Unit 2 Family Business：the Next Generation

1、Unit 2Family Business：the Next GenerationIntroduction to the TextNorth America, Asia and Western Europe have been undergoing an entrepreneurial renaissance. The world is in transition from nations of managers to nations of owners. It is also reported that the greatest intergenerational wealth transf

2、er will take place in America in the next 10 years. Much of the wealth transfer will be in the form of family businesses. However, many of these transfers will fail. Thousands of family-owned businesses cannot be successfully handed over to the second generation, let alone to the third generation. T

3、he reason for the unsuccessful wealth transfer lies in the lack of a comprehensive succession plan. Introduction to the TextThis article presents four key elements of a successful succession plan, no matter how different the family businesses are from one another. They are: planning for succession m

4、anagement, defining family employment practices, establishing and maintaining family harmony, as well as planning the estate. These are essential to successful wealth transfers. After giving instructive advice regarding each element, the authors conclude that all family business owners must deal wit

5、h the issues related to wealth transfers in a comprehensive manner well before they actually take place.Par. 1America is in the midst of one of the greatest wealth transfers in the history of mankind. (lines 1-2)America is in the process of handing over wealth to the younger generation on a very lar

6、ge scale in human history.in the midst of: (lit. or archaic) in the middle ofe.g. Evidently, the country is in the midst of an economic crisis.A little girl stood in the midst of her classmates, crying.transfer v.: give the ownership or control of something to another; move something from one place

7、to another; move officially from one job to another; change from one vehicle to anothere.g. The military government is refusing to transfer power to a democratically elected government.The manager has decided to transfer me to a new post in Pudong Development Zone.Par. 1Or: n.: handing over the poss

8、ession or control of sth; moving of sth from one place to another; the act of moving from one job to anothere.g. The author believes there are four elements playing a large part in the successful transfer of family businesses.My sister was fed up with her job in Shanghai and she asked for a transfer

9、 to Beijing.Par. 1Over the next 20 years, an estimated $15 trillion in assets will be transferred from one generation to the next. (lines 2-3)Over the next 20 years, about 15 trillion dollars worth of property will be handed over from one generation to the next.assets n.: (pl.) property which a comp

10、any or person owns, and which they may sell or use if necessarye.g. With assets of just $ I million, the family business is still relatively small.asset n.: sth or sb that is valuablee.g. An outgoing personality is a definite asset to a salesman.Par. 2But the viability of many of these transfers is

11、questionable. (line 2)But it is doubtful whether many of these transfers can be successfully realized.viability n.: workabilitye.g. The executive directors are currently investigating the viability of the proposal you put forward.viable adj.: that can be done and will succeede.g. We are in favor of

12、the program, but we want strong assurance that it is viable.questionable adj.: doubtful and uncertaine.g. The conclusion of the survey is questionable because the research was based on a very small sample of people.Par. 2Typically, only one out of three businesses is successfully transferred to the

13、second generation. (lines 3-4)Usually, only one-third of all the family businesses are successfully handed over to the next generation.Survival of a family business into the third generation is a rare occurrence. (lines 4-5)It is not common that a family business survives long enough to be transferr

14、ed to the third generation.survival n.: state of continuing to live or exist in spite of accidents, illness or being in great difficultye.g. If there is a nuclear attack, our chances of survival are not good.survive v.: continue to live or existe.g. The plane crashed and caught fire; none of the 130

15、 passengers survived the crash.Par. 3Thousands of family businesses, some of the household names, will disappear over the next decade. (lines 1-2)Thousands of family businesses, some of which have become very well known, will disappear in the next ten years.The sad part is that many of them could su

16、rvive with proper planning. (lines 2-3)The sad thing / what is sad is that many family businesses could continue to exist if their owners would make suitable plans.Par. 3Indeed, a comprehensive succession plan, which includes sophisticated estate planning strategies, generally requires at least a 10

17、-year horizon to be properly structured. (lines 6-8)Actually, business owners need to start properly forming an overall succession plan at least 10 years ahead of time, which includes complex and careful estate planning strategies. (or: Actually business owners need to form an overall 10-year future

18、 plan for succession, including complex and careful planning strategies.)comprehensive adj.: that includes (nearly) everythinge.g. This is the largest and most comprehensive study ever made of the citys social problems.Par. 3succession n.: 1. U taking ones place, coming after sb / sth; 2. U / C numb

19、er of things or people coming one after another in time or ordere.g. Who is in succession to the throne?a succession of wet days / defeat three championships in successionsucceed vt.: come next after (sb / sth) and take his / its placee.g. Who succeeded Churchill as Prime Minister?successive adj.: c

20、oming one after the other in unbroken seriese.g. Our school team has won five successive games.Par. 3sophisticated adj.: complicated and refined; elaborate; subtle; having or showing much worldly experience and knowledge of fashionable lifee.g. The company has spent millions of dollars developing th

21、is sophisticated electronic equipment.“Management Review” is a monthly magazine that appeals to the sophisticated businessman.Par. 4But regardless of how diverse they are, four key elements must be in place before a business can be successfully passed from one generation to another. (lines 2-4)But n

22、o matter how different they are, there must be four essential functioning elements in the successful transfer of a family business from one generation to another.regardless of: in spite ofe.g. A true professional can work with anyone regardless of age, race, or color.diverse adj.: different; various

23、e.g. All the members of the team come from totally diverse backgrounds.Those opposing nuclear weapons are a diverse group of people, ranging from conservative old men to radical people.Par. 5Owners / founders are extremely driven and dynamic. Often they excel at more than one skill. (lines 1-2)Owner

24、s / founders are highly motivated and very energetic. They are often good at quite a few skills.excel at: be very good ate.g. The firm excels at producing cheap computers.She excels at learning foreign languages and can speak at least four.In many cases, production experts are also marketing geniuse

25、s or skilled financiers. (lines 2-3)In many cases, production experts also have great talent for sales or are experienced financiers.Par. 5Therefore, family business owners should determine exactly how the business functions by creating organizational charts. (lines 4-6)Thus, the family business own

26、ers should decide exactly how to operate the business by creating charts that illustrate its administrative and functional structure.The differences will point to gaps in the management structure and highlight areas of misunderstanding and differences in perception. (lines 8-10)The differences will

27、indicate deficiencies in the management system and draw attention to the areas where misunderstanding and different opinions exist.Par. 6In addition, Judy has a strong management team in place. (lines 3-4)Judy also has a strong management team which runs the business for her.Par. 7Finding people fro

28、m within the family, or from outside, to fill those spots may not be easy, nor happen overnight. (lines 1-2)It may not be simple to easily or quickly find people from either inside or outside the family to work in those positions.16. Therefore, it is vital to develop an action plan and timetable ear

29、ly in the process in order to allow for an orderly transition of responsibilities. (lines 2-4, para. 7): For that reason, it is essential to develop an action plan and time- table as soon as possible in the course of action in order for the transfer of responsibilities to proceed systematically and

30、smoothly.Par. 7allow for: consider the fact that one may have to deal with an additional number, amount, or problem, or that sth may take a longer time, when one is preparing or planning sthe.g. We had better allow for sixty people, in case they bring some of their friends.The journey usually takes

31、six weeks but you should allow for delays caused by bad weather.transition n.: passage from one state, position, or condition to another; period of such a passagee.g. The world is in transition from an era of conflict to a new era of cooperation.The transition from childhood to adulthood is often a

32、difficult time for a young person.Par. 8Key managers must have a clear picture of where they stand and what their responsibilities will be in a succession-management structure. (lines 4-6)The leaders in management must know exactly what positions they have and what duties they will perform in such a

33、 transitional period.Develop a compensation and benefit structure that is sufficient to attract and retain key managers as well as to motivate them to perform in the best interests of the business and the family. (lines 6-9)Develop a system for paying salaries and offering employee benefits, such as

34、 medical care, sick leave, vacation time, etc. that will attract and keep the leaders in management and give them incentive to stay and work for the sake of the business as well as the family.Par. 9In such cases, transitional management teams may be formed to provide interim management until the chi

35、ldren are properly trained and seasoned to be in a position to manage the business successfully. (lines 2-5)In these situations, transitional management teams may be formed to manage the business temporarily until the children are properly trained and experienced and are able to manage the business

36、successfully.Par. 10Company executives, however, must be selected on ability. (line 3)But company executives must be chosen because they are capable of taking the responsibility.Par. 11Par. 12Parents can pass on their legacy to their children without necessarily giving them control of a company. (li

37、nes 1-2)Parents can leave their property to their children without necessarily giving them control of a company.When the children are not suited to take over the business - about 30 percent of the time - other methods can be found for them to share in the family wealth. (lines 2-4)In about 30 percen

38、t of the cases, children are not suitable for managing the business, but other methods can be found for them to enjoy the family wealth with other family members.Par. 13However, if you do determine that a child will carry on the business, you should be sure your choice is capable. (lines 1-2)However

39、, if you do make up your mind that a child will take over the business, make sure that the child you have chosen is competent to carry on the business.Par. 14Outside job experience is extremely useful for children who will one day assume control. (lines 1-2)Experience gained from working outside the

40、 family business is exceedingly valuable for children who will one day take upon themselves the responsibility of running the business.Often they will receive better mentoring and more opportunities to take responsibility than they would in the family business. (lines 5-7)Compared with working in th

41、e family business, they will often get better guided training and more chances to take responsibility.Par. 14Proving themselves outside the family business also gives children greater credibility with employees when they do eventually take control of the business. (lines 7-9)If the children can show

42、 that they are capable outside the family business, they will surely gain greater trust of their employees when they do finally take over the family business.Par. 15invaluable adj. (line 4)very usefule.g. Contact with Western medical techniques proved invaluable, and the students have benefited a lo

43、t.In our experience, children who develop in this manner are twice as likely to succeed as children who assume unearned executive positions. (lines 6-8)According to our experience, children who work their way up from the bottom are more likely to succeed than children who hold undeserved executive p

44、ositions, for which they are not qualified.Par. 16Rivalries and jealousies can be extremely time-consuming, not to mention destructive. (lines 1-2)Rivalries and jealousies can waste a great deal of time; moreover, they can be very harmful.If the business is large enough, consider seating an outside

45、board of directors to ensure that the interest of the family and business are properly balanced. (lines 4-6)In the case of a large business, consider asking people outside the family to serve on a board of directors to make sure that balance is achieved between the interest of the family and that of

46、 the business.Par. 16Note: Ensure, Insure and Assure all have the meaning of making a thing or a person sure. They are interchangeable in some contexts where they indicate making an outcome certain or inevitable, but insure sometimes stresses the taking of necessary measures beforehand, and assure d

47、istinctively implies the removal of doubt and worry from a persons mind. Ensure is more common in British English.Par. 17a family business vision document (line 1)a formal written statement which provides visions embodying purposes, values, goals and operation procedures for the family businessPar.

48、18Companies and families that communicate often, honestly and on a timely basis increase their probability of surviving and prospering. (lines 1-2)Companies and families that contact each other frequently, honestly and at suitable times have more chances to survive and thrive.timely adj.: (occurring

49、) in time or at a suitable timee.g. The timely loan saved the family business from going bankrupt.The government intervened in a timely manner and prevented economic disaster.Par. 19In many of these cases, the liquidity needs caused by estate taxes due on the value of the family business are far gre

50、ater than the business can absorb. (lines 2-4)The reason for the failure of many family businesses is that the amount of cash needed to pay the high estate tax on the value of the business is far greater than they can afford.Note: estate tax legacy tax death tax succession tax (Am.) estate duty lega

51、cy duty (Br.)Par. 20In most cases, life insurance may be an effective way to cover estate taxes. (lines 1-2)In western countries, people do not need to pay tax on life insurance received and thus they can use the money received from insurance to pay for estate taxes.However, the cost of life insuran

52、ce for a business reinvesting most of its capital in growing the business usually makes the insurance an impractical solution for the entire estate-tax dilemma. (lines 2-6)Nevertheless, the high cost of life insurance for a business which puts most of its capital in expanding the business usually ma

53、kes the insurance an unwise answer to the estate-tax problems.Par. 20impractical adj.: incapable of being done or carried out although it may seem possible or good.e.g. Your idea for raising money is silly and totally impractical.Your plan is very appealing, but quite impractical.Par. 21Par. 22Par.

54、23These are the four “must” elements. (line 1)These are the four elements which are absolutely necessary.However, underlying all of them is a willingness to make difficult decisions and do what is best for the business and the family. (lines 1-3)However, what all four elements require is eagerness /

55、 readiness to make difficult decisions and do / act for the biggest benefits of the business and the family.Par. 24However, if not addressed early in the succession process, these very same issues will come up later when it may be impossible to deal with them. (lines 2-4)However, if these problems a

56、re not dealt with early in the course of transfer, they will arise later. At that time, it will be too late to tackle them.Par. 25The best way to assure the existence of the family business into future generations is to deal with issues in a comprehensive manner well before the final succession is t

57、o take place. (lines 1-3)The best way to guarantee the survival of the family business after its transfer to future generations is to handle the issues in an overall manner well before the final succession is to start.For the overwhelming majority of family businesses, that means now. (lines 3-4)For

58、 the great majority of family businesses, that means they should start to deal with the issues in a comprehensive manner today.Key to Comprehension A1. Because America is now in the process of a massive wealth transfer, much of which is in the form of family-owned businesses. The authors are greatly

59、 concerned about the viability of the transfer.2. Because most of the transfers will fail because of the lack of a comprehensive succession plan.3. 1) Plan a succession management.2) Define family employment practices.3) Establish and maintain family harmony.4) Plan the estate.Key to Comprehension A

60、4. Para. 3. The authors bring up the reason that it usually takes at least 10 years to form a proper comprehensive succession plan including sophisticated estate management strategies.5. Because family business owners are highly motivated, energetic, and usually good at more than one skill in managi