Tricolam group, is a very famous conglomerate based in Chennai, famous for its silk sarees and other clothing. There have been internal conflicts within the family members, who were part of the ancestral business. A disp

Some Unique challenges/ Governance issues of family businesses: Managing the diverse opinions of family members in the business, solving internal issues and disputes, etc., is a challenge. Investors – both shareholders and creditors – may look with distrust on family-controlled companies, because of the risk that the controlling family may abuse the rights of other shareholders. So, investors shall scrutinize such companies with care before taking the plunge and investing. There are also challenges of multiple stakeholders for the leadership position. Very often, there is lack of communication between the incumbent and incoming generations. The incumbents do not know how to handle the succession challenge, while the incoming generation does not know how to raise it. The families should choose their most competent member(s) to manage the business, disregarding age, gender or bloodline. However, post succession role of the incumbent is not often planned leading to complications. Hiring external staff which may perceive that career advancement, freedom and decision making are solely the purview of family. Although ownership and management succession are the key concerns of a large number of business families, they do not devote enough attention to the process involved. Succession dilemma is also closely related to the family policy on entry of new generation, retirement of incumbents and mechanisms for resolving conflicts. Entry of new members from the family depends also on the 'space' available in the organization, which in turn depends on the success of the business. The younger generation may face difficulties in proving themselves to the former generation. Change in mind-set: Differing views between the older generation and the newer generation. Lack of Competitiveness: Another source of challenge is in the nature of competitiveness. For instance, when the Indian economy was opened up in 1991, most Indian companies, of which a huge majority were family owned, were put under competitive pressures for the first time. Many firms, particularly those that grew under government protection did not have a strategy to respond and took it as a threat rather than opportunity for a variety of reasons. This created huge tensions in business families, sometimes leading to division of assets.