Family Business Case Study: Laboratorios Roe

Violeta Cuba Cavero S00602695

* Due to privacy policies financial figures have not been able to be revealed

2nd of April 2013

History

In 1953, a Doctor called Carlos Roe Gmez founded Laboratorios Roe in Lima, Peru. At the beginning, it was a general clinical laboratory; nowadays, after more than 60 years, Laboratorios Roe is considered as the first private centre of clinical analysis in the country. Its principal competitor is

Laboratorios Blufstein, which has been in the market since 1955 and currently has thirteen centres; ten of them are located inside clinics.

Important Dates and Facts

In 1962 the Laboratory started to operate in one of the most recognized clinics of Lima: San Felipe Clinic. In this manner, the laboratory had

the opportunity to offer their services to patients inside the clinic.

Due to the high demand, in 1982 the Laboratory obtained two automated machines for high-volume biochemical analysis technology. These machines are capable of doing 360 different tests per hour.

In 1993 the Lab started to offer tests for detection of risk of Down syndrome for pregnant women.

In 1997 they launched their web page and in 1998 patients were able to check their results online (Web page: http://www.labroe.com).

From 2008 to 2011 they started to open new centres across Lima City.

 Services offered

Since the beginning the company was the pioneer in implementing their service at home across Lima city. Patients can require this service at the comfort of their own home any time, any day. This was specially created to address the needs of old or sick people that were incapable of going directly to a centre.

Because the company is always looking for satisfy peoples health needs, Laboratorio Roe offers more than 3,000 different types of analysis (HIV, Hepatitis A-B-C, blood tests, among others) and diagnostics giving as a result an approximately of 750,000 analysis per year.

Furthermore, the patients are able to check their results through the web page. Once a patient has had an analysis, it has the opportunity to pay before the service or to pay once the analyses are ready. If they pay after the service, they only need to log in to the laboratories web page with a user name and password and they will be able to see all their history analysis. However, this service will only be available if the patient has paid after having the analysis.

Moreover, this company offers a call center where patients can call and solve any doubts they might have about the services offered, prices and even the laboratories locations.

Additionally, Laboratorios Roe has recently launched a new blog called

roewebnews. This blog offers news every week and patients can read about
health news such as new ways to prevent diseases, new types of analysis, description of the analysis they offer, among others.

 Present Currently, the Laboratory has four diagnosticians clinical pathologists; one clinical haematologist and over 100 medical technologists specialized in the latest laboratory techniques. Additionally, they are around 180 employees working in the company.

Nowadays the company has more than 15 centres located all across Lima and one centre located in on of the main cities of Peru: Arequipa. Part of their future plans of expansion is to open other laboratories in other principal cities of Peru such as Cusco, Trujillo and Chiclayo. With this, the company will have presence in the principal cities, where the majority of the population is located.

 Strategic Alliances

Laboratorios Roe has certain alliances with other Institutes and Laboratories around the world. The purpose of this is to be updated with the latest Quest

information about medical technology and certain diseases.

Diagnostics Nichols Institute, de California - USA, is their most important alliance. alliances: Additionally, the following Laboratories also are part of their

Speciality Labs Baylor DNA Diagnostic

Laboratorio de la Clnica Mayo en Minesota,

Laboratory. Immunosciences Lab Inc. Immunolab laboratories.

UCSD

Autism

Research

Laboratory Laboratorio Balagu Center in Spain

Staff Doctors Dr. Carlos Roe Battistini (family member) Dr. Eduardo Roe Battistini (family member) Dr. Jorge Manuel Leiva Beraun (non-family member) Dr. Jos Glvez Daino (non-family member) Dr. Juan Carlos Gomez de la Torre (non-family member)

Administrative Sr. Cristian Concha Girardi General Manager (non-family member)

 None of the non-family members know well the possible future generation. This makes the succession planning a difficult transition due to the fact possible conflicts might appear. Non-family members that have a strong

relationship with the company might feel it should be their turn to take over the company. However, this will never happen according to the family policies. Unless, none of the possible future generation is interested.

Family involved

Currently, two brothers from the second generation, Carlos and Eduardo Roe, own Laboratorios Roe. Each of them has a different shares percentage,

which cannot be revealed due to confidentiality. None of the wives of both brothers are involved in the company. Until now, none of their sons or

daughters (10 in total) is involved in the business (See appendix 1 for the family tree).

Family Policies

Along with this long trajectory, family members have always preferred to not involve the wives in the business. However, sons or daughters are more than welcome to join the business. At the moment, one of the most important requirements is that any family member who wishes to run the business in the future must be a doctor. However, due to the fact that at this moment none of the future generation is a doctor, it might be an opportunity to change these policies.

 What is going to happen next? Ownership Structure In ten years or less, members of the second generation will be ready to pass their business to the third generation. However, at the moment no family member is interested yet in taking the business. None of the sons or

daughters is a doctor, which will make the succession planning tough giving the fact every family member has been a doctor. It could be possible that the third generation starts getting involved and the current owners chose not to withdraw their position, on the contraire they can continue running the company until they consider they can make the third generation full owners of the shares.

Shared Leadership If Carlos and Eduardo keep on thinking that the next generation who gets in charge of the business should be a doctor, then one of their sons or daughters will have to follow their path. Otherwise, no one knows what will happen. Or may be, they will change their mind and let the third generation run the business without medical knowledge or they will share leadership with the any son and daughter who is interested in getting involved in the business. If this happens, it is considered it will be necessary to estipulate each role and make clear that now both parts are leading the company.

On the other hand, the business will continue expanding across the country and take more presence in the market and always with its high quality standards. Therefore it is necessary more support to continue growing and

 the current owners considered the family members are the best choice to do so.

Furthermore, there is an International Company interested in buying their shares. The name of the company cannot be revealed due to confidentiality. If the current owners decide to sell the companys shares, then this family business will end in the second generation. In this manner, the future

generation should think twice if they want to be involved or not.

Theories and frameworks

Family business can face three different types of challenges, modernising outdated skills, managing transitions and raising capital (Leach, 2007). In this particular case, the second generation considers the business should be run by a certain way, this is, preferable by a doctor. However, it might happen that the third generation prefers to manage the business from an administrative perspective. This might be a significant change that could

affect the relation between the family members.

Furthermore, family businesses differ from any other business in terms of values, beliefs and behaviours they have. Thus, there are many factors in familys relationships that can affect the business. An effective way to

understand this is looking at the relationship between the family and the business is to see both, family and business, as systems (Leach, 2007) (See Appendix 2)

The family system is based on shared emotions between family members. While the business system is based on tasks and results.

It is possible that in Laboratorios Roe, both brothers share values and emotions and have strong relations with their sons and daughters. However, for them it is crucial that the next generation should have a broad knowledge about medicine and only having a Degree in Business Administration is not enough to run this company and obtain exceptional results as up to date.

The family business dimension, family, ownership and business (see appendix 3), takes an important role in the succession process. However, in order to have a successful succession, it is indispensable for these dimensions to be related between them and work together appropriately.

Questions

1. What will happen if the third generation decides not to follow a medical future? Will Carlos and Eduardo let the third generation to run the business only with a business administration degree?

2. Since the third generation doesnt have any medical knowledge, it is hard for them to share and understand the way of thinking from a medical point of view. Will the third generation consider studying

medicine, so the business doesnt get affected?

3. Will Carlos and Eduardo agree in hiring a non-family member as a doctor and let the third generation run the business with their current studies?

4. Carlos and Eduardo would be interested in sharing the leadership with any member of the third generation who wants to get involved? Will this affect the future of the company?

References

Datos Peru (n/a) Available at: http://www.datosperu.org/peru-laboratorios-roesa.php (Accessed 20th of March 2013)

Directorio

empresas

(2010)

Available

at:

http://directorioempresas.weboperador.pe/go.php?site=MzU6MjM3OjE2Njgx (Accessed 20th of March 2013)

Laboratorios

Blufstein

(2012)

company

web

page.

Available

at:

http://www.blufsteinlab.com/index.php?mod=pagina&com=pagina&id=resenahistorica&opcID=32 (Accessed 2nd of april 2013)

Laboratorios Roe (2012) Company web page. Available at: www.labroe.com (Accessed 20th of March 2013)

Leach, P. (2007) Family Businesses The Essentials London: Profile Books Ltd.

Vries, M. and Carlock, R. (2010) Family Business on the Couch: A

Psychological Perspective Chichester: John Wiley & Sons Ltd.

 Appendix

Appendix 1: Family tree

Appendix 2: Family System

FAM ILY Emotion-Based Subconscious behaviour Inward-looking Minimising change

FRICTIO N AND CO NF LICT

BUSINESS Task-based Conscious behaviour Outward-looking Exploiting change

Source: Leach, 2007

Appendix 3: Family business dimension

Source: Vries, M. and Carlock, R., 2010