Evaluating the ethos and challenges facing family business organizations: The case of Cengiz Holding

Table of contents

Company overview

Cengiz Holding is a family owned, leading multinational company with its headquarters in Istanbul, Turkey. Ever since its inception in 1980, the company has operated under the chairmanship of Mr. Mehmet Cengiz (Cengiz, 2012). Since its incorporation, the company has grown to become one of the leading investment companies in Turkey. Its main investments are in finance tourism, mining and energy sectors and are spread over twelve organizations. The company’s largest investment is in the construction industry. Most of its construction projects include airports, subways, motorways, dams, pipelines, bridges, railways, tunnels and telecommunication infrastructures alongside tourism abodes and amenities (Cengiz, 2012). In ddition to these, Cengiz Holding has recently diversified into insurance and aviation, yielding an effectual success within a very short time.

Abstract

The following paper seeks to evaluate the ethos and challenges facing family business organisations with Cengiz Holding as the company of study. The study critically analyses the scope and significance of family owned businesses highlighting both the advantages and disadvantages related to it. Further, the study presents the challenges faced by Cengiz Holdings in relation to family business organisations. In conclusion, recommendations are provided as to what Cengiz Holdings needs to do to help curb the escalating problems associated with family owned businesses.

The scope and significance of family business

In most companies, (Cengiz Holdings for example), family owned businesses are born out of the desire and autonomy for a family’s financial independence. For the last two decades, the aspect of family businesses has being subject of research and development with continued support from countries governments. The current developments can be attributed to an increased research and study on the subject, changes in policies and developments in cooperation networks (Kelin et al, 1997). The scope of family business has recently gained a lot of attention not only in the European Union but globally.

Family business account for over 70% of all business in the European Union Block creating an employment level of over 40% of the population leading to an increase on its benefits in the social economic development of countries economies. This has led the countries governments to form policies to foster the growth of family run business. An example of these policies includes the implementation of the 2008 European Council’s Small Business Act (kosgeb, 2012). This act was meant for European nations to help create viable environments for the development of family owned businesses (Quentin, 2010). The Competition and Innovation framework Programme (CIP) for 2007-2013 recognizes Cengiz Holding as a key example of successful family owned business despite its relenting woes and associated lawsuits.

Advantages of family businesses

Currently, it is estimate that family owned businesses contribute up to 70% of the every county’s Gross Domestic Product. These constitute a basis for significant advantage in terms of growth and development of the host country. These advantages include:

Common values among family members: Just like in most family run businesses, the Cengiz’s seem to possess similar ethos and beliefs on how the business should be conducted. This has helped in the solidification in the relationship among the family members creating strong business acumen amongst them.

Strong business commitment: The Cengiz’s Family members are known to commit a lot of time and resources for the development of the business than non-family members.

A sense of loyalty: It is evident that the Cengiz’s Family members are loyal to their own business. This loyalty has created a bond between them and the business fostering continued loyalty to the business and on to one another, creating a technique for endurance and determination for success at all costs. This can be proven at the 2009 Nokia and Motorola Lawsuits at which both family members boycotted the hearing process. This signified unity among family members.

Decreased operational costs: This is mainly realized through reduced labor requirements as Cengiz’s Family members constitute the largest number of employees of this business empire. The Cengiz’s Family members are also known to have made huge financial sacrifices towards the development of the company, reducing the cost of acquiring funds from elsewhere. i.e. loan costs and interests.

Creation of independence: being in a family business means that decisions are made by family members at their own interests. This limits external pressure in the business and all the profits realized are streamed to the business owners (Quentin, 2010).

Disadvantages of family businesses

There are certain disadvantages associated with family owned businesses. They include but are not limited to:

Lack of interest: Not all members of the family are born with a strong business sense. Sluggish family members might lead to the demise of the business.

Unfair rewarding system; Family members are likely to accept lower wages than non family members. This can limit financial incomes for the family members.

Lack of professionalism: Family owned businesses are unlikely to attract unprofessionalism from the family members as they are reluctant to employ professionals from the outside. This is the case in most of the major investments of Cengiz Holdings as the top management is mostly constituted of family members.

Financial constraints: Mostly, family businesses are faced with financial constraints in the case where family members are not in a position to raise the desired amount of cash for the development of the business.

Challenges faced by Cengiz Holding as a family business

Emotions from family members: Emotional outbursts from family members are known to affect non-family members who are employees of the institution. In return, this may lead to the formation of warring camps in the institution just like the case in the Cengiz holdings Business or family; which is which?: This is a major problem realized in Cengiz Holding just like any other family owned business entity. This can be affiliated to emotional attachment among family members in managerial positions. Business scholars and researchers have being engaged in debates to consider the involvement of women in the management of family owned business citing their leniency towards family than business which is likely to ruin their concentration in the affairs of the business (Kosgeb, 2012).

Succession planning: This is another key challenge realized in family businesses. As generations pass on, different family members have different opinions as to who should the management of the business be left to.

Unprofessionalism amongst family members: Family run businesses are usually faced by the dilemma in retaining unprofessional members of the family in the business. The Cengiz holdings family business has been faced with a range of law suits most of which are attributed to various members of the family. The company has faced cases of fraud, libel and even racketeering both termed to have been steered by members of the family. Also, the chairman, Mr. Mehmet Cengiz has being blamed for using his strong business empire to bolster his political activities (Hurriyet Daily News, 2012).

Organization structure: The lack of a well defined organizational culture has depleted the Human Resources department in the institution of most of its functions i.e. Despite various misdeeds, lawsuits and criticisms on the company’s chairman, he still retains the top seat. The 2009 Nokia and Motorola lawsuit against the company cost the company an enormous amount of money raising issues of management competence (Quentin, 2010).

Huge compensation plans for family members: Family members affiliated to the company are known to receive larger wages and salaries compared with other management professionals in the company. The company also suffers from financial constraints brought about by the misdeeds from its chairman and family members. During the 2009 Nokia and Motorola lawsuit, family members were issued with an arrest warrant should they set their foot in US soil. The chairman uses allowances from the company to cover his political asylums like the 2008 France asylum.

Conclusions and recommendations

The case of Cengiz Holding is one among many cases relating to family owned business. Having a business being operated by family member can either break or make the business. Cengiz Holding has been faced with various criticisms from the public and government citing misconducts among family members. According to the above findings, it is true to state that the unrelenting woes at Cengiz Holding can only come to an end if only the company could be left to operate without the participation of family members in its activities (Kosgeb, 2012). However, it is important to consider the fact that the business is highly advantaged in having a hand in knowledge on what is best for the company, a feature that is mostly missing in partnership and corporation businesses. Another dimension of a demeaning factor affecting the business is in social issues.

References

Cengiz Holding. 2012. Available on-line from

Cuhadar, T. and Ibrahim, H. (2010). Mission statement in institutional family business: Istanbul:

Balikesir University UP

Hurriyet Daily News. 2012. Forbes announces 100 richest Turks. Available online from <

http://www.hurriyet.com.tr/english/finance/11117628.asp>. {Retrieved on 23rd November, 2012}

Kosgeb.(2012). Family Business: Approaches in European Union. Available

on-line from < http://www.kosgeb.gov.tr/pages/ui/Baskanligimiz.aspx?ref=78> {retrieved on 23rd November, 2012}

Kelin, E. G. etal. 1997.Generation to Generation: Life Cycles of the Family Business

London: Harvard Business Review Press

Randel, S. and Craig, E. 2001. Strategic Planning for the Family Business: Parallel Planning to

Unite the Family and Business Family Business Publication. London: Palgrave Macmillan

Quentin, J. 2010. Keep the Family Baggage Out of the Family Business: Avoiding the Seven

Deadly Sins That Destroy Family Businesses. London: Touchstone Publishers

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyStudyWriters
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Business and administrative studies
excellent job! got an A, thank you
Customer 452773, May 24th, 2023
Leadership Studies
excellent job
Customer 452773, August 26th, 2023
Management
Thank you!!! I received my order in record timing.
Customer 452551, February 9th, 2021
Criminal Justice
The paper was not accused of plagiarism and was written very well. I will let you know the grade once it is graded. Thank you
Customer 452671, April 26th, 2021
FIN571
excellent work
Customer 452773, March 1st, 2024
Social Work and Human Services
Although it took 2 revisions I am satisfied but I did receive it late because of that.
Customer 452603, March 25th, 2021
Business and administrative studies
excellent work
Customer 452773, March 12th, 2023
Human Resources Management (HRM)
excellent job
Customer 452773, July 17th, 2023
Business and administrative studies
Excellent job
Customer 452773, March 9th, 2023
Business and administrative studies
Thank you
Customer 452773, March 19th, 2023
Human Resources Management (HRM)
excellent
Customer 452773, June 25th, 2023
BUSINESS LAW
excellent job made a 93
Customer 452773, March 22nd, 2023
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Close

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp