Introduction FamilyBusiness2FamilyBusiness
The fictional Egyptian MS family faces many challenges including dealing with a growing competition for their hand-made leather goods, finding ways to include all family members in the family business activities, and increasing the profitability of their shop in the centre of Cairo. To assist the MS family business in making the right strategic decisions, Tharawat magazine has sent out this issue’s case study to family business members all over the world. They have shared their expert advice with the MS family and have generated interesting statistics.
Many years ago in Egypt...
I
n the early 1940’s MS immigrated from the South of
workshops that produced different lines of products at lower
Egypt with his wife and three children to begin his
prices but remained loyal to their values and style.
first workshop in a narrow street in old Cairo. He designed and manufactured bags, chairs, vests, belts,
As the second son MMS and his sister NMS graduated from
decoration items and more. MS developed a sense
university, they joined their father and elder brother in the
of perfectionism in his work detailing his products to into
business. Their talents were more commercial. Seeing the
the smallest detail. Employees were trained with much care
growing demand from the new middle class, they proposed
and over a long period of time. Soon MS’s reputation for top
to open a first shop for their products. MS and AMS were
quality products was known to the rich of Cairo. MS became
very hesitant to get into the retail business. What had always
a brand and demand continued to increase; the workshop
differentiated them from other manufacturers was that the
expanded three times within five years. MS’s eldest son AMS,
client could come to the workshop and see the birth of each
who trained from a young age in the workshops had a real
product. At the same time AMS as well as his father wanted
passion for leather and soon joined his father in the business.
to involve the rest of the family to ensure the continuity of the family business.
Egypt changed dramatically during the 70ies; new consumer
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behaviours and tastes emerged. The MS family business
The first shop was established and run by the two younger
started to adapt to the new trends. The family created new
siblings in a highly frequented area in old Cairo. The old
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FamilyBusiness2FamilyBusiness Introduction
workshops continued to be frequently visited by loyal clients. Soon, the family decided to open a bigger shop in the business centre of Cairo. However, competition did not spare them and many shops started imitating the MS products and selling them at lower prices. In the mid-70ies Egyptian consumers wanted to have even
The MS family workshops remained profitable but the question was for how long. The family met to discuss the situation.
cheaper products. They did not mind the quality so much because the country had opened its markets to the import of cheaper foreign goods. The MS family workshops remained profitable but the question was for how long. The family
handmade goods. Pricing and volume would be an issue.
met to discuss the situation. MMS and his sister NMS proposed to expand the shops and AMS proposed to expand the workshops into other areas in
to sell other products that were not produced by the family
Cairo and to compete through their high quality, hand-made
at lower prices to attract the class of consumers that does
products. He worried, however, that the industrialisation
not identify itself with handmade products. But they could
of leather products would slowly destroy the market for
also see that this could dilute the brand of MS products.
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Introduction FamilyBusiness2FamilyBusiness
Survey Results Our case study shows that the MS family business is faced with a myriad of difficulties. To find answers for the MS family’s dilemma, Tharawat magazine sent out a survey to a select group of Middle Eastern family business executives and owners.
50
Over 50 family business executives and members shared their opinions on the MS family case.
Do you think that the MS family was right to open the shop in the centre of Cairo?
85% YES 15% NO
Will an expansion of the workshop-experience bring more brand recognition?
Very unlikely
Unlikely
10%
20%
Will adding more product range to the shops dilute the MS family brand?
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Very unlikely
Unlikely
Neutral
Likely
Very likely
10%
40%
20%
15%
15%
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Neutral 25%
Likely 30%
Very likely 15%
Will the family find an investor for the expansion of the workshops?
Very unlikely
Unlikely
Neutral
Likely
Very likely
10.53% 15.97% 21.05% 47.37% 5.26%
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FamilyBusiness2FamilyBusiness Introduction
Will the family find an investor for the expansion of the product ranges in the shops?
Very unlikely
Unlikely
10.53%
15.79%
Neutral 26.32%
Likely 47.37%
Very likely 0%
Do you think the MS family should continue producing handmade products in spite of the changing economic landscape?
Do you think that the MS family should internationalise their shops?
70% YES 30% NO
47.37% YES 52.63% NO
Do you think that the MS family should internationalise the handmade products?
63.16% YES 36.84% NO Should the family consider diversifying into other industries?
52.63% YES 36.84% NO 10.53% Other
Results Summary and Recommendations for the MS family
When summarising the results above we can see that our respondents have the following opinions on the MS family case:
70%
The majority agrees with the family’s strategy to open the shop in the centre of Cairo, while 70% also believe that the family should continue producing hand-made products.
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60%
Near to half of the respondents believe that expanding the workshop experience is likely to bring more brand exposure and over 60% believe that internationalising the handmade products is a good idea.
+50%
Respondents do not apprehend a danger by expanding the shop’s product range, however, more than half oppose internationalising the shops.
+50%
Over half the respondents believe that the MS family should diversify into other industries.
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