Indias Agricultural Sector: An Analysis

Indias Agricultural Sector: An Analysis Agriculture Sector Submitted by   Introduction to Agriculture sector Agriculture sector from an Indian Economic perspective constitute majorly the following four such as: Food-crops and oilseeds, Fiber, plantation crops, fruits and vegetables. As per the 2013 RBI statistics Indian agriculture sector contributed 11.36% of real GDP. This sector is also the highest employer in the country employing approximately 60% of the population. In H1 2013-2014 Agriculture sector of India recorded growth rate of 3.4% [1] and this is higher by a margin of 0.8% during H1 2012-13. The primary reasoning was attributed to a good and a normal monsoon during the year. This spike in the growth of the agricultural sector contributed to a better growth rate for the GDP of 4.6 considering it was a sluggish period for all other sectors including services and manufacturing. Eventhough being one of the oldest sector, Agricultural sector is still contributing phenomenally to the GDP growth of the country. So, in this report an attempt is made to analyse salient aspects of the Agriculture sector from economic perspective, government policy perspective and other items that constitute the growth of the sector. Also, the report studies the major issues that’s being faced by the facing and potential way to resolve them is being brought out. Key factors affecting the performance of Agriculture sector: Climatic factors: Monsoons, soil degradation, water availability, floods and droughts. Policy factors: Government policies related to credit availability, support prices, crop specific programmes, ensuring availability of markets for the produce. Market factors: Pricing, integration with downstream consumers, transparency. Macro-economic factors: Supply and demand, change in consumption patterns. Technology factors: Availability of farming technology, awareness of the available technology among the farmers, incentives to adopt modern technology, educating farmers about the benefits of using technology. Global factors: Export and import policies, trade restrictions. Section IV Agriclutural Policies, Ramesh V V Issues faced by Indian Agriculture sector Unequal growth of Agriculture sector at different areas of India Dependence on seasonal rainfall :The performance of the sector is highly dependent on the seasonal rainfall India receives during the monsoon season. Decrease in land availability due to population growth and industrial sector growth Non availability of farm labourers Low level of mechanisation of the sector yielding lower productivity Unavailability of logistics affecting the returns from the sector Traditional cultivation methods: Restrained access to finance: Lack of facilities for storage of the food grains: Fragmentation of land Low quality seeds: Using better quality seeds can improve the yield by 40%, adoption of Bt seeds can also increase the yield, however higher cost of seeds and activism are hindrances to adopt Bt seeds widely. Unbalanced fertilizer utilization: It is one of the main reason for the stagnation of the yield, depletion of soil fertility and pollution of water bodies. Lacklustre government policies on fertilizer subsidies are one of the reasons for unbalanced use of Nitrogen based fertilizers Cropping Patterns: Sub-optimal crop pattern leads to low rates of profits. Geographical conditions vary and accordingly suitable crop patterns should be adopted, however farmers follow traditional practices which leads to lower profits. Policies and Schemes towards Agriculture: The Department of Agriculture Cooperation, Government of India, has been implementing various schemes and programmes for the benefit of farmers through State Governments. The Guidelines and other details of various programmes and schemes have been made available in their departmental scheme guidelines. Relevant details on the type and extent of benefits for different components promoted under various schemes are mentioned here. For simple understanding of subsidies and eligibility criteria of the same a handbook has also been constructed by the department. It has been prepared by categorizing various activities in 11 different themes such as, Soil Health, Soil Conservation Fertilizers, Seeds, Irrigation, Training Extension for Farmers, Mechanization Technology, Agricultural Credit, Agricultural Insurance, Plant Protection, Horticulture, Agricultural Marketing and Integrated Farming. Besides this, broad suggestions on practical aspects of each of these themes have also been includ ed. Schemes such as Rashtriya Krishi Vikas Yojana (subject to qualifying criteria for the States), National e-Governance Plan-Agriculture, National Mission on Agricultural Extension Technology Etc have nation-wide coverage.A few other schemes such as National Food Security Mission, Mission for Integrated Development of Horticulture (MIDH), National Mission on Oilseeds and Oil Palm (NMOOP), Cotton Technology Mission, Jute and Mesta Technology and Bringing Green Revolution to Eastern India (BGREI) have Crop/ Area / District wise applicability. The expert committee has come up an estimate of around 11172 crores in the next ten years for infrastructure development for agriculture marketing as of 2008 and has come up with some reforms in the Agriculture Produce Marketing Committee Act, (APMC)act, details from NABARD website Subsidies are helpful to farmers in India as nearly 11% of farmers have land but not have sufficient funding to irrigate the land. Three main types of financing are required for agriculture sector. i.e., Short term, Medium term Long term finance. Subsidies in an agriculturally oriented developing economy like India helps increase the productivity of the farmers. Institutionalized credit provisioning: Credit raised by farmers from Non-institutional lenders, from 95% in 1951 to 40% in 2002, India has come a long way in providing sustainable credit access to the farmers. Non-institutional lenders levy a high rate of interest and historically have manipulated the farmers, which led to poverty and its side effects like illiteracy. Analysis on the Agricultural Sector Demand vs Supply: The agricultural sector in India is doing pretty good job to meet the domestic demand and also exporting food grains in certain categories. The total demand for Y2010 was 228Mt and the total supply was 270Mt. Not only in 2010, if you see the trend for the past 5 years before 2010, the supply more than demand. This clearly tells us India is a food surplus country and there is no real pressure on the demand-supply process. The supply is mainly increasing because of better and modern farming technique and high productivity per hectare. Storage facilities have improved over the last 2 decades and at affordable prices are helping the farmers to preserve the crop thru the year. There is still a lot of scope for improvement for our agro output storage facilities. Our storage facilities are not on par with other developed countries and our farmers end up with a lot of spoiled food grains. Table: Agro Production –Demand in INDIA between 2005 and 2011 (All Figures in Metric Tons) Source: http://agcensus.nic.in/ Focus on Agriculture- Union Budget 2014. Government has proposed a technology driven green revolution and in this specifically protein revolution had more focus this year. Below par expectation of monsoon and its obvious impact on Agriculture was certainly considered this year. Keeping this in mind Government has proposed aRs.1,000 crore outlay for a new scheme named, Pradhan Mantri Krishi Sinchayee Yojana, which will address sufficient irrigation facilities and mitigate some risk. To address the problem of price volatility, fund called Price Stabilization fund amounting to 500 crores was allocated. Agriculture credit target was set to 8lakh crores. Interest subvention for timely repayment of loans at 3% subvention has also been included against the current 7% rate. Rural infrastructure fund of 25000 crores was also institutionalized. Soil health is one major factor which is linked to productivity. In this regard, 100 crore project scheme was included which delivers every farmer a soil health card. In this mission, an additional 56 crores towards mobile soil testing laboratories was proposed. Agriculture research institutions to come up in Assam and Jharkand with an initial investment of 100 crores and an additional allocation of 200 crores for Andhra Pradesh and Rajasthan and telangana and Haryana for Agriculture and horticulture institutions respectively was also proposed. Kisan TV, a dedicated channelon various aspects of agriculture. Bhoomi Heen Kisan scheme, institutionalized through NABARD for landless farmers towards guarantee for finance was proposed. Funds will cater to around 5 lac farming groups who will practice joint farming. Warehouse infrastructure fund of 5000 crores was allocated to address wastage loss in supply chain. Existing APMC, will be re-oriented in close association with state governments which in potential must take care of markets and introduce reforms for farmers. One thing that was criticized was the denial of a policy of minimum price Scheme, MPS which figured in the previous government’s budget. Impact of Fiscal Policies on Agricultural Sector Most Gov.’s that came to power in India have implemented pro-agricultural policies and have given a lot of sops and benefits to this sector. Though the outlook might seem healthy, the short term inconsistent policies have made the agricultural sector unproductive and unsustainable. If the situation continues like this, experts believe that Indian would become a net food gain importer in the next 20-30 years of time. Subsidy Input subsidies are a major part of the policy in Agricultural sector in India. The major subsidies are subsidies on electricity used in farming subsidy in fertilizer prices subsidy in seed purchase Indian agricultural sector is more dependent on input subsidies than any other major emerging countries. The recent Gov. order passed by the Chief Min of the newly farmed Andhra state to waive off all the agro loans taken by its farmers is an example of this Input subsidy and illustrates how heavily this is impacting the Agro sector. The subsidy on fertilisers has been increased to 67% in 2010 from 41% in 2004. This steep subsidy was possible because Gov. kept the nominal fertilizer prices unchanged in spite of high inflation and allowed real subsidized fertilizer prices to fall. The total Gov, input subsidy stood at 9.6% of the total Agro sector output. Among all the subsidies fertilzer subsidy amounts to 11 Billion dollars out of the total 60 Billion subsidy provided by GOI. This also plays a key role in the increase in non plan expenditure and which in turn increases the fisical deficit. The input subsidies have also produced some unintended side effects like over utilization of land, soil degradation, nutrient imbalance of soil and reduction in ground water level. Minimum Support Price The Govt had setup the Commission of Agricultural Costs and Prices (CACP) to define the minimum support price for almost all the major crops. The intention is to help the farmers but it interferes with the demand and supply. Tax Subsidies Indirect taxes for farm output is almost nil. Inflation The GOI expansionary policies and fiscical stimulus in 2009-10 has resulted in increase in inflation. This has resulted in the increase in cost of the farm labour and non subsidized farm equipment procurement. This has put pressure on the margins of the farmers. Restriction on Exports/Imports Whenver the supply was lower than demand for a particular crop happens i.e in supply shock scenario Govt generally tends to look to restricy exports. This has been an usual pattern with recent incident when the prices of onion and sugar increased as a result of lower production and the got wa quick to restrict the exports of these commodities Impact of Monetary Policies on Agricultural Sector Agricultural loans are available for various farming related activities. Farmers may apply for loans to purchase inputs for the cultivation of food grain crops as well as for horticulture, aquaculture, animal husbandry, floriculture and sericulture businesses. There are also certain special loans made available by many public sector banks and co-operative agriculture banks to finance the purchase of agricultural machinery such as tractors, harvesters and trucks. Construction of biogas plants and irrigation systems as well as the purchase of agricultural land can also be financed through different types of agricultural finance. NABARD offers a Kisan Credit Card Scheme and crop loans under the Rashtriya Krishi Bima Yojana. Kisan Credit Card Scheme helps farmers raise short-term funds for agriculture and other farm-based activities, on an on-going basis, with very flexible and friendly repayment terms. It also offers an agricultural loan for development of agriculture related industries, purchase of machinery and other agricultural purposes. Interest Rates Conclusion The agriculture community must be weaned off the subsidies gradually once sufficient development is made so as to increase the sustainability of Indian agriculture by providing them the right price for the cultivated produce, introducing highly effective storage facilities, providing necessary training to the farmers regarding use of technology and equipment thereby reducing wastage considerably and enhancing the sector as a whole. Agricultural subsidies can be a blunt instrument that can impede progress and slow down economic growth if theyre implemented without heed to the situation and specific date of expiry. Agriculture and industry has shown remarkable vigour and dynamism in contributing to a healthy growth in exports in the recent past. India’s food security depends on producing cereal crops, as well as increasing its production of fruits, vegetables and milk to meet the demands of a growing population with rising incomes. Policy makers will thus need to initiate and/or conclude policy actions and public programs to shift the sector away from the existing policy and institutional regime that appears to be no longer viable and build a solid foundation for a much more productive, internationally competitive, and diversified agricultural sector. References http://www.finmin.nic.in/ http://indiatoday.intoday.in/story/budget-2014-green-revolution-kisan-tv-channel-agri-institutes-arun-jaitley-finance-ministry-narendra-modi/1/370753.html http://businesstoday.intoday.in/story/agriculture-gets-priority-in-narendra-modi-govt-budget-2014/1/208042.html

Brand alliance Essay

The desired outcome of a brand alliance is to increase each other brand’s equity. Some of the examples could be as follows: â€Å"Two companies pool their resources to co-brand, with the idea that the new product can enjoy a unique positioning or two manufacturer’s pool resources to develop a promotional campaign featuring both brands. † (Samu, Krishnan ; Smith, 1999, p. 57). In general, brand alliances carry along great benefits but at same time ome inevitable risk. Well-established alliance is a powerful tool that can help to promote, to specify, to enrich, and to increase the brand value. Good example for increasing the brand value is brand alliance of PorscheDesign and Adidas, where PorscheDesign clearly raises the image of Adidas and on other hand PorscheDesign has more presence and can sell its products in many lucrative locations. (Adidas Annual report, 2009). Brand alliances are used at times of prosperity as well as in times when the brand suffers; they may serve as a driver for a brand to regain its market position. Wrong arketing strategies can ruin the attractiveness and image of a brand and successful brand alliance can revitalize them. According to (Samu et al. , 1999, p. 57) â€Å"A new brand might partner with an established brand to build a stronger presence for a specific usage occasion†. If one of the brands has very good image and brand equity, it is likely that customers will perceive the partner brand with similar attitude. This strategy is risky and can harm the stronger company. The risk factor can be lowered by extensive market analysis that can reveal some of the unfavourable issues for the xact brand alliance. A common practice for possible alliance partners is creation of an exit strategy. That allows companies react quickly if some of the planned outcomes goes wrong or in other direction than planned. (Melvin Prince ; Mark Davies, 2002) Very common reason for creation of brand alliance is a launch of a new product. It serves as a great advertising tool because it drags attention. New product is associated with some extraordinary brand, which creates a message for consumers. A successful example of brand alliances to promote new product launch where two trong brands allied and which worked perfectly was Range Rover and Victoria Beckham. The outcome was the new model line of Range Rover, Evoque. Targeted mainly at female customers, sales growth rose significantly after the introduction of Victoria Beckham’s special luxury edition. Even though the actual limited edition was produced only in small volumes, it created great deal of exclusivity for the new product. Associating the new model with Victoria Backham and creating a well- managed advertising campaign led to a successful launch of the new model line crowned by many design awards. About Land Rover, 2012). . Analysis of Successful Factors in Brand Alliance 3. 1 Successful Factors Before going deeply in the analysis, it is important to understand in theory the successful factors behind a brand alliance and their effects on consumer attitudes. while the effects they produce are the independent variables. While engaging in an alliance, it is fundamental for companies to work on the successful factors in order to produce and maintain the positive effects while reducing the negative ones

The Hidden Facts on Buy a Term Paper Online

The Hidden Facts on Buy a Term Paper Online Buy a Term Paper Online: No Longer a Mystery Sometimes there's so much paperwork and a small number of assignments a student might simply forget about something. Buy you will make the last decision you are going to be paper to put a specific amount students money on your account. Our service has built a strong group of writers that are term in a variety of students of science. Students often decide to tackle professionals for solving their writing troubles and there's nothing wondering as the issue of writing exists for a significant lengthy moment. Digital learning is now a reality, which can't be discarded. So managing of from just a little something isn't excellent for somebody. If you're planning a trip but not certain what are the very best places to go in autumn, you're welcome to take a look at some finest touristic fall destinations targeted at helping people to select something new, extraordinary, which matches their inter ests and preferences. Besides the difficulty in developing a college term paper, the time required to accomplish such a job is also daunting. Up in Arms About Buy a Term Paper Online? 1 way or another, the easiest solution still remains to deal with professionals that are ready to earn everything possible so you might get the maximum grade. If you would like to get an affordable custom made paper, keep reading for some tips and ideas on the way in which the approach works and precisely what you can expect to get. Otherwise, there's a solution. So ultimately, the procedure is subjective. Here's What I Know About Buy a Term Paper Online There are always questions we're asked about the way you can go and find yourself the very best possible place to acquire research papers written for you. There are lots of guides published to help students when trying to compose a great research paper. Very ideal place to purchase research papers caruso. Me best location to acquire inexpen sive research. The Basics of Buy a Term Paper Online You must also tell us your academic level so our writers know the amount of depth necessary for your paper. Your paper can be split into several components, so you'll be in a position to preview and pay term the completed parts throughout the practice. Previous portion from the crucial phrase papers really has to be verdict. The last sentence in your paper ought to be a buy statement. Buy a Term Paper Online for Dummies The principal part of a term paper is discussion. Let's say you should purchase essay for college. If you would like to ensure it is simpler to come up with along the entire entire cardstock an individual can paper service even get benefit originating from a personalized term paper professional services. If you are totally happy, all you have to do is download citations paper. Your paper is going to be fonnatted based on the fbllowing APA fornratting requirenrents. Whenever your term paper is ready, we'll contact you. A research paper is a written assignment in which you need to describe the outcomes of private experiment. But What About Buy a Term Paper Online? When you begin looking into paper writing services, you will see prices which are significantly. You may receive a lot of our services for a sensible price. It's understandable that each student have the chance of purchasing term paper online. Custom, if you choose the incorrect online writing service, it's risky to purchase term paper on the world wide web. What Is So Fascinating About Buy a Term Paper Online? There's no level in order to produce a description which seems fantastic however isn't realistic. Let's say you pay for at least 10 orders for the length of a training course. The customer will know the purc hase price of the order till they place it and ensure it is definite. If you opt to order affordable term paper on the internet, you will only have to complete a tiny form that will take couple minutes of your time. Thus, you could be inclined to take our tips into a substantial consideration. The website supplies a chance for the visitor to ask questions that are then answered by different members through a discussion forum. Download the internet Casino software today and you may play our totally free casino online, and be on your way to the fun and excitement of Vegas style internet casino gaming! Instead, why don't you just click on a term paper Web site and get the whole. You will likewise be able to get in touch with your writer as you want to, though your paper is being composed. Another new recommendation to keep in mind custom essay papers could be to continually find the opinions webpage for nearly any essay producing support which you're pondering. Luckily, there are methods to decide whether a term paper writing service is legitimate. You purchase a research paper writing essay editing support. Great organization of ideas will help your readers to follow your principal point from the very first sentence to the close of the essay. A lot of people consider essay writing services as a tricky work and we are here in order to prove that it may be easy with us. Looking for a resume writing paper throughout most difficult pieces of all ideal fitness essay to purchase essay interview could be able to purchase essays.

Examining Family Businesss Corporate Governance - Free Essay Example

Sample details Pages: 14 Words: 4081 Downloads: 10 Date added: 2017/06/26 Category Statistics Essay Did you like this example? This dissertation sets out a study of the family businessà ¢Ã¢â€š ¬Ã¢â€ž ¢s corporate governance, addressing the relationship between the owners and the management. Family businesses constitute a wide spectrum of enterprises, from small family owned and managed companies to a large internationally operating family controlled corporations. There are several definitions illustrates the family owned businesses, however the majority agree that Nebauer Lank definition illustrate the family business in a simple way and puts it as à ¢Ã¢â€š ¬Ã…“ A firm can be regarded as a family business if a given family holds the voting control of the firmà ¢Ã¢â€š ¬? (Nebauer Lank, 1998). This dissertation argues that, given the duality of the economic and non-economic goals family firms pursue and the complexity of the stakeholders structure, family firms need governance structure that matches the complexity of their constitutes stakeholders. According to that a better research and empirical understanding as how family firms are governed is needed. In this study the focus will be on assessing the level of understanding of the corporate governance concept overall and the codes provided by the Capital Market Authority (CMA), the Capital Market Authority in Oman focusing on strengthen the family owned business by incentives them to go public. The CMA is just recently in the process to create a corporate governance to help the Family business to be prepared to do so. In this study, the focus will be to create an understating and help to create a better code to help the family business sustain in the future. On the other hand there will be an evaluation of the agency theo ry and how the family owners acceptance of this model. Furthermore a research by McKinsey quarterly shows that 95 per cent fails to succeed the generation due to the lacking of succession planning and roles defining, therefore the dissertation will be evaluating the practice and preparation if any on how the existing owner prepare companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s succession planning rules and codes to handover their responsibilities to their successors. Don’t waste time! Our writers will create an original "Examining Family Businesss Corporate Governance" essay for you Create order In this study the focus will be on the family businesses in Sultanate of Oman, a country in the Arabian Gulf with a fledgling capital market. Oman has made significant efforts to improves the level of corporate governance, particularly in the listed companies and now the capital market would like to expand its corporate governance codes to the family owned businesses to strengthen the chances of the sustainability of its growth. Aims And Objective This dissertation will focus on the unique corporate governance challenges that any family business faces and propose structures and practices that can mitigate these challenges and ensure the viability of the business. The detailed objectives that guide the dissertation process are: To review and analyze relevant theoretical, and other, streams of literature that focus on corporate governance and family business Analyzing the practice of the existing code of corporate governance that applied by the CMA and if it fit to be implemented in the family business companies. Asses the ownership structure and polices in the companies and testing the theory of the ownership and control separation. Asses the long term planning by the company owners and how the successor is been appointed. To assess the significance, reliability, and validity of the results; to discuss the theoretical, empirical, and practical implications of the findings; to assess the limitations The impact of corporate governance in family businesses performance. Scope of the dissertation The present study addresses the governance of family firms, focusing on the nature of various governance mechanisms and how they affect firm performance. Family businesses provide a fruitful research context to study corporate governance due to lack of governance research in the area and the distinctive characteristics of family firms. The family business context, especially, enables the study of how aspects of formal and social control vary according to characteristics of ownership structure. Research Approaches and method The methods to gather the required data will be a qualitative, where the participations will be selected based on their history and age of the company in practice. The research will be analyzing their policies and corporate governance practice. Interviews will be placed with the owners and senior managers of the companies to get all the data required for the findings and results. Structure of the dissertation Chapter 1: Introduction This chapter included the background of the study, the aim, purpose of the study, research questions and limitation of the study and it will present the structural framework of the study. Chapter 2: Literature Review This chapter will review the historical perspective, theories and related studies of corporate governance, family business and related theories to corporate governance. This chapter will include the secondary data which will be used in discussing the findings. Chapter 3: Methodology Chapter describes the methodology and procedures that were used to carry out this study. Furthermore, this chapter will review the population and participants of the study, instruments and data collection procedures. Chapter 4: Results and Findings This chapter will present the data and findings related to the research questions Chapter 5: Data Analysis and Discussion This chapter presents the data analysis and the discussion of the finding. Chapter 6: Conclusion In this chapter, the researcher will present a summary of the study and the findings, conclusion and recommendation. The structural framework of the dissertation is illustrated in Figure 1. Figure Literature Review Introduction A growing number of studies have been done on the family business ownership and management separation or combination in the past few years and what is the linkage between the performance and these two elements. In this chapter we will be presenting the theories and the studies that are related to it and selecting a frame work that will be the base of the evolution of the practice we examine in the family businesses. Family Owned Business Family enterprises or family owned businesses represent the oldest form of businesses in the world. The family owned businesses constitutes more than 70 percent of all business in most of the third world countries and in some developed countries (IFC, 2009). In the IFC research à ¢Ã¢â€š ¬Ã…“Family Businesses Corporate Handbookà ¢Ã¢â€š ¬? shows that family owned businesses are the higher contributor in any country growth in terms of economic development and employment. In Spain, for example, about 75 percent of the businesses are family-owned and contribute to 65 percent of the countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s GNP on average. Correspondingly, family businesses contribute to about 60 percent of the cumulative GNP in Latin America (IFC, 2009). in addition to, accordingly to recent researches that 95% percent of employment in the Middle East and especially in the Arabian Gulf Peninsula is in the family owned businesses. There are several definitions that explains the family business corporations, the IFC define it as à ¢Ã¢â€š ¬Ã…“a company where the voting majority is in the hands of the controlling family; including the founder(s) who intend to pass the business on to their descendantsà ¢Ã¢â€š ¬?, in another words is à ¢Ã¢â€š ¬Ã…“A business actively owned and/or managed by more than one member of the same familyà ¢Ã¢â€š ¬Ã…“. There are two systems that control the family businesses; which are the family system, and the management system, the two system overlap due to the dual roles that any family member take, like a family member may be a manger or an employee in the business and here where the conflict arise. The family system is based on emotional, love and care. The family system is based on the relationship in the family and they take most of these values to the business. Where in the business system is the professional values are the edge of the decision. (Managment Resources, 2010) To define a family business need to understand the environment from one to another, here are list of family business definitions that made by researcher past the year that cover the family business from different view but reserving the concept. Table Family business Definitions A company is considered a family business when it has been closely identified with at least two generations of a family and when this link has had a mutual influence on company policy and on the interests and objectives of the family. (Donnelley, [1964] 1988: 428). Controlling ownership rested in the hands of an individual or of the members of a single family. (Barnes Hershon, 1976: 106). Organizations where one or more extended family members influence the direction of the business through the exercise on kinship ties, management roles, or ownership rights. (Tagiuri Davis, [1982] 1996: 199). It is the interaction between the two sets of organization, family and business, that establishes the basic character of the family business and defines its uniqueness. (Davis, 1983: 47). What is usually meant by .family business.is either the occurrence or the anticipation that a younger family member has or will assume control of the business from an elder. (Churchill Hatten, 1987: 52). We define a family business as one that will be passed on for the family.s next generation to manage and control. (Ward, 1987: 252). A business in which the members of a family have legal control over ownership. (Lansberg et al., 1988:2). A family business is defined here as an organization whose major operating decisions and plans for leadership succession are influenced by family members serving in management or on the board. (Handler,1989b: 262). Firms in which one family holds the majority of the shares and controls management. (Donckels FrÃÆ' ¶hlich,1991: 149). A business where a single family owns the majority of stock and has total control. Family members also form part of the management and make the most important decisions concerning the business. (Gallo Sveen, 1991: 181). A business firm may be considered a family business to the extent that its ownership and management are concentrated within a family unit, and to the extent its members strive to achieve, maintain, and/or increase intraorganizational family-based relatedness. (Litz, 1995: 78). A business governed and/or managed on a sustainable, potentially cross-generational, basis to shape and perhaps pursue the formal or implicit vision of the business held by members of the same family or a small number of families. (Sharma et al., 1997: 2). A family enterprise is a proprietorship, partnership, corporation or any form of business association where the voting control is in the hands of a given family. (Neubauer Lank, 1998: 8). Family businesses share some common characteristics, largely due to the interacting and overlapping domains of family, ownership and management (Tagiuri Davis, 1982). Family firms have a complex stakeholder structure that involves family members, top management, and a board of directors. Family members, who are often significant owners, usually play multiple roles in managing and governing the firm (Tagiuri Davis, 1982). This involvement promotes loyalty and also commitment to long-term value creation (Dyer Handler, 1994) and reduces problems that arise from separation of ownership and control, as experienced in large, public corporations (Jensen, 1989). Also, family businesses may enjoy a competitive advantage due, for example, to remaining entrepreneurial in character and having a strong sense of responsibility to society (Neubauer Lank, 1998), fast verbal and nonverbal communication, aided by a shared identity and common language of families (Gersick, Davis, McCollom Hampton Landsberg, 1997), family members. Business expertise gained during early childhood onward (Kets De Vries, 1996), and a strong organizational culture contributing to external adaptation and internal integration (Schein, 1983). However, the familyà ¢Ã¢â€š ¬Ã¢â€ž ¢s involvement in governing the firm may induce a focus on business and non-business goals, possibly leading to inefficiency (Schulze, Lubatkin, Dino Buchholtz, 2001). If the owner family is not regularly informed about the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s affairs, differing visions of the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s future may develop between management and the family. The resulting feuds between family factions may distract managementà ¢Ã¢â€š ¬Ã¢â€ž ¢s attention from value-creating activities and so reduce their commitment to strategic decisions. Owner-managers also may act opportunistically by satisfying their own needs at the expense of the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance and long-term survival. Entrenched owner-manager s may not share their powers with others, especially not with the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s board. Furthermore the common characters of all family businesses are illustrated in the diagram below. Figure The individual represent the family members who are directly involved in daily bases with the operation, the family symbolizes the whole family where in some family businesses called the family counsel and the management dimension represents the family managers and non-family managers. McKinsey quarterly stated in the report à ¢Ã¢â€š ¬Ã…“keeping the family in businessà ¢Ã¢â€š ¬? that only 5 percent will continue to create shareholders value after the third generation. Moreover; the IFC also mentioned in the family business hand book, while the third generation takes over; 95 percent of all family businesses will not survive the ownership around. These consequences might be a result to the lack of commitment and proper business education of handling the business demands. In addition, the survival of family firms is often challenged by dictatorial rule, resistance to change, lack of professionalism in management capabilities, confusion in family and business roles, rivalry and enlarged human emotions among family members, conflicts between interests of the family and the business, and a low rate of investment in business development (Donnelley, 1964; Gersick et al., 1997; Kets De Vries, 1993). All the definitions are focusing on the shareholders and their power in voting and management and these two points are actually the core strength and weaknesses of any family business. However there are other dimensions that a family business can be measured of its strength and weaknesses like: Culture Ownership and governance Succession planning Family involvement This dissertation will be reflected somehow in the culture dimension due to the strength of the factor here in the Arabian Gulf Countries and Oman. Different researcher came up with different definitions of the family business; however, the definitions imply six themes for clarifying the boundaries of the domain of family business: (1) ownership, (2) management, (3) generational transfer, (4) the familyà ¢Ã¢â€š ¬Ã¢â€ž ¢s intention to continue as a family business, (5) family goals, and (6) interaction between the family and business. These themes are similar to those found in the extant literature. For example, Handler (1989a) categorized family business definitions under four headings: ownership and management, interdependent subsystems, generational transfer, and multiple conditions. The extant literature on family business research has largely neglected the definition of the family itself. By modifying Winter.s, Fitzgerald, Heck, Haynes Danes (1998) definition of the family, the present study defines it as a kinship group of people related by blood or marriage or comparable relationship. This definition allows a multigenerational view of an extended family. Family Business in Oman According to the family firm institute (FFI) the around the 75% of Omanà ¢Ã¢â€š ¬Ã¢â€ž ¢s private companies are family owned, with their firms creating 70% of the country employment. There are 12 top families who are controlling around 75% of the contribution over all in Oman. The family owned business also control 90% of commercial activity according to Tharawat (Fortunes) Magazine. Oman is a part of the GCC Region where in the region is estimated that family businesses worth more than 1 trillion dollar, that is ready to be handled to the next generation. All family owned business share same characteristics as mentioned above, even the strengths and the weakness are similar to some extant in all family businesses. However, the family business can be categorized to two categories: Listed family businesses Non-listed family business The listed family businesses are set to fulfill the listed companies corporate governance code as per the CMA regulation, but the non-listed are not treated that way; whatà ¢Ã¢â€š ¬Ã¢â€ž ¢s so ever the size or the operations are. The CMA in Oman are concentrating nowadays to establish an attractive market and safe to all sizes of family businesses, à ¢Ã¢â€š ¬Ã…“the CMA is concentrating on converting the family closed family business to go public by Initial Public Offering(IPO) offering them a less strict rules and requirements to commence the IPOà ¢Ã¢â€š ¬? as the Head corporate governance Center declared. Furthermore there are different points that might affect the operation of any family businesses such as: family relations affect the assignment of the management family indirectly runs the company à ¢Ã¢â€š ¬Ã…“major family influence/dominanceà ¢Ã¢â€š ¬? of the management (in terms of strategic decisions) à ¢Ã¢â€š ¬Ã…“significant proportionà ¢Ã¢â€š ¬? of the enterprisesà ¢Ã¢â€š ¬Ã¢â€ž ¢ senior management à ¢Ã¢â€š ¬Ã…“most important decisionà ¢Ã¢â€š ¬? made by the family à ¢Ã¢â€š ¬Ã…“family controlà ¢Ã¢â€š ¬? of the management of the enterprise at least 2 generations having had control over the enterprise These points might be strengthen the family business in the initial stages of the operations but there must be some kind of governance or policies on whom can make a decisions and how is not. Corporate Governance Corporate governance is a topic that has been a subject of significant debate since 2001 Enronà ¢Ã¢â€š ¬Ã¢â€ž ¢s and other US companies crashed. Some analyst say lack of corporate governance was the main reason behind the crash (International Swaps and Derivatives Association, 2002). The international Swaps and Derivatives Association highlight that the failure was due to interests that extended certain managers at the expense of the shareholders. While the United Statesà ¢Ã¢â€š ¬Ã¢â€ž ¢ capital market where busy analyzing the reasons behind the crash of Enron and World Com, Sultanate of Oman has also experienced its share of corporate trouble affecting not only large companies such as Rice Mills SAOG and Oman National Investment Company Holding SOAG but also dozens of smaller companies, which have had to turn to the government for assistance (Dry, 2003). The year 2002 was the birth of the new corporate governance standards from the Capital Market Authority (CMA), but it was only c overing the list companies in the Muscat Security Market only. Since then the CMA focused on upgrading this standards and code and refine it to be in a worldwide acceptable standards and to include the best practice for the companies. The standards have been modernized since 2002 on the listed companies and the closed shared ones but nothing was mentioned on the family business side. In 2009 the CMA established the corporate governance center to help the companies implement the codes of corporate governance and to regulate the practice and monitor it, in addition to create a new standards to fit the family businesses practice. Till today the CMA and the Center did not establish a full concept on how they can produce a set of codes to be acceptable to the share holders of these businesses due to the lack of information on the family owned businesses in Oman. Theoretical framework related to Corporate Governance. The corporate governance model did not came from one framework or a certain theories, but I was built up on different practices and theories which results of different frameworks that today any economic system can customized to suit the needs to regulate the market. There are certain theories that been always associated with corporate governance practice which is set out the relation between the principle (shareholder) and the agent (management): The agency theory Stewardship Theory Stakeholder theory The agency Theory Agency theory having its roots in economic theory was exposited by Alchian and Demsetz (1972) and further developed by Jensen and Meckling (1976). Agency theory is defined as à ¢Ã¢â€š ¬Ã…“the relationship between the principals, such as shareholders and agents such as the company executives and managersà ¢Ã¢â€š ¬?. Agency theory argues that in the modern corporation, in which share ownership is widely held, managerial actions depart from those required to maximize shareholder returns (Berle and Means 1932; Pratt and Zeckhauser 1985). Since Jensen and Meckling (1976) proposed a theory of the firm (Agency Theory) based upon conflicts of interest between various contracting parties à ¢Ã¢â€š ¬Ã¢â‚¬Å" shareholders, company managers and debt holders à ¢Ã¢â€š ¬Ã¢â‚¬Å" a vast literature has been developed in explaining both aspects of these conflicts. Jensen and Meckling (1976) further specified the existence of à ¢Ã¢â€š ¬Ã…“agency costsà ¢Ã¢â€š ¬? which arise owing to the conflict s either between managers and shareholders (agency costs of equity) or between shareholders and debtholders (agency costs of debt). Financial markets capture these agency costs as a value loss to shareholders. The agency theory argues that an agency relationship exists when shareholders (principals) hire managers (agents) as the decision makers of the corporations. The agency problems arise because managers will not solely act to maximize the shareholdersà ¢Ã¢â€š ¬Ã¢â€ž ¢ wealth; they may protect their own interests or seek the goal of maximizing companiesà ¢Ã¢â€š ¬Ã¢â€ž ¢ growth instead of earnings while making decisions. Jensen and Meckling (1976) suggested that the inefficiency may be reduced as managerial incentives to take value maximizing decisions increased. Agency costs are arising from divergence of interests between shareholders and company managers. à ¢Ã¢â€š ¬Ã…“Agency costsà ¢Ã¢â€š ¬? are defined by Jensen and Meckling as the sum of monitoring costs, bonding costs and residual loss. (1) Monitoring Costs Monitoring costs are expenditures paid by the principal to measure, observe and control an agentà ¢Ã¢â€š ¬Ã¢â€ž ¢s behavior. The economic impact of asymmetric information also results in various corporate agency problems. Firm managers (insiders) know more about their firm than shareholders and debt financiers (outsiders). When outsiders are unable to judge over the firms performance, they tend to qualify a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance as moderate. A result of this asymmetric information is that shares of a firm with a great performance are undervalued and vice versa. More specifically, information asymmetries between shareholders or bondholders and corporate executive management creates the necessity of monitoring (costs) and complications for the structuring of financial contracts. They may include the costs of preparing reliable accounting information and audits, writing executive compensation contracts and even ultimately the cost of replacing managers. Denis, Denis, and Sarin (1997) contended that effective monitoring is restricted to certain groups or individuals. Such monitors must have the necessary expertise and incentives to fully monitor manager. In addition, such monitors must provide a credible threat to managementà ¢Ã¢â€š ¬Ã¢â€ž ¢s control of the company. (2) Bonding Costs To minimize monitoring costs, managers tend to set up the principles or structures and try to act in shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s best interests. The costs of establishing and adhering to these systems are known as bonding costs. They may include the costs of additional information disclosures to shareholders, but management will obviously also have the benefit of preparing these themselves. Agents will stop incurring bonding costs when the marginal reduction in monitoring equals the marginal increase in bonding costs. As suggested by the agency theory, the optimal bonding contract should aim to entice managers into making all decisions that are in the shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s best interests. However, since managers cannot be made to do everything that shareholders would wish, bonding provides a means of making managers do some of the things that shareholders would like by writing a less than perfect contract. (3) Residual Loss Despite monitoring and bonding, the interest of managers and shareholders are still unlikely to be fully aligned. Therefore, there are still agency losses arising from conflicts of interest. These are known as residual loss, which represent a trade-off between overly constraining management and enforcing contractual mechanisms designed to reduce agency problems. There are some other types of agency costs as following: (4) Agency Costs of Debt There are three groups of participants in a firm, suppliers of equity, debt suppliers and firm managers. It is logical that they would try to achieve their goals with different measures. Suppliers of equity, or shareholders, are interested in high dividend ratioà ¢Ã¢â€š ¬Ã¢â€ž ¢s and high share prices. Debt suppliers, on the other hand, are interested in interest and debt repayments, whereas firm managers would be focused on their financial remuneration. These conflicts of interest give rise to opportunity costs (whereby best strategies are often not adopted) and real costs (e.g., inspection costs). These costs decrease the market value of a firm. Kim and Sorensen (1986) investigated the presence of agency costs and their relation to debt policies of corporations. It is found that firms with higher insiders (managers) ownership have greater debt ratios than firms with lower insider ownership, which may be explained by the agency costs of debt or the agency costs of equity. (5) Agency Costs of Free Cash Flow The free cash flow theory presumes that there are enormous conflicts of interest between shareholders and stakeholders. This implies that managersà ¢Ã¢â€š ¬Ã¢â€ž ¢ decisions do not always maximize the value of a firm (Jensen, 1986). Jensen (1986) also emphasized the continuous agency conflicts between top managers and shareholders. These conflicts are especially severe in firms with à ¢Ã¢â€š ¬Ã…“largeà ¢Ã¢â€š ¬? free cash flows. A free cash flow is the balance of money a company is left with when all projects are financed. If top managers hold more cash than profitable investment opportunities, they may overspend money on organization inefficiencies or invest it in projects with net present value (NPV) less than zero. The logic has it that higher debt levels reduces free cash flows and consequently increases the value of the company. The Stakeholders Model The Stewardship Model Corporate Governance in Oman Selection of framework related to this study The agency theory and family businesses ( Ownership Vs. Management) Introduction to the succession planning in the family Business The importance of succession planning Conclusion of Literature Review