The Rothschilds: Maintaining 200-year-old legacy of Family Business
| Case Code: FBM004 Case Length: 14 Pages Period: 1970-2015 Pub Date: 2015 Teaching Note: Available |
Price: Rs.600 Organization: Rothschild Group Industry: Banking Countries: United Kingdom, Germany, France, Italy Themes: Family-managed Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Expanding the Business
After the battle of Waterloo, Nathan and his brothers concentrated on expanding the business and increasing the wealth of the family primarily by giving loans to governments. The London House with the help of Paris, Frankfurt, Naples, and Vienna, between the years 1815 and 1859, issued a total of 50 loans worth 250 million sterling pounds, mainly to governments which were in need . The Rothschild family banks altogether became the most powerful bank in financial history and dominated bond issues. According to some industry experts, the principal contribution of the Rothschild family to nineteenth century capitalism was the development of the bond market...
Crises and Opportunities
Every crisis in Europe opened up new opportunities for the Rothschild family; rather, they utilized the conditions to their benefit. When the ghetto of Frankfurt was bombed by the French army in 1796, it reduced the restrictions placed upon Jews in Germany. As a result, Mayer’s business flourished and his newly started banking business received a boost...
Continuity and Transition
The early days of the 19th century saw the introduction of the taxation system and the Rothschild’s style of operating with a single commercial account couldn’t sustain itself. The different Houses continued with their separate businesses independently. The failure of the Rothschild’s Austrian bank in the 1930s, the Nazis seizing the family’s property in Austria, and the nationalization of the French Bank in the 1980s showed a breakdown in the power and control the Rothschild family had enjoyed for nearly 200 years...
The Family Enterprise Challenges
One of the major reasons for the success of the Rothschild family was the individual success of the five sons of Mayer. According to Amschel, Nathan acted like the commanding general in London, and the four brothers were like his soldiers and everyone played a very important role in taking the family’s business forward. However, the individual success of the descendants was not under the control of any single person as the family got bigger from the third generation onward and the businesses grew more independent. To make every business of the family a success in the future would be tough without coordination of all the other family members...
Looking Ahead
In July 2012, David commented that he was preparing his son Alexandre de Rothschild (Alexandre) as part of succession planning. "What I observe in Alexandre’s attitude and behavior and what colleagues tell me is very comforting. But again, he’s not under pressure to be more visible or add titles. Things are progressing as they should." David had been planning things strategically to consolidate things within the family and the businesses for a better future...
Exhibits
Exhibit 1: Current Businesses of the Rothschild Family
Exhibit 2: Family Tree
Exhibit 3: The Five Cities
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