MNE3704 Assignment 2 Semester 2 2025 (Answer Guide) - Due September 2025

MNE3704 Assignment 2 Semester 2 2025 (Answer Guide) - Due September 2025 QUESTION 1 — CASE: Five Sisters and Two Executors 1.1 Pitfalls family business owners should avoid (8 marks) Family business failures after the death or incapacity of a founder are frequently the result of predictable governance and planning gaps. Six key pitfalls are evident in this case, each paired with a practical recommendation. The first pitfall was the absence of a robust succession or transition plan. Stuart held “the family’s first succession planning meeting” only six months before his death and “Stuart had left no plan for transition or succession” (UNISA, 2025: 5). Lack of clear succession timelines and training leaves heirs unprepared and creates power vacuums (Poza, 2020). A phased succession roadmap with contingency provisions is therefore essential. The second pitfall was weak or informal governance structures. Stuart “was not much for governance, organisation structure, or formal systems” (UNISA, 2025: 6). Informal decision-making centralised in the founder makes it difficult for successors to govern objectively. A family constitution, formal board charter and clear role descriptions are recommended (Parada, 2020). The third pitfall was entrenchment of non-family managers or executors. The case notes the executors “were paying themselves large salaries and had entrenched themselves in their positions” (UNISA, 2025: 5). Entrenched agents can capture decision rights and pursue personal interests. Regular audits, removal clauses and oversight committees should be embedded in estate documents. The fourth pitfall was a failure to align ownership, management and family expectations. The sisters “didn’t have the tools, knowledge, or experience to manage the businesses” (UNISA, 2025: 6). Overlapping roles cause conflict and slow decision-making. Separating ownership decisions from management functions and codifying expectations is a key corrective (Poza, 2020). The fifth pitfall was unmanaged cross-jurisdictional complexity. The businesses “were registered in a variety of countries and A