clan started an ice cream business to while away their time. This small project has then turned to a food business giant in Thailand and other countries. Tunku Abdullah, coming from a royal family, has established several business ventures from extremely diverse businesses. Lastly, Ibu Mutiara and her grandchildren have created a transportation empire under the Blue Bird Group umbrella.
All three clans operated their businesses arithmetically. First, you have the addition processes where the clans add new business ventures to their conglomerate. The Ralva clan preferred to add businesses that are in line with their restaurant and bakery business, but bounded by their preferred target segment. You also have Tunku Adbullah's Melaware group using a "shotgun approach" in expanding to new industries. And finally, we have the Blue Bird Group going to the extremes of adding businesses that has something to do with land transportation.
Second, there is the process of multiplication. The Blue Bird group leads this arithmetic strategy in terms of the volume of growing their existing businesses. Third is the process of subtraction. Unlike the Ralva clan, Tunku's aggressive approach in acquiring different businesses has resulted to several projects that had to be let go. Last is the process is division. Since their businesses had expanded to overwhelming sizes, the clans have to divide the ownership of responsibilities amongst the new generation.
Problem Analysis
All three clans have different approaches when it comes to the arithmetic processes that govern their family businesses. The Ralva clan has a more concentrated approach. Tunku can be considered the aggressive acquirer. Finally, Ibu Mutiara wants to have everything that has something to do with their core businesses.
Given the enormous success of each clan, it's hard to argue with the way any of them approaches business. Still, nothing is absolute and each also faced several challenges that could have been avoided. Similarly, some of their practices have proven to be very valuable to overlook. There are significant learning that can be acquired from the clans' experiences, both in terms of identifying flaws and putting emphasis on strategies that works.
Alternatives Generation
The ideal alternative would be to gather the best practices of each clan in each arithmetic process, and then apply all of it at the same time. However, given the unique traits of each clan, and any other business organization, it can be very problematic and difficult to implement. There is no straight line when it comes to business expansion and it is also impossible to avoid bumps along the way.
The Ralva clan's approach can be considered one of the alternatives. Their addition processes is focused on their restaurant and bakery business, resulting to minimal subtraction. This also translates to a conservative multiplication process. Their conservative approach also impacts the way the family members handle the business, with the youngest generation of family members no longer joining the company. Short term, the advantages of their approach is enormous. Their focus to the core business can translate to significant earnings from that business. However, looking at the long term, as the clan grows; their businesses are left only to a handful of interested parties.
In contrast to the Ralva clan, the Melaware group is quick to jump in any business opportunity that comes in their way. Their approach can be too aggressive at times, but is effective in growing their conglomerate. The obvious problem in this alternative is in structuring a company that has pieces coming in from different fields. Synergy among businesses is very difficult, but they are ensured that they have enough to pass on to future generations.
Lastly, we have the Blue Bird model. Everything they do is in line and supported by their core business, which is transportation. The addition process is aggressive, yet controlled. The multiplication process is very rapid. The subtraction process is very flexible because they tend to stay on the safe side. They don't cut-off businesses, but trim the volume down when needed. The division processes is also well planned; there are available opportunities for all and at the same time, the new generation are groomed to take on these roles.
Decision Analysis
In paper, the alternative that has the best outputs point out to the Blue Bird Group. They are aggressive, but are always in control of their expansion. They also take computed risks, enabling them to quickly adapt to demand changes.
The problem with this alternative is their vulnerability to structural and technological change. Though this might be in the long-run, there is a threat of collapse since they are stuck in the transportation industry and everything depends on everything else. This is unlike that Ralva clan's venture, food, which has an inelastic demand. To counter this, they should always be on their toe when it comes to forecasting and innovation. Their strengths can immediately transform to vulnerability with drastic changes in the economy. It might take several decades or even centuries for anything drastic to happen in the realm of land transportation, but they should never be complacent.
Action Analysis
There is no short-term way to measure success in this arena. Everything has to be based on historical strengths and stability. The only tool that can be used is forecasting, but even that is limited when talking about generations of clans taking over businesses. The key success factor for this case would be the longevity and overall growth of a clan's empire.
