Is Your Family Business Ready for Global Growth?

The world today is a paradox. In some ways, physical geography and local cultures seem incidental to enterprise. Cloud-based platforms, seamless video connectivity, and blockchain ledgers give enterprises the tools to expand their regional and global ambitions to conduct business anywhere, from anywhere.

Except, of course, the world isn’t so simple. A pandemic can abruptly upend marketing and production plans and halt business travel. A single container ship stuck in the Suez Canal can become a chokepoint for the entire global supply chain of every industry. Even more predictable disruptions like ever-evolving trade agreements and barriers reveal the complexities of doing business in an increasingly connected world.

Even before the pandemic hit, family enterprises with ambitions to expand their regional and global presence planned for risk. Respondents to a recent Deloitte Private survey said they were most concerned about escalating trade tariffs and duties, cyber attacks, and the cost of raw materials, as well as economic uncertainty at home and worldwide, and disruptions by competitors within and outside their sectors.

Quick Reflexes

No two family enterprises are alike. Structural complexity and cultural norms vary widely, even within a single region: some Chinese family enterprises seeking to expand into other markets may be decades old and still overseen by their founders, while a Japanese counterpart exploring its own global prospects might have 50 generations of history behind it.

At either extreme, and all points in between, family enterprises need global reach to grow and exchange ideas: A first-generation business may have as much guidance to offer an experienced organization as the other way around. Getting an independent perspective from your global network can help provide clarity on your company’s competitive landscapes in markets with diverse market opportunities, supply chains, talent pools, and regulations and taxation.

Such a network can help your family enterprise navigate other challenges as well. Continual geopolitical change and business uncertainty heighten the urgency for your company to secure capital to weather changing dynamics. And rapidly changing market conditions can open opportunities that call for quick reflexes before they close again.

Closing Opportunity Gaps

Global connections can give an enterprise the confidence, guidance, and resources to pursue opportunities outside its existing markets.

Agristo, a Belgium-based family enterprise that sells french fries and frozen potato products in 120 countries, sought the expertise and partnership of its global network before investing in software to help it digitize its increasing burden of customs documentation.

Beyond IT and operations strategy, Agristo’s network also illuminates market insights that help it introduce products exclusive to some markets, and the network’s concentrated decision making helps Agristo respond nimbly to trade and economic fluctuations. In 2018, the renegotiated North American Free Trade Agreement imposed higher tariffs on U.S.-made frozen french fries, which drove up their cost in Mexico—and opened a competitive gap for Agristo to fill.

“Every decision we make—whether it’s tied to innovation or strategy or our manufacturing processes—takes place in a very short amount of time,” Agristo co-CEO Hannelore Raes said.

How a Family Enterprise Succeeds

Other family enterprises get cross-border guidance on complex sectors that vary widely by market and by region.

One 200-year-old, $2.5 billion Japanese family enterprise has thrived throughout the pandemic and navigated unpredictable market conditions. Its strengths include business strategy alignment, the leadership of a professional CEO from outside the family, and continual evaluation of its family governance. Applying the guidance of its global network, this enterprise’s corporate governance blends Japanese and Western strategies, incorporating foreign financial structures including trusts and foundations.

Only 35% of the family enterprises Deloitte surveyed said their business objectives align with family goals, and fewer than a third of respondents said their families agree about the future development of the business. Yet for a family enterprise to succeed, alignment is critical on such factors as transparency, multigenerational succession planning, preparing the rising generation to lead, and pragmatic governance.

Guidance for a Changing World

Family enterprises have long relied on close relationships with independent consultancies for objective guidance through challenging terrain. But not all enterprise partners are global in scope, with resources and knowledge around the world.

If your enterprise is preparing for expansion, succession, and growth, a global network can give you all the access you need to regional and local expertise on varied and changing markets, sectors, laws, and opportunities, along with such concerns as multigenerational planning, strong governance, and family and business health diagnostics.

In a time of dynamic change and intense competition, family enterprises believe they hold advantage on agility in changing markets. Getting guidance from a global partner with a network of professional expertise in markets beyond your own and a clear line of sight into your blind spots is key to ensuring that, as you explore new markets, regions, and sectors, your family enterprise remains the disruptor and not the disrupted.

Strengthen your family enterprise’s ambitions for global growth. Read more from Deloitte Private.

Read More

Add Comment