Bonnier Group: Sweden's Leading Family Owned Business
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Case Code: BSTR238 Case Length: 18 Pages Period: 1990-2006 Pub Date: 2006 Teaching Note: Not Available |
Price: Rs.400 Organization: Bonnier AB Industry: Media, Entertainment and Gaming Countries: Sweden Themes: Family-Owned Business, Corporate Governance |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Sixth Generation
Till the third generation, the concept of single dominant owner prevailed in the Bonnier Group. In the fourth and fifth generations - Tor and Albert Jr. emerged as the leaders and they played a dominant role. Till the fifth generation, ownership control was limited to a few family members. Even when the number of owners grew, only one family member held the key position and had major responsibilities. However, the succession from fifth generation to sixth generation represented a huge shift. In the sixth generation, there were 28 male and female descendents. The fifth generation encouraged the sixth generation members to take active part in the activities of the group, in order to identify a leader from them.
In order to ensure smooth transition, the sixth generation Bonniers were nurtured from a very young age and were made to understand that they were all equally eligible to hold ownership control in the group. Another factor that helped in the growth of the family business was the culture of open communication and consensus. All the family members were free to raise questions relating to business decisions during the group meetings. If the members raised serious objections to any of the projects, the projects were not pursued. In 1990, the members of the sixth generation along with Albert Jr.'s brother Lukas attended an educational program, in which they decided to create a vision to take the group's business forward. At that time, Carl-Johan (son of Albert Jr.'s brother, Johan) was identified as the leader by all the members. He assumed the responsibility of the CEO of the group. Around the time, due to the highly diversified nature of the business, there was a strain on the Group's financial and human resources. Several changes were taking place in the media industry in Sweden with the advent of the Internet. The family decided to consolidate its position in the media business and pull out of other unrelated businesses...
The Governance Practices
From the 1940s till the 1970s, Albert Jr. presided over the holding company which controlled the family's ownership interests in the Bonnier Group. Albert Jr. led the group and made all the important decisions regarding the activities of the company, including acquisitions and expansion. He even chose the people for the key positions in the Group. On the other hand, Gerard was the largest owner, holding the maximum shares in the Group. He was responsible for the publishing business and for maintaining the art collection of the family. Under the sixth generation, however, the governance practices and governance structure of the Bonnier Group went in for a major overhaul. With the sixth generation, for the first time, female descendants were entitled to employment in the Group and Bonnier Group inducted non-family members on the board of directors. According to Carl-Johan, "The first thing I did when I became CEO was to change the board of directors from 100 percent family to a majority of external professionals because it was important to get some internal integrity." As of 2006, there were 12 directors, of whom only four were from the Bonnier family...
The Road Ahead
According to industry experts, in a scenario where 90% of the family businesses split up by the time the fourth generation took over the reins, the Bonnier Group's corporate journey till the sixth generation was highly commendable. They were of the opinion that transition to the next generation would be smooth as governance procedures had been formalized and the family was bound by the 30-year agreement. The analysts said that after so many decades of operation there was no sign of dissent visible within the family. Factors such as the fundamental values of the family, responsibility, quality, and freedom of speech, which had guided it through 200 years, could guide it for generations to come. Some analysts, however, were of the view that the survival of the Bonnier family as a single entity might not be possible for too long...
Exhibits
Exhibit I: Family Business as a Heirloom
Exhibit II: Bonnier Group - Family Tree
Exhibit III: Bonnier Group - Important Events(1804-1989)
Exhibit IV: Bonnier Group - Business Divisions
Exhibit V: Organization Structure of the Bonnier Group
Exhibit VI: Bonnier Group - Net Sales and Operating Profits
Exhibit VII: Bonnier Family - Governance Structure
Exhibit VIII: Largest Family-Owned Businesses in Europe
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