MNE3704
Assignment 5 Semester 1 2025
Unique #:
Due Date: 8 May 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
1.1
Family governance refers to the structured system of decision-making and
communication that aligns the interests of family members, shareholders, and
professional managers to ensure business continuity, unity, and wealth preservation.
In the energy company case, family governance benefited the business by
introducing formal structures like a board of directors, an external CEO, and a trust.
These mechanisms professionalised operations, clarified succession plans, and
allowed José to gradually transfer ownership while preserving business value and
family harmony.
1.2
1. Resistance to Change
José initially resisted involving outsiders in the business. Lorenzo overcame
this by leveraging his leadership record to persuade his father to support
governance changes.
2. Transition from Informality to Formality
The business evolved from being run at the dining table to adopting formal
policies, a structured board, and an audit committee.
3. Succession Planning
A formal succession process was implemented to ensure leadership
continuity, reducing the risk of abrupt or contested leadership changes.
4. Professionalisation of Management
The appointment of a non-family CEO and long-standing employee
demonstrated trust in professional management over nepotism.
5. Legacy and Ownership Transfer
José planned ownership transfers through a trust, avoiding conflict and
ensuring wealth preservation for future generations.
6. Balancing Roles and Authority
Varsity Cube 2025 +27 81 278 3372
Assignment 5 Semester 1 2025
Unique #:
Due Date: 8 May 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
1.1
Family governance refers to the structured system of decision-making and
communication that aligns the interests of family members, shareholders, and
professional managers to ensure business continuity, unity, and wealth preservation.
In the energy company case, family governance benefited the business by
introducing formal structures like a board of directors, an external CEO, and a trust.
These mechanisms professionalised operations, clarified succession plans, and
allowed José to gradually transfer ownership while preserving business value and
family harmony.
1.2
1. Resistance to Change
José initially resisted involving outsiders in the business. Lorenzo overcame
this by leveraging his leadership record to persuade his father to support
governance changes.
2. Transition from Informality to Formality
The business evolved from being run at the dining table to adopting formal
policies, a structured board, and an audit committee.
3. Succession Planning
A formal succession process was implemented to ensure leadership
continuity, reducing the risk of abrupt or contested leadership changes.
4. Professionalisation of Management
The appointment of a non-family CEO and long-standing employee
demonstrated trust in professional management over nepotism.
5. Legacy and Ownership Transfer
José planned ownership transfers through a trust, avoiding conflict and
ensuring wealth preservation for future generations.
6. Balancing Roles and Authority
Varsity Cube 2025 +27 81 278 3372
