Family businesses must take serious action to overcome challenges facing them

Sponsored by the National Bank of Dubai, the workshop was held on the sidelines of the Arab Strategy Forum, which ends in Dubai today. The workshop was held on the second day of the forum and featured Faranak Foroughi, Head of Private Banking, National Bank of Dubai; Naguib Sawiris, Chairman & CEO of Orascom Telecom; Robert Douglas Dowie, General Manager of National Bank of Dubai; and Samir Al Ansari, CEO of Dubai International Capital.

Dowie said: "The history of family business says that 66% of these companies fail to continue their business as the second generation of the family takes over. The reason is the lack of a clear future vision or policy that helps sustain the business in the long run."

Foroughi outlined several actions that families should take in order to ensure the success of their business and stressed the importance of self training and updating one's self with the latest aspects in business and administration and establishing a board that comprises family members to manage the family business according to the best criteria of development.
Professional management
According to Foroughi, the feeling of being a family member gives them a strong sense of pride which in fact encourages them to develop their businesses and maintain its success. Foroughi also stressed on the importance of having high levels of transparency for maintaining the success of family business.

Naguib Sawiris expressed his apposition to family-run businesses as it makes the decision-making process hard for the manager of a company who has to deal with the existence of many shareholders. On the other hand, if the company is owned by one person only, it will be easier for this owner to take decisions, especially if those decisions are bold and risky.

He said, "A manager might take a decision which could have a negative short term effects and major results in the long run. And this decision might not win the approval of all shareholders, which might create some sort of a disagreement and hinder the progress of business in the company accordingly."

Samir Al Ansari said that the existence of well-known international businesses and companies and the new business aspects that have emerged from globalization and the changes that came along with it, constitute the major threats the family businesses are facing.

Al Ansari called for family businesses in the Arab world to learn from the examples of leading international family business which have maintained their success from one generation to another.

The Arab Strategy Forum has six Organising Partners and two Media Partners. They are Emirates National Oil Company Ltd (ENOC), Abraaj Capital, PricewaterhouseCooper, DaimlerChrysler, National Bank of Dubai and Gulf News, in addition to Media Partners Al Sharq Al Awsat and CNN. The Arab Strategy Forum will provide valuable insights, which will help in improving the status of the Arab World.