through control of the board and usually also through involvement in senior management.”
b.In its Newsletter – First Edition – November 2008, the Bahrain Family Business Association gave the following facts about FOBs in the Kingdom of Saudi Arabia:
•The total Saudi FOB investments within Saudi Arabia are estimated at 250 billion Saudi Riyals.
•They comprise 45 companies among the largest 100 companies in KSA.
•Total companies operating in KSA (2002) is estimated at 11,622 with a total capital of 141.4 billion riyals.
•The total revenue of those companies exceeded 120 billion riyals in 2003.
•They employ close to 200,000 persons
•Most of the Saudi FOBs have extended commercial activities
•The third generation of the original founders runs 10% of total businesses, the second generation 20% and the balance is still run by the founders.
•Most of the companies are successful and profitable but not organized.
c.Al Sharaqia Chamber of Commerce, in the Kingdom of Saudi Arabia, in its newsletter issued in April 2014 quoted the following statistics:
-FOBs in GCC offer 65% of employment in the region
-FOBs represent 85% of total registered companies worldwide
-90% of the FOBs are situated in KSA, Italy and USA
-SR66 Billion is the value of investments of FOBs in KSA
-54 FOBs of KSA are among the top 100 companies in the world
d.“The family businesses contribute 25% of GDP in Saudi Arabia”Arab News issue dated 27 July 2012.
e.Federation of GCC Chambers’ publication “Encyclopedia of Gulf Family Companies – 2012” gives detailed accounts of FOBs, in GCC and states the following about the family businesses in the MENA region. “The MENA region is relatively a young region when it comes to family businesses when compared with the western family businesses where several businesses have been run by 9th and 10th generations…”
It then gives some of the key challenges facing many businesses in the MENA region which include:
•Successions issues and transferring effective control and knowledge from one generation to the next.
•Attracting outside talents. Recruitment needs to reflect specific competency requirements of FOB.
•The need to shift from purely operational to thinking in more strategic terms.
•Proper separation of management and ownership.
•The need to re-evaluate and restructure existing portfolios.
•Diversification into multiple businesses than can lead to over expansion beyond the group’s knowledge and competencies.
•Balancing risks and growth potential.
•Tax issues as the family business operates outside its borders
f.Bahrain Family Business Association, in its publication “An Insight into Family Business Enterprises in the Kingdom of Bahrain” 2011, had detailed outcome of a study conducted by Ernst & Young. The purpose of the study was to provide a perspective on family businesses and their insights into this type of institution in Bahrain. 59% of FOBs surveyed were established in 1980s and later and 41% established operations in 1970s and before. Recommendations on opportunities for improving management and sustainability practices to establish clear lines between governance, management and family was another purpose for the study. The study involved a survey of 100 family businesses leaders operating in the Kingdom of Bahrain.
| Years in Operations | Percentage % |
| 0-10 Years | 21 |
| 11-20 Years | 19 |
| 21-30 Years | 19 |
| 31-40 Years | 14 |
| 41-50 Years | 7 |
| 51-60 Years | 10 |
| 61-80 Years | 7 |
| 80-100 Years | 2 |
| More than 100 Years | 1 |
| Total | 100 |
Sectors in Which Surveyed FOBs operate include:
•52% in Real Estate and Constructions
•35% in Retail and Consumer Products
•Less than 1% in Tourism, hospitality, Financial services & Insurance, Medical and Technology sectors
•25% other sectors which includes:
-Advertising
-Consulting
-Farming
-Legal
-Media/PR
-Logistics
-Transportation
-Trading
It was found that most of the companies surveyed have only existed for one or two generations. In fact only 28% of them made to the second generation and percentage declined rapidly thereafter. This is in line with findings of surveys conducted in emerging markets where over a third of family firms have transitioned to the second generation and the majority remained in either the first or second generation.
The Key findings of the study include:
•Family businesses feel satisfied with their current strategic planning process and their capability to achieve long their strategic objectives.
•The Governance structure and its effectiveness and processes was a relative weakness
•There is a serious gap in the succession planning
•The majority of FOBs surveyed do not feel that “going public” is important for their future survival.
In their conclusions and recommendations EY listed the following:
•FOBs need to establish a clearly defined strategy direction. Such plan to be reviewed and updated annually;
•FOBs need to embrace continuous change in technology and management practices;
•FOBs to have an effective family governance structure (Family Council, BOD);
•They need to have a well-defined management and ownership structure;
•They need a well-defined succession plan;
•They need to build capable and talented management teams to include both family and non-family members;
•They need to focus on becoming performance driven.
g.PWC jointly with Pearl Initiative published a study “Family Matters- Governance Practices in GCC Family Firms”. 100 family firms in the GCC were interviewed for the research. Highlights of the report are as follows:
Purpose:
1.Raise awareness and understanding on governance issues, trends and existing practices amongst GCC family firms
2.Enable family firms to benchmark their