FMB Exam 2 Study Guide with Complete
Solutions
Distinct characteristics of FB succession - Correct Answer️️ -Dual identity, biological
necessity, nonmarket based transfer of power. Strongly ruled by emotions.
Next generation succession-important considerations - Correct Answer️️ -a. Nee...
relationships, and have the ability to accommodate others, can count of non-family
member managers, controlling ownership, earn respect from all, skills and abilities fit
the strategic needs, respect past and focus energy on future, have had many
challenging assignments.
Integrity, commitment, respected, competence in decision making and interpersonal
skills, skills in marketing, sales, finance, strategic planning and technical aspects.
Selection methods to choose the successor - Correct Answer✔️✔️-Primogeniture
approach- the elders, sibling partnerships- two sons to work together, Caretaker- when
the successor is not quite ready to take over, Corporate approach- assess criteria and
qualities
Why do some parents make it difficult to join the FB, eg. Ford family - Correct
Answer✔️✔️-They may not want to let go, not sure of child's capabilities or commitment.
Nature of next generation commitment - Correct Answer✔️✔️-Affective, normative,
calculative, dependent
Next generation development: smart money management; managerial worthiness; and
family relations - Correct Answer✔️✔️-Smart money management: Heirs should learn
stewardship and responsibility
Managerial worthiness : Work for salary and develop work ethic, give expense account,
compensate at the market rate and provide performance reviews.
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