Conflict Over Leadership and Succession in a Successful Family Business: The Lakkard Leather Company - Richard Ivey School of Business Foundation (2011) - Case Review

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[...] After recovery, CFL finds himself at odds with his son on several issues: first, his refusal to step down even as he feels out of step with the demands of managerial tasks at the company, which reflects poorly on his strategic outlook. CFL finds his sons' idea about dealing with working capital requirements and human resources management to be alien to his own ethos for Lakkard Leather. CFL continues to run his business as a family workshop, which entails favorable credit to his friends and business partners, even as his own suppliers are growing more demanding as to payment. [...]

[...] Furthermore, Lakkard's managerial decisions have put him out of touch of the reality of leather manufacturing in Germany. The Lakkard Leather Company is a mid-size company of 192 employees, founded by owner Carl Friedrich Lakkard (CFL) in 1964. It has grown from 38 employees thanks to successive acquisitions of local competitors, such as Eggers and Kaiser, between 1994 and 1998. In 2003, a road accident temporarily put Peter Lakkard in charge. His managerial style differs from his father's, which translates in a more efficient working environment, one that is more business-minded than the hitherto 'family workshop' mindset. [...]

[...] His project called for a labor-intensive but highly profitable designer handbag, with an astounding 70% margin. In essence, CFL cannot see past his tenure and look forward to renewing his managerial policies and fit his company within a less favorable environment. The fact that he still treats his former friends and contacts' firms as favored customers even as most of them left or retired shows that he has not internalized that the Leather production sector in Germany is no longer the same as it was when the company was founded in 1964, or when he bought out his competitors in the mid-and late 1990. [...]

[...] Conflict Over Leadership and Succession in a Successful Family Business: The Lakkard Leather Company - Richard Ivey School of Business Foundation (2011) - Case Review Instructions Read the case study: Conflict Over Leadership and Succession in a Successful Family Business: The Lakkard Leather Company. Your written review should be at 2 pages. When you are reading the case study, determine: The situation. Background information: industry, organization, products, history, competition, financial information, and anything else of significance. Specific (functional) area of interest: marketing, finance, operations, human resources, or integrated. [...]

[...] By contrast, Peter's tenure was more fortunate, as he made sure to clue in workers in the company's business, and make them part of it, rather than treat them as mere employees. The primary issue in this case is CFL's unwillingness to step down, or at the very least to change the way he conducts his business: to improve the cashflow situation, he needs to expand is working capital, and move his production to more upscale products. This turns out to be beneficial to the company and its workers, since it results in an improved working environment for human resources, as well as a more efficient production process, streamlined to cut down on wastage and throughput time. [...]