Midea Group’s Case Study Of Family Governance

The inheritance of family businesses,especially the second generation inheritance of family businesses,has always been an important issue of concern in the academic and practical circles.Since the reform and opening up,Chinese family businesses have grown rapidly.This has made China’s family-owned enterprises gradually occupy an important place in China’s non-public economy.While these companies have made progress,we have also noticed that the current development of such enterprises has encountered difficulties in the choice of managers.The main difficulty lies in the fact that most of these enterprises face the transfer of power between founders and successors.At this point in time,the founder of the company has been retired,but the willingness to integrate its descendants is not strong or the younger generation does not have the ability to master the enterprise.Under the grim situation that enterprises face no one else,the profession of professional managers has become another choice for everyone to consider.Some family businesses choose to introduce this system.Although there are success stories,examples of failures such as “Real Kung Fu” and “Huiyuan” must be vigilant.Based on the principal-agent theory,this paper analyzes the case of the management of the professional managers of Midea Group by means of inductive reasoning.From the perspective of case analysis,it expounds the system design of the introduction of professional managers in the family,and uses the corresponding data analysis methods to specifically display the beauty.The group went to the effect of familyization.Specifically,this paper first introduces the background of this paper,the significance of the topic,the literature review,the method used and the structure of the paper,followed by the related concepts and related theories of de-familyization,and then introduces the motivation and process of the familyization of the case company..Then introduce the motivation and process of the case company to family and the company’s operating conditions,and then combine the actual situation of the US group.The group founders of the United States elaborated on the constraints and incentives of professional managers in the family governance,and the effect of introducing the governance of professional managers.The study found:(1)The founder of the Midea faces retirement and the second-generation inheritance is not strong.It is the essential reason for the family to go to family.From the short-term analysis,He Xiangjian announced that Fang Hongbo took over the incident,and the outside world gave very positive feedback.Very optimistic about Fang Hongbo’s succession.(2)He Xiangjian,the founder of the Midea,adopted a series of binding incentives used by professional managers.It mainly includes: using the checks and balances of equity,the supervision of the board of supervisors of the board of directors,and the means of external supervision to constrain the opportunistic behavior of managers,corresponding to the adoption of high annual salary,reasonable equity incentives,transfer of business management rights and the design of perfect systems The shortcomings of He Xiangjian used the informal system of decentralized management culture to make up for the shortcomings of the formal system.(3)The de-family governance of the Midea enhances corporate value.After Fang Hongbo took over the US,the company’s strategy implementation process accelerated,and the reform achieved remarkable results.EVA analysis method was used to evaluate the performance of companies that eliminated shareholder costs.It can be seen that Fang Hongbo has faced the entire industry after taking over the Midea Electric Memory Group.The trough of the company,but the operating conditions and pressure resistance of the entire enterprise have been significantly improved.The value of the Midea group in the era of Fang Hongbo is constantly improving.After the above analysis,this paper combines the case practice and draws some inspirations: the family business needs to firmly control the enterprise in the process of familyization,and it is recommended to adopt a gradual handover in order to reduce the negative impact of the reduction of its own specific assets on the enterprise.The mode of extending the transfer time promotes the formation of a psychological sense of identity among the industry managers and reduces the “squeezing out” behavior of professional managers inside and outside the company.Moderate introduction of institutional investors to promote scientific and modern corporate systems.