The Three Generations case has several problems that show from the first transition of father to son, and carries on throughout the live of the business. The one major underlying problem is the lack of central control and power. This can be stated as the lack of effective corporate governance. This problem shows itself over and over in the business. The lack of conformity and strategy, the legal issues, and the splitting of the company are signs of the problem.
The symptoms that arise from the lack of corporate governance are obvious, beginning with unclear leadership. The idea of corporate governance is to align the decisions of the ...view middle of the document...
Too many hands were in the pot and everyone was more concerned with their share.
The next symptom in the case is the overall lack strategy and direction. This happened because the leadership was not strong enough, and possible because the much needed business acumen was not present. The sons grew up with the company and learned from their father how the run it. The problem is the father was no longer the voice and leader of the company. When Harry Sr. was in control the business grew and had a strategy in place that was not questioned. Once the reins were passed down that central figure was lost. This is very evident in Don McNeely when he decided it was no longer a family business, and would not name a family member the next owner. Harry and Don did not see eye-to-eye on this very important issue, thus creating the split of the company into two separate entities. An alternative to this decision could have been related to the first symptom in that they should have turned the power over to the board to make the decision. A vote could have been cast and a final decision could have been made. In the end one brother would have lost, but the company would have been able to carry on as one cohesive unit. The board members work together to figure out the best scenario for the corporation, the brothers did not.
The third major symptom is this case is the three-way split of the company. As stated before the lack of leadership and direction ultimately caused the split between the brothers, but the problems that follow will end up tearing the foundation of the company apart. The managers of the company had built it into a successful business, and the owners knew that. When the company split in two the managers could not go with both so they formed a third division to act as a control mechanism for each company. The issue now is that the owners have essentially cut themselves out of the equation. The managers were controlling business without the constant influence of the owners. That division can then easily become opportunistic. They are powerful enough to make decisions about the business that may benefit them more than the owners, or act in a way that the owners did not agree with. This...