Exam essay Example | Topics and Well Written Essays - 750 words

Exam - Essay Example Family owned businesses tend to feel that the business environment around them is not secure enough for them to venture into the unknown (Cromie et al. 1995, p.11). Lyman Orchards is an example of such a family owned business venture which, despite having existed for more than two hundred years and been run by multiple generations of the Lyman family, it has not been able to grow into a multinational conglomerate as has been the case with non-family businesses such as McDonald’s and Target. Moreover, unlike non-family businesses, family businesses do not rely on formal planning and instead, their management systems are based on less formal control as well as fewer incentives. The informal nature of such businesses is often based on their being wholly owned and managed by members of the same family and these do not need personal incentives to work in the business because they work for themselves. In family businesses such as Toyota and Samsung, members of their founding families have been active members since they were founded and this has been as a result of the long tradition as well as personal interest that has been established over the years. When it comes to finance, non-family firms have the advantage because they can easily gain finances through making offers at the stock market (Coleman and Carsky 1999, p.73). This is not the case with family firms, which if the owners do not have ready finances to invest in the business might bring about financial ruin. Therefore, while family owned businesses are more likely than not to achieve greater profitability than non-family businesses, the latter have an advantage because they achieve higher growth levels. A family business such as the Trump Organization faced some financial problems in its history as a result of being internally financed by the owners and such a scenario becomes extremely