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MANAGING FAMILY BUSINESS

REPORT

SUBMITTED IN PARTIAL FULFILLMENT OF


THE REQUIREMENT OF THE COURSE

MANAGING FAMILY BUSINESS


BMT 3004

DONE BY
NAME: MAHESH CHAND
REG NO: 15BBA0026

PROJECT GUIDE
Dr. Sudipto Bhattacharya
Associate Professor
Vit Business School
Vit University, Vellore

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CONTENTS PAGE NUMBER

INTRODUCTION

HISTORY, CULTURE AND


VALUES

FAMILY PARTICIPATION

MANAGEMENT
DEVELOPMENT

STRATEGIC BUSINESS PLAN

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GOUTHAM JEWELLERY

INTRODUCTION

A Family-owned business is one that is owned and managed (that is controlled) by one or more
family members. Family-owned firms are – “organizations where two or more extended family
members influence the directions of the business through the exercise of kinship ties,
management roles, or ownership rights.” A family – owned business is any business in which
a majority of the ownership or control lies within a family. It is also a complex, dual system
consisting of the family and the business. Members involved in the business are part of a task
system and also a part of a family system and these two systems may overlap.

Over 80% of world business is controlled by families. They employ around 50% of world work
force. They contribute around 40 to 50% in world GNP. But the sad picture is that only 15 to
20% of family businesses survive till the third generation.

This project tries to describe the Family Business History and Culture and its member
participation. This is the first step in developing an understanding of a family business.
Knowing the family business history, values and culture is an important foundation for
analysing the situation from both a family and a business perspective.

HISTORY, CULTURE AND VALUES

Goutham jewellery was established in 1990 by Goutham Chand at Vaniyambadi. His journey
as a businessman started at the age of 12 when he was taken to his relative’s shop to learn the
basics. After getting some basic knowledge of “how to purchase and sell the jewellery?”. He
set up his own business with an investment of RS 15 lakhs.

Goutham’s father, Mr Soanraj Bhandari was from a very small village Ajmer in Rajasthan. He
had 2 acre of land and was cultivating rabi and used to sell to the local groceries. Since the
growth of the business was weak he decided to move to south India to satisfy his personal
needs. He came to Chennai in 1964 and worked as an employee in a textile shop. Goutham
chand had a huge interest in business and he used to visit many shop and used to gain
knowledge through it. Once Goutham went to his relative’s jewellery shop where he came to
learn that this business could give him proper growth and wealth and he decided to establish a
jewellery shop. At the age of 15 he worked as an employee in a jewellery shop and after
servicing for 3 years. He began to research where to start his own shop and he found that in

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Vaniyambadi the competition of jewellery is comparatively low than other place. He set up his
own shop in 1990.

Goutham researched the customer taste where the women were increasingly opting for
fashionable and lightweight jewellery instead of traditional chunky jewellery. There was a rise
in demand for lightweight jewellery, especially from consumers in the 16 to 25 age group, who
regarded jewellery as an accessory and not an investment. The new millennium witnessed a
definite change in consumer preferences.

Goutham had 500 gram of gold as an investment and he started to get new design from sellers
from different part of country like Chennai, Mumbai, Coimbatore and Kolkata. He started to
gain the reputation by providing a good customer service.

Rakesh, being the eldest son of Goutham chand was taken to his store during vacation. When
he was 15, my father made him a responsible person.

The objectives of the business are to exceed customer's expectations in design styles, quality
and customer service and increase the number of products sold by 20% each year.

The mission of the business is to design, make and sell high quality fashionable jewellery
designed primarily around gemstones. We exist to attract and maintain customers through our
unique combination of designs, quality, and customer service and fashion recommendations.

He also advised us on how to behave with the customers. He used to say all the time that the
customer is the king and if he doesn't come to the store, we are nobody.

He said, less margin and more turnover would lead to good reputation in the society. So, we
grew up listening to even the smallest piece of advice from my father.

He used to tell us that we must stock what the customers wanted the most. He was of the
opinion that we should never buy what we liked but only what the customers liked.

He was also very particular about the quality of the goods we sold. He was totally against
cheating customers.

The below chart describe the growth of the business over the years and currently the business
is running with an ease. The growth of gold from 500 gm in 1990 to 2.2 kg in 2017.

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Gold(in kg)
2.5

1.5

0.5

0
1990 2000 2010 2017

Gold( in kg)

FAMILY PARTICIPATION

Soanraj

Goutham

Rakesh Mahesh

First generation:

Mr. Soanraj, father of Goutham was a farmer.

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Second generation:

Goutham chand being the head of the family take care of the business.

Renu helps in providing various ideas to improve the business such as business decisions.

Third generation:

Rakesh assist the business with his father and he helps in booking keeping and purchase and
sales.

Mahesh help in creating email, website, web design and business card for the business

Women are often in the office, on the computer, or doing the bookkeeping and have even been
described as "invisible." These same capable women, however, often become "instant
entrepreneurs" when their husbands are ill or die, or when an economic crisis forces them to
assume the husband's role. Such gender stereotypes are slowly changing.

Decision making and problem solving: we decide on the issue and communicate the possible
options and help take a decision in the family.

The role of communication is very important because it is the only way we can make our family
members understand what is important to the business and where we can be more profitable.

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MANAGEMENT DEVELOPMENT

Management succession within a family can be a blessing from the standpoint of all concerned,
but it is, without question, the most difficult issue most family-owned, family-managed
businesses will ever face. In almost every case, the time to confront this ultimate issue is sooner,
rather than later.

At the risk of trivializing a complex process, I offer these basic guidelines for management
development and succession within a family. The guidelines can be used effectively to
stimulate discussion of critical issues with clients.

 Require young family members to gain full-time experience elsewhere for at least
2-5 years after college, before allowing them to work full-time for the family firm:

Part-time or summer jobs in the family business for teenage family members
are fine for orientation and motivation purposes, but it is almost always a
mistake to permit full-time employment without substantial post-college
experience elsewhere. Let the younger generation prove themselves to someone
else. Let them taste success without having to wonder whether they have earned
it on their own. Let them taste failure without having Mom and Dad standing
by to bail them out. If they begin to succeed in someone else's business, but they
still want to join the family firm, bring them back. If they begin to succeed, but
prefer to stay away, let them build their lives elsewhere; probably they will be
healthier and happier

 Give younger family members line responsibility and freedom to make mistakes
when they become full-time employees.

Successful entrepreneurs are almost invariably people who know how to "do it
or sell it' They know how to produce a product, provide a service, or sell some
product or service. Their line management skills are critical elements of their
success. Assisting Mom and Dad, managing the office, or keeping the books
won't do the trick. Businesses that survive and flourish well beyond the typical
quarter-century life cycle mentioned earlier are almost always businesses that
have been reinvented periodically, usually by new generations of management.

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 Avoid overlapping the management responsibilities of family members.

Much of the friction and discord in family-owned businesses arises because


family members feel free to second-guess and criticize their relatives and dislike
taking suggestions or orders from them. Where work assignments overlap, the
probability of friction increases, and serious problems may arise. A clear
separation of responsibilities and authority, together with clear physical
separation at work, can go a long way toward reducing tensions and promoting
harmony in the family.

 Minimize the overlap between the business and the family that owns it.

A family's place of business should be exactly that. Family activities and


discussions belong elsewhere. The reverse is also true: family homes and events
should not serve as extensions of the plant, store, or office. With rare exceptions,
home-based businesses should be moved out of the home, as soon as finances
permit. A man hired a boat builder to build an ocean-racing sailboat in an unused
portion of his machinery factory. The boat turned out nicely, but I suspect that
the impact on employee efficiency and morale cost far more than the rental cost
of a suitable space in which to build the boat. Most of the time, such
arrangements are ego! power trips on the part of business owners or else risky
attempts to run personal expenses through the business.

 Begin succession discussions and planning early; make a written commitment at


the earliest possible date.

When young family members begin fulltime employment in their family's


business, it should be viewed as an experiment which may or may not lead to a
career commitment on either side. If the older generation is uncomfortable with
this and unwilling to make such a commitment, the younger family member
should interpret this as a clear signal to move on, seeking employment
elsewhere in the industry or starting their own business.

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STRATEGIC BUSINESS PLAN

 MARKETING STRATEGY

We are targeting women in India. In addition, women are the primary end consumers of
jewellery, it's natural for our Jewellery Store to spend most of its marketing resources targeting
this largest market. sell jewellery through four main formats, which are uniquely positioned to
address different consumer segment needs. Firstly, ‘The Exclusives’ range offer high-end
luxury jewellery; secondly, ‘The Semi-Exclusives’ range offer stylish and sophisticated
products for the discerning consumer; thirdly 22K and fourthly 18K range offer trendy,
fashionable and stylish products at competitive prices.

 UNIQUE SELLING PROPOSITION (USP)

The Jeweler Store will offer personalized fashion consulting to our customers with custom
jewelers making service. We will demonstrate our extensive knowledge in jewellery color
combinations and current fashion design trends. We will offer advice on which jewel goes best
with which clothing. We will be the one source people turn to when they need advice on how
to accent with jewelers.

 SALES STRATEGY AND POSITIONING

The Jeweler Store will be centrally located in the Malls and easily accessible for customers.
stores will reside in the middle of one of the corridors thereby, having high visibility.

Based on our knowledge and experience with fashion design combined with our skills at
designing and making jewellery products we are a full service jewellery store which sells
jewellery tailored and customized to each customer.

We understand that we will have to prove our Company's worth to customers to earn their
business. As equally important, we need to sell both the Company and products.

We will approach sales from a salesperson-customer relationship basis. All sales


representatives will be trained and encouraged to assist customers in a personal and engaging
manner. By gathering key customer information and seeking design feedback on our products.

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With regard to all products, we will continue to stay abreast with the latest fashion trends in
order to offer our customers new, trendy jewelers.

 Analysis of SWOT

Strengths
Strong relationships with suppliers that offer credit arrangements, flexibility and response to
special requirements.

Excellent and knowledgeable staff, offering personalized customer service. The jewellery
stores set itself apart from the competition by providing customized jewellery designs.

Weaknesses
Access to additional operating capital.
Owners are climbing the retail experience curve.

Opportunities
Increase in higher income of target market.

Addition of other jewellery related products and services.

Threats
Local and emerging competitors.

Shoplifting.

Sales tied to economic growth.

 Expansion of the business to capture the market.

 Planning helps to increase efficiency and effectiveness of the business.

 Promoting the business through sales promotion, publicity and advertisement.

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