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Strategic planning seen as the biggest challenge facing ME family businesses

DUBAI — Early reports from the 2008 Middle East Family Business Survey, which is to be released at next week's Family Business Forum, reveal that strategic/operational business planning ranks as the biggest challenge facing Middle East Family Businesses today.

Rami Nazer of Ernst & Young, who conducted the survey and will be unveiling the exclusive results on Monday at the forum, said the survey shows that Middle East family businesses recognise the importance of strategy in achieving the long-term survival and growth of a family business, according to a Press release.

"It was clear that devising a clear strategy for the business was a challenge," he added. "The reason for this could be the perceived restriction that a clearly articulated strategy can impose on the entrepreneurial spirit of the founders."

The survey was conducted throughout the Middle East since July 2007 and was submitted directly to participants. The results were compiled over the past year at the Family Business Centre of Excellence in Jeddah.

A diverse array of participants covering different geographic markets were incorporated into the survey, where the largest percentage of participants were family businesses who focused on their own country first, followed by the GCC and then the entire Middle East.

Tying in with one of the main Family Business Forum themes, Ernst & Young found that most family businesses who participated in the survey are currently in a transitional phase, with most of them being run by the second generation, or both the first and second generation. None of the participants were run by a fourth generation.

"One conclusion we drew was that the age of the family business had little or no effect on the overall outcome of the survey, as the answers were similar around the key challenges," says Nazer. "This could mean that businesses are staying still and not doing enough to improve over every generation, due to some unforeseen problems such as internal emotions or issues within the family business that are tied down to its culture or history."

The biggest surprise found was that when participants were asked about the 10 most common challenges faced by family businesses, the two lowest scores were management and ownership transition, followed by family governance structure, given that only 33 per cent of the family businesses surveyed claimed they have effective familygovernance.