The current case study concerns the issue of leadership transfer in the company of Bush Brothers & Company. Historically, the company’s leadership and vision were intertwined with one of the Bush family’s founders. However, both the family and company grew larger, with its share becoming more dispersed across the family members and expanding the company’s divisions. It led to the situation when the generation expected to overtake the company faced a lack of understanding and future vision vital for Bush Brothers & Company’s survival.
Judging by the information provided in the case study, Bush Brothers & Company faces a substantial crisis regarding its future vision. Fortunately, it does not apply to its financial state: the company expands into the new market of Hispanic foods, improves infrastructure, and invests in staff and family members’ education (Lansberg et al., 2016a). In this context, a thorough SWOT (strengths, weaknesses, opportunities, threats) analysis can provide a general overview of the company’s state, including detailed information on its financial condition.
On the one hand, strengths are the company’s resources and capabilities that can be utilized to build and sustain a competitive advantage in the market. Firstly, Bush Brothers & Company has the ability to reliably increase its market share through product and service quality improvement due to its highly loyal customer base. Secondly, the company has valuable experience of launching new products into the market, indicating proper market research techniques. For instance, Bush Brothers & Company has tested various market concepts and developed successful solutions, such as moving to baked beans from tomatoes.
Thirdly, a solid current balance sheet and reliable financial statement can help Bush Brothers & Company invest in innovative and diversified projects to increase the revenue sales return.
Fourthly, the company has built a strong relationship with incumbent suppliers due to the time spent in the market. According to Lansberg et al. (2016a), the company can improve its services and products by utilizing the skills of its supply chain partners. Finally, the company’s diverse product portfolio enables simultaneous targeting of several domestic market segments, which allows for building diverse revenue and profit mix.
On the other hand, the factors that hinder the ability of a company to maintain and increase its competitive advantage are considered its weaknesses. Firstly, according to the case study, there is substantial room for improvement in terms of inventory and cash cycle management. (Lansberg et al., 2016a). Secondly, despite the company having a stable balance sheet, Bush Brothers & Company operates in the most conservative measure of profitability, such as return on invested capital instead of return on equity and assets (Lansberg et al., 2016a). Finally, there is a lack of critical talent – the company struggles to find a suitable CEO replacement in light of the upcoming leadership changes.
Opportunities are such environmental factors and developments that a company can utilize in order to consolidate its current market position or to further expand it. Growing market size and evolving consumers preferences represent the first opportunity. In this context, the company has an opportunity to increase its consumer base on the condition of retaining the already loyal base simultaneously. Apart from that, there is an opportunity to access the international talent market. Since Bush Brothers & Company experience problems locating high-level talent, it can tap into the international talent market to evaluate the possibilities.
In the meantime, threats are those environmental factors that can potentially disrupt the functioning of a company’s business model. Firstly, the industry showcased in the case study poses a threat of sticky prices. According to Lansberg et al., the stagnant nature of prices in the industry might affect the company’s ability to set the desired price for its products (2016a). Secondly, Bush Brothers & Company should monitor the risk of growing protectionism and conservativism inside the company, which avoids the majority of business solutions that are connected with any risk.
Goals and Needs
In general, the company’s goals in its current state are centered around a successful leadership transition. In particular, the main goal is to agree on a suitable leadership model with several assumptions. The first assumption is that the new leadership acknowledges the importance of a shared vision for the company (Lansberg et al., 2016b). However, stable the current financial situation and capabilities, there is a great risk of poor investment decision-making without a transparently defined shared purpose. The second assumption is the clear definition of roles and responsibilities (Lansberg et al., 2016a). The current shareholder model of the three-unit governance – corporate board, family senate, and private trust company – creates ambiguity in decision-making.
The third assumption is that the new leadership would implement a strategic, big-picture business approach to the company’s future. According to the given case study, there is a risk of overfocusing on short-termed objectives (Lansberg et al., 2016a). Finally, the new leadership would have to be operationally proficient and adhere to the historical family values integrated into the company at the same time (Lansberg et al., 2016b). The philanthropic values have accompanied Bush Brothers & Company’s every step. Consequently, it is assumed that the new leadership will either confirm this adherence or establish renewed values according to their vision.
In other words, the main conflict is the inability to decide on the role of a CEO successor when it comes to the choice between the family members. Lansberg et al. (2016a) state that the third generation has too much workload to remain in the leading position. The fourth generation, the generation thought to take the CEO position, possesses the needed business skills to rule the company in the short term but lacks the strategic, visionary sense regarding the company’s future. Lastly, the fifth family generation lacks the experience and the skill to become a CEO. This information implies that the conflict can be resolved in two ways: either by nominating the CEO not from the family or by establishing parliamentary governance based on the three existing units. In this context, the former does not require any external professional aid due to the precedent that exists in the company’s past. However, the latter would require the authority between the corporate board, family senate, and private trust company to be re-evaluated on the basis of future increases in responsibilities.
In my opinion, the company should prefer the option of establishing shared governance between the leading units. Choosing a CEO who was not a family member required a long preparation for the company members to test the leader-to-be competencies (Lansberg et al., 2016a). In addition, the candidate had worked in the company for many years, whereas such a candidature is not present at the given moment. Thus, the decision to reformat the existing governance seems like a more reliable and quick solution to the problem. The consequent implementation plan would include the following steps. Establishing a sense of urgency will enhance the process. Forming a powerful governing coalition will provide the required leadership. This coalition will create the company’s vision based on the mutual agreement. The vision will be communicated throughout the company and help establish the short-term strategy that leads to long-term stability.
Lansberg, I., Grady, K., & Waikar, S. (2016a). The future of Bush Brothers & Company: Developing a shared vision for a complex family enterprise: Case. Kellogg School of Management at Northwestern University.
Lansberg, I., Grady, K., & Waikar, S. (2016b). The future of Bush Brothers & Company: Developing a shared vision for a complex family enterprise: Resources. Kellogg School of Management at Northwestern University.