Font Size

- Aa +

Tue 28 Apr 2009 02:03 PM

Font Size

- Aa +

GCC family firms need to adapt for survival - study

Involving third generation, competition, 'restless entrepreneur' - key obstacles. 

Engaging the third generation, increasing competition and the "restless entrepreneur" syndrome, are three key obstacles family companies in the GCC will have to overcome to survive into the next decade, acording to a new study.

Research by Booz & Company has shown that GCC family firms tend to be under six decades old, managed by members of the first or second generation, with few seeing involvement from the third generation.

Many who run family conglomerates are also classed as “restless entrepreneurs” - people who focus on new business and investment rather than concentrating on growing their current businesses.

Both these factors, plus increasing competition from outside the region, would have to be overcome for family run enterprises to survive into the next decade, the report warned.

“Our analysis of more than 100 family businesses reveals the most critical factor to their success is the families’ coordinated and sustained long-term strategy for growing and controlling their businesses,” explained Ahmed Youssef, a principal at Booz & Company.

“Many GCC family businesses over the next decade will also have to contend with the hurdles posed by the transfer of company control to a third generation,” Youssef added.

Some studies show that up to 80 percent of family businesses fail to make it through the third generation, the report pointed out.

Many GCC family businesses would need to grow 20 percent a year to maintain the same level of wealth, the report added.

“They will survive economic downturns and generational changes by institutionalising their businesses and managing the restless entrepreneur syndrome – or face extinction,” it concluded.

Ametis 10 years ago

I fail to see what is wrong with looking at new opportunities to diversify the business. As long as the next generation family members are brought into the family as soon as possible to be nurtured and their entrepreneurial skills are tuned, explored and given the opportunities. If anything my experience in the Gulf has been that most families are stone set in the business started by great grandfather, and are hesitant to explore new avenues, leaving the market for foreign companies to come and rule the roost.......