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Family Business

In

Dynamic Global Change

Table of Contents

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Current Landscape Key Challenges

The Way Forward

Table of Contents

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2 3

Current Landscape Key Challenges

The Way Forward

Family Business DNA in the GCC

Family businesses in the GCC are categorized with the following:


Domination of the economy 4 out of 5 family businesses are run based on family relationships & trust

instead of structured & proven managerial systems


Outperformance is correlated with ownership governance & business focus Lower financial performance with hand off to second & third generation New and unprecedented challenges are impacting survivorship

Family Business DNA in the GCC

and impacted by the following drivers:


Special access to capital, business network and information More concentrated control within families Traditional rules of succession Privately-managed internal disputes

Passion for business ventures

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Current Landscape Key Challenges

The Way Forward

Major Challenges

Family businesses are faced with multi-dimensional and rapidlydeveloping challenges that have not existed together before

Economical

Political

Internal

Demographic

Structural

Environmen tal

Major Challenges - Economical

Economical challenges are appearing throughout the world


Economical Challenge 2008 Financial Crisis
Shift of economical powers

Implications Stagflation versus Inflation

Currency risk
Increase of business risk (volatility) High unemployment Wars versus Shift of political powers

Shift of debt from private sector to


governments

Globalization

Global imbalance including Euro


zone

Major Challenges - Political

Political challenges are rising throughout the Middle East and other countries
Political Challenge Democratization versus social unrest Implications Social instability for years to come

War versus vested interest of


global power Quest for social programs Civil wars Arab - Israeli conflict

Major Challenges - Demographic

Demographic challenges are putting pressure on future plans


Demographic Challenge High growth in developing countries Implications Uncontrolled youths

Generation conflicts
Migration of talents Social class unrest

Low or negative growth in


developed countries Cultural influences

Cultural conflict Role of women Political power sharing Social networking


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Major Challenges - Environmental

From earthquakes to climate change, environmental change is never predictable


Environmental Challenge Crises Japan nuclear issues Water pollution Climate change Implications Reduction of agriculture output

Limited land use


Search for new source of energy Wars to be fought over water

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Major Challenges - Structural

MENA region trades significantly less than expected


Structural Challenge Inefficiencies versus big governments Implications Capital migration

Lack of adequate infrastructure


Difficult access to finance Weak educational systems

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Major Challenges - Internal

Internal family feuds businesses fragile


Internal Challenge Succession challenges Management talent versus wealth ownership Venturing beyond core competencies Intellectual property verus

and

weak

structures

render

family

Implications Business failure

Strategic and financial planning

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Current Landscape Key Challenges

The Way Forward

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The Way Forward

A strategy mix to control the challenges:

Short Term

Long Term

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The Way Forward (1/2)

On the short term

Realistic pricing of volatility Simplifying business model, better focus and making it dynamic Focus on regional investments Dont diversify globally, rather partner globally Cash Commodities is king Exploit social & media networks

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The Way Forward (2/2)

On the long term

Recognize dynamic change in behavior Gain intimate understanding of your long-term customers (the youths) Invest in innovation through partnerships Outsource Distinguish between wealth and talent Demand smaller governments

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