The case on Iaccarino & Son follows the course of a family establishment through three generations. Throughout the years this family faced many obstacles such as, discrimination, financial and economic hardship, and very intense competition are a few things that observed. Some of the issues focused on in this case are succession the gentlemen shared, conflict within the family business, management and leadership issues, communication problems within employees and among the family members of the business, and bad decision making.
Carl Iaccarino, Fran’s Dad, buying out his brothers With Carl iaccarino buying his brother’s Jospeh’s 50 percent stake in the company, due to an increase in disagreements, back in 1970’s; It made Carl the sole owner.
During this transition, the company name was changed to Iaccarino & Son, to persuade Fran to join the family firm. Even though Fran was running his on successful picture framing business, he felt obligated to join the company to help his father out of the recession the company had been hit by in 1980’s.
Fran saw this opportunity as a case study. Seeing that he’d earned a MBA degree in 1992. By the end of the decade with Fran on the team, the company reached their 10 million make of the higher profits. Due to the fact the company had already experienced several recessions and they barely were able to stay above water, should have been a red flag for Fran. Also, the way Carl and Joseph split should have thrown up red flags for Fran.
Fran overlooked those red flags and wanted to focus on growth, on replacing old technology, and on finding new markets. Fran had hopes of one day owning and running Iaccarino & Son.
With big hopes of turning the company around which by the way, by the end of the decade the company had reached the 10 million mark, with higher profits; Fran paid little attention to the long time employees who felt intimidated by his presence, as well as felt he was a threat to the company. A lot of deception took place behind Fran’s back. When possible, employees would go behind Fran’s back and reverse all of his hard work. Carl in agreement with the long time employees didn’t trust Fran’s growth strategies put together to focus on the key issues, which caused problems. The fact that Fran never negotiated an ownership position with his father caused even more confusion in the business. Fran had no type of the final day on things.
Because he only signed on to oversee accounting and estimating the costs of completing contracts. By 2001, Fran is fed up and plans too depart from the family business. Fran gave Carl an option to bring in outside consultants and he would stay. Carl agreed to bring in outsiders to help re-organize the company. The consultants implement many of the same changes Fran had previously attempted. By 2007, Fran was optimistic about the company’s future. He drafted a plan for unnecessary expansion, wanting to the double the size of the firm.
Right after the draft of the expansion of the company, the great recession hits in 2008. The company wasn’t affected immediately, due to the type of contracting that was in effect. In 2010 and 2011, the company was hit hard by the recession. The company lost three projects in one day, as well as a dwindling backlog of projects. Some type of risk management plan should have been created before the 2008 recession, for the simple fact the company hard trouble during the other recessions.
They should have have evaluated and eliminated excessive debt ( if any), Downsize the company as much as possible, Cross train employees, and etc.. Because There wasn’t a risk plan created, the company ended up filing Chapter 7 bankruptcy in 2012. Before the closure of the company, in 2011 the company had their highest level of sales, Over $15 million. Due to the 2008 recession, a lot of bills weren’t able to be paid and the 83 year-Old company made the decision to close.
I think this family was treated very unfairly. From being taken advantage caused a lot of problems for their company. The family not always being on the same page was another problem. If Carl would have trusted Fran more, I feel the company could have progressed more and still would have been open today.