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Case Studies by Morten Bennedsen

29 case studies

by Publication Date
published: 27 Nov 2017

  • Topic: Family Business
  • Industry: Radio, Television, Consumer Electronics
  • Region: Asia

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Abstract:
This three-part case covers the history of Samsung from its origins as a small trucking company to one of Korea’s largest conglomerates. Part A, “Drivers of Success, Family Assets and Business Strategy”, charts the growth of Korea’s the export-led economy after the end of Japanese occupation in 1945, driven by a handful of family-owned ‘chaebols’. Founder Lee Byung-chull’s trucking business, set up in 1938, diversified in the aftermath of the Korean War, as he forged a strong political network that enabled him to embed his family’s influence and assets in the business strategy. Part B, “Heart Attack Puts Succession Planning at Risk”, describes how the ill health of the second-generation leader Lee Kun-hee deprived the firm of a clear succession plan. As the de facto leader of Samsung, his son had to build up his power base to assume the role in the context of a complex ownership structure. Part C, “Court calls time out on Lee Jae-yong”, examines how the de facto heir was convicted of bribery and given a five-year prison sentence, prompting speculation that he would run the Samsung empire from his cell.

Pedagogical Objectives:
The three parts can be used together or as stand-alone cases in the classroom. Part A (16 pages) explores the success of a family business with modest beginnings, transformed within a generation into a major conglomerate; the role of the second-generation leader who transformed the export-driven firm into a global company with factories and R&D facilities all over the world; and the role of family relationships that enabled the Lee clan to retain ownership over the sprawling enterprise. Instructors can use the shorter Part B (11 pages) to look at the Lee family and the choices available to the de facto heir after his father’s heart attack; the tax avoidance measures he must have taken (in view of Korea’s hefty 50% tax on estates of this size); and the much publicized merger of two Samsung affiliates that was clearly not in the interests of minority investors. Part C (10 pages) enables discussion of the legal ramifications of illegal behavior and the possibility of reforming aspects of the family-run chaebols, which critics blame for the state of the economy today.

Keywords:
Samsung, Lee Jae-Yong, Korea, Lee Byung-Chull, Chaebol, Lee Kun-Hee, Lee Boo-Jin, Lee Seo-Hyun, Paul Elliott Singer, Elliot Management, Park Geun-Hye, Park Chung-Hee, Samsung Electronics, Conglomerates

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published: 25 Sep 2017

  • Topic: Family Business
  • Industry: Household furniture
  • Region: Asia

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Abstract:
The case is about a small family-owned business making fine bone china in South Korea, whose founder was driven by a sense of filial piety, one of the principles of Confucianism. This emphasizes respect for parents, elders and children, and the idea that they will be taken care of in times of need. Exemplary behaviour is expected from children in public in order to reflect well on their family name and ancestors. Fraternity among brothers is also emphasized to prevent disputes arising out of sibling rivalry. The case explores how successive generations kept these values alive within the family, the company, and its employees. It also describes how more recently, Hankook Chinaware has lost significant market share on the domestic front as because of an influx of low-cost Chinese products flooding South Korea.

Pedagogical Objectives:
Instructors can use this case for specific situations in which the principles of Confucianism are being taught. Family business instructors who run courses in Asia-Pacific may find it particularly relevant as it deals with concepts relevant to the region. The case is short and easy to read. From a technical point of view, it can be used to shed light on the transfer of pottery skills from one generation to the next. Instructors can also use it to highlight how external market forces can transform a niche business into a commodity industry where profit margins are squeezed beyond breaking point.

Keywords:
Hankook Chinaware, Confucianism, South Korea, Porcelain, Luxury Chinaware, Dinner Plates, Dinner Plates, Pottery, Filial Piety, Wedgwood, Prouna, Vases, Josiah Wedgwood, Fine Bone China

published: 03 Jul 2017

  • Topic: Family Business
  • Industry: Apparel
  • Region: South America

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Abstract:
A well-known lingerie retailer in Colombia, Leonisa is a family-owned company that barely survived a second-generation succession crisis. Brothers Joaquín and Julio Ernesto Urrea founded the firm in 1956, and over 50 years built one of the most recognizable brands in Latin America. While they each had an equal stake in the company, their respective families were not of equal size: Joaquín had 11 children including nine boys, Julio had three daughters. While the girls were interested in design and fashion, the boys were keen to create satellite ventures around the core brand. When one of the co-founders died, a family dispute erupted over whether the dividends should be plowed back into the business or distributed to the shareholders. A mediator obliged the warring branches to reach a settlement that would allow Leonisa to survive. The ousted sisters eventually had their own success story by launching a new business based on their core competencies.

Pedagogical Objectives:
The case offers an opportunity to learn from a family-run company that survived a succession crisis, requiring students to think about family differences from a shareholder point of view, and the role of mediators in saving warring family branches from destroying the firm. It underlines the need for co-founders whose families have different interests to have a long-term plan to prevent a clash of clans. In this instance, one branch got out of the original business and constructed a new business based on their fashion and design skills. Students of family business in Colombia and Latin America will learn lessons from a family dispute that was ultimately resolved.

Keywords:
Leonisa, Ellipse, Urrea, Women’s Underwear, Lingerie, Colombia, Brassieres, Ana Patricia Urrea, Urrea Jiménez, Urrea Arbeláez, Fernando Urrea, Carlos Ignacio Urrea, Julio Urrea Jiménez

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published: 29 May 2017

  • Topic: Family Business
  • Industry: Apparel
  • Region: South America

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Abstract:
A well-known lingerie retailer in Colombia, Leonisa is a family-owned company that barely survived a second-generation succession crisis. Brothers Joaquín and Julio Ernesto Urrea founded the firm in 1956, and over 50 years built one of the most recognizable brands in Latin America. While they each had an equal stake in the company, their respective families were not of equal size: Joaquín had 11 children including nine boys, Julio had three daughters. While the girls were interested in design and fashion, the boys were keen to create satellite ventures around the core brand. When one of the co-founders died, a family dispute erupted over whether the dividends should be plowed back into the business or distributed to the shareholders. A mediator obliged the warring branches to reach a settlement that would allow Leonisa to survive. The ousted sisters eventually had their own success story by launching a new business based on their core competencies.

Pedagogical Objectives:
The case offers an opportunity to learn from a family-run company that survived a succession crisis, requiring students to think about family differences from a shareholder point of view, and the role of mediators in saving warring family branches from destroying the firm. It underlines the need for co-founders whose families have different interests to have a long-term plan to prevent a clash of clans. In this instance, one branch got out of the original business and constructed a new business based on their fashion and design skills. Students of family business in Colombia and Latin America will learn lessons from a family dispute that was ultimately resolved.

Keywords:
Leonisa, Ellipse, Urrea, Women’s Underwear, Lingerie, Colombia, Brassieres, Ana Patricia Urrea, Urrea Jiménez, Urrea Arbeláez, Fernando Urrea, Carlos Ignacio Urrea, Julio Urrea Jiménez, Wicfe, Succession, Next Generation, Education, Entrepreneurship, Leadership

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published: 25 Apr 2017

  • Topic: Family Business
  • Industry: Papers and Allied Products
  • Region: South America

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Abstract:
Carvajal traces the 110-year history of one of Colombian’s oldest family-owned firms from a small print shop to one of the largest paper product conglomerates in Latin America. Founded in 1904 by Manuel Carvajal, a Colombian educator and erstwhile politician, the company has contributed to Colombia’s economic and intellectual development ever since. By the 1950s Carvajal was the leading printer and publishing house in Latin America. Although the company benefitted from state protection, a tradition of technical innovation was established – in 1958 it printed the first telephone directory for Bogotá on two-sheet offset press – and thereafter expanded into neighboring countries, diversifying into inter-linked activities. Throughout the 20th century the firm was led by descendants of the founder. In the 21st century, a non-family CEO was hired for the first time.

Pedagogical Objectives:
This strategy-making exercise for a family-run company that has reached a turning point in its 110-year-old history requires students to think about how ‘family assets’ can contribute to the firm during the 21st century. While family firms in Colombia are often associated with conflict and failure, here the challenge is to examine the role of professional management as a force for change. Students also need to consider why many Carvajal next gens have positioned themselves as potential leaders, with skills honed at top international business schools and a deep understanding of the family enterprise. Beyond the leadership issue, discussion can encompass the vision of the Carvajal family as the company expands beyond Latin America. Students of family business in the region will find many lessons to be learned from this exceptional firm and family, and their commitment to its survival.

Keywords:
Carvajal, Carvajal Empaques, Colombian Family Business, Grupo Norma, Publicar, Carpack, Assenda, Propal, Bernardo Quintero Balcázar, Pedro Carvajal, Ricardo Obregón Trujillo, Eugenio Castro Carvajal, Alfredo Carvajal Sinisterra, Adolfo Carvajal Quelquejeu, Wicfe, Succession, Next Generation, Education, Entrepreneurship, Leadership, Governance, Parallel Planning, Strategy, Boards

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published: 25 Apr 2017

  • Topic: Family Business
  • Industry: Transportation services
  • Region: South America

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Abstract:
One of the biggest logistics services providers in Colombia, Servientrega started out as a one-man courier operation on the streets of Bogota in 1982. Jesus Guerrero, an enterprising messenger boy, set up his own delivery service at the age of 18. After attracting more clients than he could handle, he persuaded his sister Luz Mary to join the company and invest her savings in exchange for half of the shares. Before long, Servientrega was growing so fast that they employed other siblings. Jesus gave one brother a 5% share in the business, expecting his sister to do the same. However, she held on to her 50% and used her majority shareholder position to take over, forcing her brother out of the CEO job. Jesus began acquiring new logistics operations that he consolidated into the Guerrero Group, which today has 39 subsidiaries (including Servientrega) and employs 28,500 people. The lawsuits that plagued the former partners and put their venture at risk ultimately prompted Jesus to launch a competitor to Servientrega, RedServi.

Pedagogical Objectives:
The case offers an opportunity to learn from a family-owned company whose principal shareholders got into a dispute with dramatic consequences for their business. A minor dispute between brother and sister over a 5% shareholding led to a series of lawsuits that put the family-owned firm at risk. Students will be challenged to explain why the brother decided to start a new company to compete with the original company that he founded years earlier. The case illustrates how family conflicts can have unexpected results, such as the formation of a rival business.

Keywords:
Luz Mary Guerrero, Jesus Guerrero, Servientrega, Logistics, Colombia, Bogota, Efecty, Redservi, Latin America, Supply Chain, Warehouse, Courier, Transport, Guerrero Group, Wicfe, Fair Process, Communication, Psychology, Gender

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published: 29 Mar 2017

  • Topic: Family Business
  • Industry: Papers and Allied Products
  • Region: South America

Show details ...

Abstract:
Carvajal traces the 110-year history of one of Colombian’s oldest family-owned firms from a small print shop to one of the largest paper product conglomerates in Latin America. Founded in 1904 by Manuel Carvajal, a Colombian educator and erstwhile politician, the company has contributed to Colombia’s economic and intellectual development ever since. By the 1950s Carvajal was the leading printer and publishing house in Latin America. Although the company benefitted from state protection, a tradition of technical innovation was established – in 1958 it printed the first telephone directory for Bogotá on two-sheet offset press – and thereafter expanded into neighboring countries, diversifying into inter-linked activities. Throughout the 20th century the firm was led by descendants of the founder. In the 21st century, a non-family CEO was hired for the first time.

Pedagogical Objectives:
This strategy-making exercise for a family-run company that has reached a turning point in its 110-year-old history requires students to think about how ‘family assets’ can contribute to the firm during the 21st century. While family firms in Colombia are often associated with conflict and failure, here the challenge is to examine the role of professional management as a force for change. Students also need to consider why many Carvajal next gens have positioned themselves as potential leaders, with skills honed at top international business schools and a deep understanding of the family enterprise. Beyond the leadership issue, discussion can encompass the vision of the Carvajal family as the company expands beyond Latin America. Students of family business in the region will find many lessons to be learned from this exceptional firm and family, and their commitment to its survival.

Keywords:
Carvajal, Carvajal Empaques, Colombian Family Business, Grupo Norma, Publicar, Carpack, Assenda, Propal, Bernardo Quintero Balcázar, Pedro Carvajal, Ricardo Obregón Trujillo, Eugenio Castro Carvajal, Alfredo Carvajal Sinisterra, Adolfo Carvajal Quelquejeu, Wicfe, Succession, Next Generation, Education, Entrepreneurship, Leadership, Governance, Parallel Planning, Strategy, Boards

Related:

published: 29 Mar 2017

  • Topic: Family Business
  • Industry: Transportation services
  • Region: South America

Show details ...

Abstract:
One of the biggest logistics services providers in Colombia, Servientrega started out as a one-man courier operation on the streets of Bogota in 1982. Jesus Guerrero, an enterprising messenger boy, set up his own delivery service at the age of 18. After attracting more clients than he could handle, he persuaded his sister Luz Mary to join the company and invest her savings in exchange for half of the shares. Before long, Servientrega was growing so fast that they employed other siblings. Jesus gave one brother a 5% share in the business, expecting his sister to do the same. However, she held on to her 50% and used her majority shareholder position to take over, forcing her brother out of the CEO job. Jesus began acquiring new logistics operations that he consolidated into the Guerrero Group, which today has 39 subsidiaries (including Servientrega) and employs 28,500 people. The lawsuits that plagued the former partners and put their venture at risk ultimately prompted Jesus to launch a competitor to Servientrega, RedServi.

Pedagogical Objectives:
The case offers an opportunity to learn from a family-owned company whose principal shareholders got into a dispute with dramatic consequences for their business. A minor dispute between brother and sister over a 5% shareholding led to a series of lawsuits that put the family-owned firm at risk. Students will be challenged to explain why the brother decided to start a new company to compete with the original company that he founded years earlier. The case illustrates how family conflicts can have unexpected results, such as the formation of a rival business.

Keywords:
Luz Mary Guerrero, Jesus Guerrero, Servientrega, Logistics, Colombia, Bogota, Efecty, Redservi, Latin America, Supply Chain, Warehouse, Courier, Transport, Guerrero Group, Wicfe, Fair Process, Communication, Psychology, Gender

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published: 15 Dec 2016

  • Topic: Economics & Finance
  • Industry: Technology
  • Region: Europe

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Abstract:
On 30 August 2016, Margrethe Vestager, the European Commissioner for Competition, ordered Ireland to recover €13 billion in illegal state aid that the state had granted Apple over a decade from 2003. In allowing Apple to pay close to zero in taxes, she ruled, Ireland had given the foreign company a selective advantage over other businesses paying the regular corporate tax rate of 12.5%. Tim Cook, CEO of Apple, and Enda Kenny, the Irish Prime Minister, appealed the ruling, a process that is still ongoing. The case explores this event from five analytical pillars: 1) the role of Ireland’s low corporate tax rate in attracting FDI; 2) Apple’s decision to allocate its earnings to a paper company in Ireland with no physical presence in the country; 3) the repatriation of foreign earnings to the United States; 4) the transfer payments that Apple makes to the US to pay for R&D; 5) the Commissioner’s decision to impose a retroactive tax penalty on a foreign company that acted in accordance with the tax arrangements granted by its host country.

Pedagogical Objectives:
The case is designed to encourage students to think about the role of tax policy from the perspective of the company. With the rise of global companies such as Apple whose products are sold all over the world, the question of where they should be taxed becomes a particularly controversial issue. Students will be asked to reflect on tax policy around the following five points: 1) as a national competitive advantage in attracting FDI; 2) on shrewd corporate accounting that renders taxable income to nearly zero sums; 3) on powerful tax disincentives for the repatriation of earnings approaching two trillion dollars to the United States, 4) the political rational behind the current corporate tax principle that states taxes for innovative companies like Apple should be paid in the source country where R&D is carried out; 5) and that supranational entities such as the European Commission should take preventive measures and not corrective punitive measures in dealing with foreign countries who have created thousands of jobs in a particularly vulnerable host country such as Ireland.

Keywords:
Margrethe Vestager, Public Finance, Corporate Tax, Repatriation of Earnings, State Aid, Tax Haven, Ccctb, Apple, European Commission for Competition, Transfer Payments, Enda Kenny, Tax Minimization, United States, International Taxation

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published: 15 Dec 2016

  • Topic: Family Business
  • Region: Global

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Abstract:
This two-part case collection presents the profiles of 39 family-run firms that are 'Hénokiens', a French association whose members have survived for more than two centuries. The oldest member, a hostel in Japan named Hoshi Ryokan, has been in business for 1,300 years over 46 generations. The family business narrative is based on five analytical pillars: family assets, roadblocks, succession planning, professionalization and innovation. Instructors can take a single profile of a member firm and use it to illustrate one or more of the five themes. The cases highlight the key people and events that have marked economic history over the centuries, making for a fascinating read as well as offering an alternative business model of leadership and longevity.

Pedagogical Objectives:
i) To evaluate the role of such families in building multi-generational businesses. ii) To understand the assets that such families contribute to their firms, the various obstacles faced over the centuries and different ways that they have overcome them. iii) To learn about family succession and the dangers and opportunities presented by an ever-growing number of family members. iv) Why family firms bring in professionals to run them. v) The role of innovative leaders and entrepreneurs in family businesses.

Keywords:
Hénokiens, Family Business, Family Assets, Family Roadblocks, Family Succession, Family Innovation, Multigeneration, Next Generation, Strategy and General Management

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