family business (MBA)

1. Kay Zin Latt (D580072)
Assignment 1: Anderson Steel Service, Inc
(1) What are the business, family and ownership issues in this case?
The business is a local distributor of steel products in Santa Ana, California namely
Anderson Steel Service, Inc owned by a family with three sons. It had through 25 years in
business, doubled sales volume every four years and increased its profit ratio from 2% of
sales in 1956 to 5% in 1979. The ownership is that 57% of the stock had been evenly
transferred (19% each) to the three sons of the Chairman, Mr. Charles Anderson. The rest
43% of the stock would belong to Charles.
(2) Why did the situation arise?
Charles's youngest son, Peter currently working as a salesman at the company, proposed to
revamp truck delivery service to out-of-town customers and emphasized greater company
growth and planning. Charles acknowledged that long-range planning had always been
lacking in the company but the company had been quite successful without it with the
upward of sales revenue and net profits for future capital investment. Charles would like to
consider Peter’s proposal but two elder sons namely Robert and Frank are unlikely to agree
with Peter’s proposal as they thought that Peter did not have enough working experience in
family business. Robert currently leading as a President of the company thought that ten-
year plans were a “little far-fetched” for a small company and the two elder brothers
reasoned that it had taken nearly ten years of on-the-job training for them to know the
business well enough to ensure smooth functioning so Peter should have 10-year experience
before he could judge the consequences of his experimental ideas. On the other hand, Peter
who has a tiger spirit had complained frequently about the lack of real planning in the
company and the needs to assign responsibilities and timetables to get things done.
(3) If you were Charles, what should you do?
If I were Charles, I will follow these steps to solve the tension of this situation among my
sons and keep the company grow strongly in the future for our third generation;
(i) Face to face meeting with my sons
(ii) Make Peter present his proposal and ideas altogether with his marketing research
outcomes
(iii) Open the floor to discuss frankly about Peter’s proposal from different points of
view
(iv) Find the solution for each point to get mutual understanding among us
(v) Suggest to prepare long-term plan for 10 years but spilt into two phases (first 5-year
plan and second 5-year plan)

2. Kay Zin Latt (D580072)
(vi) Suggest Peter to coordinate with Frank for preparing the long-term plan for financial
aspects then present to Robert and me for our advice and assessment to develop the
long-term plan
(vii) Negotiate among us to appoint Peter as a sale manager to reduce the workload for
Robert
(viii) Gain the victory of our problem by discussing openly and combining Peter’s idea to
grow our company with long-term plan with the practical points of view of Robert
and Frank, and my guidance based on my experience as an entrepreneur; it is better
to make some mistakes or take some risks than to do nothing.