Company Background and History

Prior to founding his own company, the founder had had seventeen years of experience working as a sales clerk in a nonwoven textile company. Those years of working in the trade allowed him to realize the profits of a certain item he was responsible for trading. He then came up with the idea of starting his own trading company. Before leaving his previous job, the founder had disclosed his plans to the company he had been working for, in hopes that the company would be able to continually supply him the product he was interested in trading. Thus, with an initial capital of NTD1 million, which came from family savings, the trading company was founded in 1989 as a two-person company, along with the founder’s wife. The founder was responsible of sales while his wife took charge of financial operations.

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The first clients were found through contacts of previous clients whom in turn introduced even more clients. Unfortunately, after a few years, the company in which the founder had been servicing discontinued their supply of the trading material. This event brought the founder to a new stage in the development of his business – the acquisition of a new factory.

In 1993, the founder came to the knowledge of a client whom was no longer interested in operating his own factory and had no successor to continue the business. Through this opportunity, the founder decided to purchase the factory and focus on the manufacturing of a single type of nonwoven fabric – the stitch-bond. In order to be able to legally manufacture the fabric, a new company name had to be registered with the scope of operations as the manufacturing and selling of stitch-bond nonwoven fabric. Thus, as part of its survival strategy, the first factory was established in 1993. Requiring a larger initial capital of NTD5 million, the founder invited family members to join in the investment, which in turn created a group of stockholders. The administrative branch of the first factory was initially composed of the founder, his wife, the addition of his eldest son which at the time was around 25 years old and two other non-family members whom were friends of the youngest son. At the acquired factory, the founder’s ex-colleague joined as a technician, a family member took the position of factory manager and four other non-family members were recruited as production line operators. Having established a large base of contacts in the nonwoven industry, the founder managed to find more clients in this pool to initialize the sales of its own manufactured products. With other investors in this new venture, a stockholder meeting is held yearly which is also considered as a yearly board meeting. During these yearly

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meetings, the firm’s performance is discussed and new goals are set for the coming year. The family members who are part of the stockholder group are not acquainted with the textile industry; therefore, they only contribute financially and most strategic decisions are made solely by the founder. Factory 1 currently serves the Taiwan market and a few markets overseas which include: South Africa, the Americas, the Middle East and Southeast Asia.

In 1997, a new opportunity presented. With flourishing demand of nonwoven fabrics in mainland China, the founder wished to expand his business into this market. Through a business partner who had previously started his business in China, the founder was able to find a location for the establishment of a new factory to supply the Chinese market. The second factory was jointly established by the founder, two business partners and a few family members. Family member employees now include the founder, his wife and their youngest son. Non-family members are recruited by the business partner with more experience in the Chinese market, making the total number of employees about 100 to this day. Even though non-family stockholders still participate in business operations, both are no longer part of the stockholders’ group due to disagreement on the strategic plans the company should follow in the future between the founder and the latter mentioned.

Therefore, the current composition of the stockholder group is entirely the same as that of factory 1. The role of the stockholder group still acts as that of a board of directors and so there has been no need to establish a formal one. Similar to factory 1, the contribution of the stockholder group is only a financial one and the founder still has the final say on all major decisions that the business is to take. Factory 2 currently manufactures for the Chinese market and strategically, serves as a supplier

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to factory 1’s customers who look for low-cost products.

Through a review of the interview data, it was found that the founder has an overpowering character. His past entrepreneurial success in establishing the trading company by himself has given him high confidence and self-esteem. Due to such a background, the founder has a tendency to feel directly responsible for all the operations in the family business and thus has the habit of taking all tasks into his own hands. As will be seen in the analysis section, this particular trait is found to be a determining factor in shaping the growth of the family firm.

Having presented the interview data, the following section will analyze the developmental process of company A. Using the three-dimensional developmental model as an analytical tool, a clear understanding of what stage company A stands in each dimension will be achieved. The analysis will also allow an understanding of the challenges the company has met and how it has or has not overcome them.

Actions the company has taken to overcome these challenges will be discussed.

This will shed some light on the additional guidelines family firms may follow in order to overcome the challenges encountered at each stage and be able to maintain the continual growth of the family business.

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