Tuesday, May 28, 2013

CTH (A & B): Turning a Family Business into a Corporation

SHEKSHNIA Stanislav, SHARINOVA Natalia 
©2013 INSEAD Case Study

A private company with complex ownership and a non-transparent management system faces challenges associated with fast growth and an archaic management structure. The founders recognize the challenges, but lack the knowledge and experience to deal with them. The system of corporate governance at CTH reflects a strange mix of Russian legal requirements (among them, the separation of the chairman and CEO roles and independent audit), family traditions, and an informal entrepreneurial approach. The case illustrates the different approaches the CTH founders explored in reforming the system of governance, how their thinking process evolved, and what decisions they made at different stages of the change process.

Pedagogical Objectives: To give students the opportunity to see a real situation in managing a family business, the challenges that it poses, and possible ways to deal with it. It allows them to see how local companies in emerging market enter the global world, how this affects the culture and management system inside the orgnisation, and how challenging it can be for successful Russian entrepreneurs to adapt and switch to international corporate and financial strategies.