Case Study

Characters

Claire- mother CEO of the company

Mark and Emily-Children from the first marriage

John and Sara- children from Second marriage

Tom and Frank- children from third marriage

Peter- son from fourth marriage

Case study family business

Thomason’s travel agency 

The Family

In 1965 Claire married for the second time. After her first marriage ended a year before and giving birth to two children. Her second marriage didn’t last long as well she was a rich woman was not in a need for a man to depend on. She gave birth to another two children from her second marriage that lasted for only 3 years. Between 1961 and 1971 Claire gave birth to 7 children from 4 marriages.

Claire owned one of the largest travel agencies in the Florida one her father owned and gave it to her, as she was his only child. She was a successful woman and knew how to run the business even if she was pregnant and have young children.  The fact that she didn’t let any of her personal life issues stand in her way makes it an achievement but she did more than that, the business was making around 3 million dollars in 1958 when she took charge of the company after her father passed away, she was 24. By 1970 the tourism industry expanded in the Florida and it started to grab everyone’s attention, but it wasn’t until 1990 that tourism truly flourished in the Florida, started attracting a host of international attention. The company was making 15 and 20 million dollars a year all that with her running the business.

 Her children were all growing up with her even after the got divorced 4 times. She didn’t remarry after and dedicated her time to her 7 children and work. In 2001 Claire’s oldest son Mark was helping her run the business acting as a right hand. While John, Peter, Frank and Tom were all working as well within the firm and helping their mother and old brother they didn’t have the same influence as Mark had. Mark was the only son from her first marriage and John the only one son from the second were closer to each other than any of their siblings Tom and Frank were from the third marriage and Peter was from the fourth. They were all close in terms of age but none of them was qualified like Mark he was taken to work earlier than his brothers. The sisters were out of the picture Emily and Sara had other interests and didn’t want the same life as their mother. In 2002 Claire decided it was time to retire and that her sons are now capable of taking over. All got a long well when Claire retired with the 5 sons all managing the firm under Mark’s guidance; it wasn’t until Claire’s illness with level 3 cancer that problems started between the brothers with Tom, Frank and Peter worrying about what their fate will be after their mother’s death.

The dilemma

Claire faces a tough decision on how to split the company between the brothers and at the same time insure that their sisters are taken care of without the help of anyone not even their brothers. The issue of who to take charge after she’s gone and the extent of power that she wants everyone to have when she’s gone came to her mind to ensure everyone has a certain amount of power and decision making authority.

Tom and Frank will want to sell their shares that will be given to them by Claire, Claire as well will ensure the brothers are not to sell their shares for the first five years. And will ensure that each son or daughter will only give their shares to one offspring to work for them in the board even if these shares are shared between that son or a brother or a sister of his.

Last Days

In 2004 Claire was diagnosed with lever 3 lung cancer. For a women her age it would have been difficult for her to recover as her body can’t cope with the chemotherapy, meaning Claire only had a few months left at best, with a chance of making it a couple of years if she chooses to continue with the chemotherapy. After being diagnosed she wanted to secure the future of her children and her business as well ensuring that each of the siblings could benefit from the business whether they want to work in the company or not. At first the three young brothers started to worry about their fate after their mother especially that they weren’t as close as the siblings from the first two marriages.

When Claire heard that her children might be willing to sell the business to an outsider and with the potential of someone from outside of the family to have a say in the business after she’s gone, she made sure that no one of the sons or daughters are allowed to sell their shares in the first five years that they own them in order to give them a chance to work together and see how the business is turning around to be in a compulsory way, then they have the option if they want to sell their shares and they see that they could benefit for the money they’ll pull out of the business somewhere else then they could only sell their shares to one of their brothers or sisters to still ensure that the family business will always be ran by family members even if some of them don’t want to be part of the business anymore.  

Different opinion

When Tom, Frank and Peter heard about their mothers plan they disagreed stating that each one of them should have the choice to continue in the family business or branch out to something else and that they don’t want five years of their lives wasted in a business that could in the long run not benefit them as much as if they opened a new business in another sector. When Claire heard the arguments of her sons she started to doubt herself and didn’t know what to do and still do what’s on her mind while satisfying her children in the way. She was worried that an outsider could go in and take control of the company while there’s still some of her sons or daughters unwilling to sell their shares. Tom in the same year his mother got sick got an offer from a multinational insurance company with a good salary and potential earning more money than what he’d make at his own firm with his siblings the job offer came through one of his friends that recommended him for the job that’s the primary reason Tom wanted to have the option of selling the business if it came down to it. Peter and Frank were both interested in a idea they wanted to use the money they’ll get after selling the business to open a new company specializing in importing alcohol from South America. The idea itself made Mark and Claire get worried about the both of them not only was the idea dangerous and in a competitive industry that starting from the beginning in it is near impossible they also thought that both Frank and Peter didn’t have the expertise to launch a business the size of the one they want. Doubting both Frank and Peter, Claire at the moment sees that tying down the brothers to the company and its money for 5 years could get rid of the idea and get it out of their plans for the future, she was the one that had the keys to decided whether her children could use the money and shares straight away in something else they want or not.  

Sibling rivalry

Claire has a big family she loves each and every one of them dearly and didn’t differentiate between any of her children. She made sure that each one of them was treated and taken care of equally when they were younger but due to her children not trusting each other her business could face problems within the management after she’s gone if problems just started to occur when she’s alive. She fears that the brothers won’t get along and that they would fight for management and shares in the business if she doesn’t do that herself before she leaves them. Brother rivalry is common in family businesses; brothers may not get a long for more than one reason whether they have different views or different ways of running the business, that’s why trust between brothers from four different fathers could be difficult in business when two or three of them are doubting the rest and are afraid that they won’t be able to have a role in the business because of their brothers. Mark and John both threaten Frank, Tom and Peter by how close they are to each other and their understanding of the business that surpasses that of the younger three brothers.

Issues

Different Career paths

Frank and Peter both wants to sell their shares and enter a new business with the money they acquire from their mother’s business. They always wanted to start something new and something they chose for themselves, even though they don’t have the knowledge to enter the alcohol market, they see it a business that can make a lot of money quickly if the job is done right. Different career paths in families could be a cause for a business to fail if the 2^nd generation has members that are not willing to work for the family business and sell their shares to someone else instead, or if they might keep their shares and do nothing but take money from the businesses profits. This could cause a business to fail when family members start neglecting their family’s work and concentrate on their own business.

Security 

Claire’s children all want security they want to know that their lives are stable and that they have the finances needed for the already planned near future at least. Security could cause brothers to decide to sell their shares to guarantee that they’ll get money from their family business that they could use for their own business in the future. Tom, Peter and Frank are an example of that, they wanted to sell their shares fearing that Mark could exclude them or that the business could fail after their mother is gone. Numerous reasons can force family members to leave family businesses but if the business doesn’t guarantee security in the future members could choose to get out of the business and work with this money somewhere else.

Theory

Succession planning

Succession planning is an important part of the business if this business wants in to future to continue making profits and expanding. The company needs to put a set of rules to ensure that the business wouldn’t be harmed by changes in management whatsoever. The business needs to set rules on the 3^rd generation and how the 3^rd generation should be allowed to participate in the business in the future. Without any succession planning businesses could face chaotic battles between family members over control of the business that’s why succession planning is necessary.

Three cycle model of family business

The ownership, the family and the business are the three dimensions of this theory. The theory explains that the three dimensions are connected to one another and that if one of them is affected the other two will, for example the business will suffer is there is problems in the bored, like there is now with Claire’s children, and if the family suffers for any reason that will have an effect on the business and possibly ownership as well.

Envy within Family business

Jealousy and envy in families could ruin them, businesses are fragile and jealousy could be the only reason for it to fall and never be the same again. For example in the case study Tom, Frank and Peter envy Mark because of the power he’s got after his mother in the business.