The Family Dynamics And Management Of Industrias La Vega
1222 Words5 Pages
There have been issues regarding the family dynamics and management of Industrias La Vega that have been brought to my attention. Some of the issues that were brought to my attention have been addressed, which is commendable, but will still be discussed. However, the recommendations are still being made in order to continually improve the family dynamics within the business. The recommendations that are being made should only be implemented if it is the best course of action for your family with regards to the business.
The first issue that occurs within the family dynamics regarding the business is lack of transparency. Lack of transparency occurs when family members do not share knowledge about the business with each other. This…show more content… Then, as a long-term solution, the rights of shareholders and responsibilities of the manager to shareholders should be put in writing in the form of policies and procedures. It might also be in the best interest of the business to create policies regarding dividend payments and liquidity because this appeared to be an issue also.
The second issue that is occurring within the family is a combination of an established entitlement culture and the erosion of the entrepreneurial culture. These issues arise when family members have an unsustainable culture of consumption and are using the business as an ATM. This is entitlement culture was established when Francisco Sr. would grant every request for money, new houses, and trips. The entitlement culture continued when Francisco Jr. became CEO and began using company funds to purchase a luxury car, helicopter and a boat that were “essential” to his executive post. The recommendation for immediate action is to stop the granting of requests for family members, if it has not already. Also it is recommended that Francisco Jr. be directed to stop purchasing luxuries with company funds for his personal use. Long-term recommendations to solve these issues include writing a family constitution that includes a guide to the family’s relationship to wealth and the business. Another recommendation would be to create policies that describe a process for purchases using company funds, and what entities the funds can be used to purchase.