Implementation of value based management in small family retail business

Abstract

EN: The issue of implementation of Value Based Management in Small Family Retail Business has been investigated in the study and its feasibility has been proved. Despite the absence of statistical record about family business in Ukraine, we assumed that majority of medium-size, small and (as a part of small ones) microenterprises were family-owned (especially those which are registered as individual entrepreneurs). The tendency revealed by the authors (on the base of analysis of statistical data on those types of business) indirectly proves the increasing role of family business in Ukraine, regardless of insufficient attention paid to it by the government and local authorities and even absence of such a term in Ukrainian law. Firstly, special characteristics of family business and its difference from ordinary businesses have been clarified. The main principles of family business are: strength in unity, ability to handle conflicts, fairness, social engagement, strong values, pride and mutual support. Hence, taking into account that the biggest obstacle of VBM implementation is transformation of the way of thinking into the value-oriented one with perception of business as your own (by every manager and employee), we are convinced that it would be much easier to implement value philosophy (and VBM as a whole concept) in family business. Besides, the aim of maximization of the long-term value instead of current revenue is fully consistent with the objective of begueathing effective business to the heirs. Secondly, the stages of implementing VBM in Small Family Retail Business have been identified. They are: Task set, Assessment set, Сlarification set, Culture set, Planning set, Analysis set, Result set. Furthermore, the value chain for Small Family Retail Business has been built in the study. It includes Manufacturers and suppliers, Logistics (delivery, storage), Shops (management, sales areas, equipment), Customers service.Finally, the Value Drivers Tree for Small Family Retail Business has been developed, taking account of specificity of the type of business being examined. The three key value drivers are: Spread (between ROIC and Cost of Capital), Sustainability and Growth. Spread creates value, Growth accelerates value and Sustainability makes it possible to prolong existing of a firm on the fastchanging market. The results obtained in the study can be used in further research in this realm.