Family run businesses should embrace change and establish effective corporate governance and succession plans to succeed in the long term, says a leading businessman.

Mohammed Alshaya, chairman of MH Alshaya Co, was speaking at the Forbes Family Business Forum held in New York.

Family businesses make up about 75 per cent of all businesses in the Middle East, more than in western economies where the figure is about 50 per cent.  Only five per cent of these businesses survive the third generation, primarily due to the lack of strong succession strategies.

Speaking at the special forum on cross cultural lessons in family business with fellow participants from family run organizations from around the world, Alshaya emphasized that a quest for greater growth should not be at the expense of core values that have ensured success in the first place.

“While family enterprises have contributed greatly to national economies globally, the main challenge in the future is adapting to change without losing the strong values at the heart of this success; it is all about balancing the old and the new.

“Family businesses remain a major force, however, they need to evolve in the face of globalisation and changing consumer trends to remain viable and grow.  There are thousands of companies like Alshaya around the world with 100 year histories – while we value our heritage as a testimony of our success, we are also acutely aware of the need to look to the future by being innovative and embracing new markets,” he said.

Alshaya suggested that the involvement of external advisors is vital for the long-term success of the Middle East family enterprise as long as family control remains.

“Involving external advice is imperative for family businesses to survive but it is necessary to make sure external advisors understand the family, its beliefs and culture, as well as its business. 

“The family should also retain ultimate control– if this is diluted it can have a huge impact on the business as outside interests impact the very entity the family has developed.  Having said this, it is the family business’ responsibility to guarantee the quality of any outside advisor,”  Alshaya said.

Alshaya was invited to speak at the forum as a fourth generation member of a highly successful multinational family business based in Kuwait. Founded in 1890, M H Alshaya Co today is one of the most dynamic and fastest growing companies in the region. It is a leading international franchise operator for over 40 of the world’s most recognised brands including Starbucks, H&M, The Bodyshop, Mothercare, Debenhams and Boots. Alshaya has more than 1,300 stores across 13 markets.

The company has also established successful businesses in Turkey, Russia and Southern/Eastern Europe, under the leadership of Alshaya.  –TradeArabia News Service