Влияние глобализации на семейный бизнес
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Assignment for international business
Topic: “ Influence of globalization on a family business”
Student 1521222
The influence of globalization on a family business.
In our century everybody are talking about the globalization and her influence of every aspect of our life, in my assignment I am going to look on the influence of globalization on a family business and if there is an influence, try to understand if it is more positive or negative. At first we have to give the definitions what does the globalization and family business mean.
There is no strong definition about what does the globalization mean itself. See ap1 However we can assume that the globalization is developing of market and economy involving new members in this process. Now we should give the definition of a family business and here we can see that there are a lot of definitions and a lot of theories how we should look at this problem. See ap 2
Actually ifwe compare two companies one is owned by a family, and the second one is just an average one. We will see that there are not so many differences however there are some particular problems in family owned companies. For example struggling over the person who is making a decision and taking over of business see ap3. In this work we will be looking at the whisky producing companies and see how globalization deals with them
But to understand how does the globalization influences family business and small companies we should look at the instruments that globalization uses. There are three of them the first one is WTO the second one is IMFand the third one is World Bank. “Look at the three main institutions that govern globalization : the IMF theWorld Bank and the WTO”1“ The IMF and the world bank become the new missionary institutions, through which these ideas (free market) were pushed on the reluctant poor countries that often badly needed their loans and grants”2 So that give us the right to say that globalization was born in 1944 “When the Bretton Woods Agreement was reached”3and for Europe the main data was on 25 march 1957 year see ap 5 . . Nonetheless there are different interpretations the main idea is that This organization was establish to protect the economy froma crisis and also to make it more stability . Also we need to mention the internet, because this is a part of globalization, may be not as strong as WTO IMF and world bank but all in all it became the part of our life we do not even mention how deeply it integrated in our life. And if when we say globalization we usually mean economy in the case of internet we can talk about globalization of information and cyber culture.
Now we shall look at the
relations between family owned companies and globalization. However as I have already
mentioned there are not so many differences between family companies and
average enterprises. And it is mostly impossible to look at all family business
companies because there are a lot of them and they go through the
globalization, it will be a mistake to compare a ford motor company to a pub
somewhere in
As an example of the
company, I decided to take Scottish whisky distilleries owned by family for
example Glenfiddich , , Cutty Sark , Springbank, etc.
At first because these are the typical family business companies and they also
positioned themselves in this way see ap 6. The
second reason because the hole history of
Looking at the relations
At first we should look on globalizing processes through the lens of this
distilleries. As we already put the advantages that gives us economic union we
can assume that for companies that producing whisky these are very positive
moments. Because the inner British market is
limited. And to be honest whisky it is not the most popular drink in
As a second we need to look at the second aspect of globalization. An this are shops that give the opportunity to the companies to sell their products. Not the small shop on the corner but the multinational big storagesthat supply thousands of people with products. Imagine how is it easy now to make only one agreement for example with spar and sell them your production. Unfortunately it is hardly possible to find any information how many bottles is selling to storages by for example Glenfiddich but we can assume that a lot or we can also compare the quantity of bottles in the small shop and Tesco for example. Usually in small shops there are from 2-3 bottles on the shelf however in Tesco when I have asked if it was possible for me to by 20 bottles themanager answered yes. At the same time if we think about how many agreements is necessary to make with small shops to reach the same selling level we will easily understand the positive things about these moment.
The next thing weare going to look at is going to be internet. Because might be seen as a globalization in the area of information. And again we can establish thatinternet gives the big advantages for this companies. If we look particularly at the Glenfiddich web site we will see the opportunity to by their products from the internet some rare ad expensive products ( of course it is also possible to by and average production). But not only can we buy the product we also can read about it. And is not it god for a company to promote their product avoiding big costs on doing it in different sources like TV radio and newspapers. They steel must advertise their products but Now it is possible to make a reference on a web-site and people will go there read the information about the product and understand it. Using the interne they can keep in touch with the customers, research the attitudes of their customers because if you want to be register ,to get the last news from the company you have to go through a questionnaire but even if you do not registry you still leave the information about your age.It means thatfor the company it is easier now to collect the data give it to the department of marketing and analyze it.
In the conclusion we need to say that on the example of Scottish whisky distilleries there is a positive influence of globalization on this particular family businesshowever we also need to mention that there are differenttypes of family enterprises and it is mostly to possible to apply my assignment in all the cases. In my assignment we see that the globalization and entering the economic union brought these companies to the opportunities to go further their own countries and sell their products everywhere inside this union without any restrictions and it means more customers and more customers means more profit and the more profit company the better for the company. There are no evidences that might bee interpret as negative influence. Starting from this we can assume that in this area of family business globalization brings the positive aspects. And the last thing about the family whisky distilleries- They are proud of being traditional Scottish company that was founded by their family but they are enjoining going global. But it might be fair only regarding to the companies we have researched, because as I have already mentioned there is a big variety of family business companies and if we look at the other companies the influence of globalizationmight be different.
1) Joseph Stiglitz ,globalization and its discontents, penguin books 2002 page 10
1) Joseph Stiglitz ,globalization and its discontents, penguin books 2002 page 13
3) Michael R.Chinkota et all, international business, 7 th edition, Thomson south-west 2005, page 230
1) Appendix
Discussions of definition of family business
1)”globalization the process by which governments sign away the rights of their citizens in favor of speculative investors and transnational corporations”1
a) A typical - but restrictive - definition can be taken from the International Monetary Fund,[citationneeded] which stresses the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology 1-a
b) Globalization – the growing integration of economies and societies around the world 1-b
c) globalization refers to fundamental changes in the spatial and temporal contours of social existence, according to which the significance of space or territory undergoes shifts in the face of a no less dramatic acceleration in the temporal structure of crucial forms of human activity 1-c
d)“Globalization reflects a business orientation based on the belief that the world is becoming more homogeneous and that distinctions between national markets are not only fading but, for some products, will eventually disappear . As a result, companies need to globalize their international strategy by formulating it across markets to take advantage of underlying market, cost, environmental, and competitive factors.” Czinkota 380
“globalization is the watchword that increasingly looms large in all walks of life, not only in our entertainment, our fashion, and the products we buy,but also in our morals, belif systems, and our very sense of being a human species. Foe the firs time in history, the availability of international products and services has reached beyond the elite to become the reasonable expectations of the masses. The global market is inevitable, inescapable, and here.” Czinkota 18
“International business consists of transactions that are devised and carried out across national borders to satisfy the objectives “ Czinkota 5 1-d
These examples show us that there are different points of view on the globalization especially if we look into the antiglobalists web sites. But in these sources usually there are a lot of emotions and very small knowledge that’s why I do not bring here their opinion.
2)A Family Business. Litz (1995) identified family businesses conceptually based on ownership, management, and intention to transfer. He developed a nine fold typology of business types and identified four of the nine business types as family businesses or potential family businesses. Although his conceptual work further developed definitions of family business, the definitions were not applied to empirical data. Handler (1992) has identified four ways in which theorists usually define family business: degree of ownership and/or management by family members, degree of family involvement, potential for generational transfer, or multiple criteria.
3)There are two particular things that single out the family business from other kind of business. The first one is the struggling over the person who is making a decision. And the second is the big problem about the overtaking the business.
So there might be a disagreement and even conflict about what decision to make based on a different experience, education etc. However in a family owned company the situation when a junior employee for example son has got a straight impact with the boss that is also a his father is more likely to happen than in average company. “ My dad is from the old school and I am from the new. I went out and bought business cards, charging it to the business. He started giving me a stink about it. So I paid it myself”page 59 Paul C Rosenblatt et al 1985 “The Family In Business “ In This example we can see that not only is it a conflict but also a self initiative order with money. It is an example that can prove us that junior family members working in the family business might not observe hierarchy it might lead to the situation when other workers will not respect the boss because they might think that he is not confident -1anymore.
1-“It is difficult to single out all criteria that makes a person the leader , however “ some current selection criteriafor senior management positions seem to reflect a prevailing belief in some traits. Example include:1- the ability to solve the problems and see how they fit into the wider scheme of things 2- a strong desire to achieve.3-self confident and self – disciplined 4- the ability to listen and to communicate effectively 4- stability of emotion and positive attitude toward other members of the organization, especially subordinates 5- analytical and intelligent ( but not to intelligent)”“Managing organizations” Robert H Rosenfeld et al 1999 page198. And it might destroy an authority of the Boss
However in the average
company (not family ) according to another case study we see the different
situation . If we look at Yue Gee Ling case we can
see following situation “ Gee Ling felt too junior to confront his bosses
directly with his criticism. Instead he decided on what he felt would be a more
subtle approach”page 2 Yue Gee Ling case University of Stirling
Department of management and organizations Hand Book. As we can see in the
second example the behavior of a junior manager is completely different and
also we can not blame the cultural factor in the Yue
Gee behavior. Because nonetheless he is from Asia region he studied in the
The second thing we were going to look at was the take-over of the business. And hear the situation is also different from the others companies. And the problem is that in case of a family business the Boss usually wants his relatives to run his company after him. But the difference between average company and the family that in average company the control usually goes to the most clever and experienced worker or other company buys it. However in the family business the relative of the owner does not necessary the best candidate on this role. This fact forces the leader usually father to educate his children by himself by helping them and protecting. To be sure if they are not the best they are also not the worst and when he leaves they will be able to run the company. “ Over the next 25 years, his children joined the company and worked their way up through the management ranks to join the board” “Great Scots in Family Business” Chapter three page 29.
“ The accountancy firm BDO Stoy Hayward estimates that just 24 per cent of family business survive the hand over to a second generation, and only 14 per cent make it to the third. One study of the sector blames the situation on “ failure to manage the complex and emotion-laden issue of succession from one generation to the next”” “Great Scots in Family Business” page 94.
5)”After the second world war there was a reaction against the high tariff policy of the 1930s and significant efforts were made to move the world back to free trade. World organizations (like GATT and it’s successor WTO) have been developed to foster international trade and provide a trade climate in which such barriers can be reduced” 4
“ The IMF was charged with preventing another global depression. It would do this by putting international pressure on countries that were not doing their fair share to maintain global aggregate demand, by allowing their own economies to go into a slump. When necessary it would also provide liquidity in the form of loans to those countries facing an economics downturn and unable to stimulate aggregate demand with their own resources…. The IMF was founded on the belief that there was a need for collective action at the global level for economic stability” 5
“The IMF was conceived in July
1944, when representatives of 45 governments meeting in the town of
“On march
1957 the governments of
|
Stage of integration |
Abolition of tariffs and Quotas among members |
Common Tarriff and Quota System |
Abolition of restriction on factor movements |
Harmonization and unification of Economic Policies and Institutions |
|
Free trade area |
Yes |
No |
No |
No |
|
Customs union |
Yes |
Yes |
No |
No |
|
Common market |
Yes |
Yes |
Yes |
No |
|
Economic union |
Yes |
Yes |
Yes |
Yes |
Table-8
6)
A
family-owned company
a)Glenfiddich was founded by William Grant in 1886 and is owned by the same
family today. We are one of only a handful of Scotch whisky distillers to
remain in family hands.10
b)
Springbank Distillery is unique. It is the oldest independent family
owned distillery in
c)CUTTY SARK family run business and royal warrant holders 12
7) Legal definition of whisky
To be called Scotch whisky, the spirit must conform to the standards of the
Scotch Whisky Order of 1990 (
1. Must be distilled at a Scottish distillery from water and malted barley, to which only other whole grains may be added, have been processed at that distillery into a mash, converted to a fermentable substrate only by endogenous enzyme systems, and fermented only by the addition of yeast,
2. Must be distilled to an alcoholic strength of less than 94.8% by volume so that it retains the flavour of the raw materials used in its production,
3.
Must be matured in
4. Must not contain any added substance other than water and caramel colour.
5. May not be bottled at less than 40% alcohol by volume. 13
No whisky other than Scotch whisky may be made in
8) There is a book where the author looks at the history of whiskys describes the ways of making of this spirit etc . and he also writearticle where he is describing the situation in Scottish culture and traditions “ Gaelic is dying steadily, there is more haggis consumed in London on one particular night of the year , the tartan is worn not by thenative working Highlanders but by the shooting tenant or his kind, the majority of whom are not Scots, and whisky is so dear that a working man can afford little more than a smell of the cork. And as for what these things have ever done, they are certainly doing one thing now with efficient dispatch and that is doing”14
9)
“target marketing is thus defined as the
identification of the market segments that are the most likely purchases of a
company’s products. This idea of how companies target their marketing efforts
was put forward by Abell ( 1979) when he suggested
targeting strategies based upon customer group concentrations or customer need
concentrations , or a combination of each” 15 it might be interesting to look
at this point through 2 companies for example famous grouse and Glenfiddich. In the first case the company positioned
itself as a qualified but blended whisky. So they are targetingpeople that will drink quality product but
they do not like straight whisky. Who can it be everybody- the housewife adding
the drop of whisky in the coffee in the evening,young people mixing the whisky and coke etc. However
in this part of market they have the big competition with Jack Daniels whiskey
because even though jack Daniels is not a real whisky they have a really
attractive price comparing to Famous Grouse.
In the case of Glenfiddich the market is
targeted is mostly the high price and quality whisky market. If we enter the Glenfiddich web-site we will see that the most simple
product they make is a 12 years old whisky. And than they have15,18,21, 30 years old whisky.(we are not
talking about special series like the serie of 1973
year) So this is a product for the real experts in this spirit. And in this
market they compete with all producers of Quality whisky like Johnnie Walker
for example. But the beggest competition usually is
about average the simple whisky they produce. Becouse
when we talk about old whisky we need to understand that they are very
expensive for example the 30 years old Glenfiddich
costs
10) “ the variables are what are termed “ the marketing mix” which is a combination of all the ingredients in the “recipe” that is designed to prove most attractive to customers. In this case, the ingredients are individual elements that marketing can manipulate into the most appropriate mix E.J McCarthy (see Kotler, 1977) further described the variables the company can control in order to reach its target market as the “four Ps”…. 1)product 2) Price 3) Place 4) Promotion” 16
REFERENCES TO APPENDIX
1) Colin Hines, Localization a global manifesto, Earthscan publications ltd 2000 page 4
1-a) http://en.wikipedia.org/wiki/Globalization
1-b) http://www1.worldbank.org/economicpolicy/globalization/
1-c) http://plato.stanford.edu/entries/globalization/
1-d) R.Chinkota et all, international business, 7 th edition, Thomson south-west 2005 page 380,
page 18, page 5
2)Litz, R. A. (1995). The family business: Toward definitional clarity. Family Business Review, 8(2), 71–81.
Handler, W. C. (1992). Methodological issues and considerations in studying family business. Family Business Review
3)
page 2 Yue Gee Ling case
Smith, Maurice, 1960 -Great Scots in family business / by Maurice Smith.
;“Managing organizations” Robert H Rosenfeld et al 1999 page198
4)Svend Hollensen, Global
Marketing, a Market-responsive approach, Prentire
hall
5) Joseph Stiglitz ,globalization and its discontents, penguin books 2002 page 12 6)http://www.imf.org/external/pubs/ft/exrp/what.htm#created.
7)Denis Swann , The Economics of the common market Penguin Books eight Edition 1995 preface
8) R.Chinkota et all, international business, 7 th edition, Thomson south-west 2005 page 251
9) R.Chinkota et all, international business, 7 th edition, Thomson south-west 2005 page 252
10)http://uk.glenfiddich.com/world/key_facts/index.html
11)http://www.springbankdistillers.com/springbank-whisky/about.php
12) http://www.cutty-sark.com/origins.htm
13)http://en.wikipedia.org/wiki/Scotch
14)
Neil M Gynn, Whisky and
15) Geoff Lancaster and Paul Reynolds, Marketing, Palgrave MacMillan, 2004 page 34
16) Geoff Lancaster and Paul Reynolds, Marketing, Palgrave MacMillan, 2004 14
Bibliography
1)R.Chinkota et all, international business, 7 th edition, Thomson south-west
2) Geoff Lancaster and Paul Reynolds, Marketing, Palgrave MacMillan
3) Neil M Gynn,
Whisky and
4) Denis Swann , The Economics of the common market Penguin Books eight Edition
5) Joseph Stiglitz ,globalization and its discontents, penguin books
6) Svend
Hollensen, Global Marketing, a Market-responsive
approach, Prentire hall
7) ;“Managing organizations” Robert H Rosenfeld et al 1999
8) Paul C Rosenblatt et al 1985 “The Family In Business“
9) Smith, Maurice, 1960 -Great Scots in family business / by Maurice
Smith.
10) Yue Gee
Ling case
11) Handler, W. C. (1992). Methodological issues and considerations in studying family business. Family Business Review
12) Litz, R. A. (1995). The family business: Toward definitional clarity. Family Business Review, 8(2)
13) Colin Hines, Localization a global manifesto, Earthscan publications
14) The Literature review made by my group for “Reserchment methods and Dissertation Planning”the topic “ why does the family business is struggle to survive across the generations”
15)http://uk.glenfiddich.com/world/key_facts/index.html
16) http://www.springbankdistillers.com/springbank-whisky/about.php
17) http://www.cutty-sark.com/origins.htm
18) http://en.wikipedia.org/wiki/Scotch
19) http://www.imf.org/external/pubs/ft/exrp/what.htm#created