Predicaments And Governance Mechanism In Internal Control Of Family Enterprise

Whatever in quantity and quality,the family enterprises are both with a large share in the global economy.According to the study of scholars,such as Kelin E.Gersick,it is supposed that family enterprises owned by a family or administrated by a family occupy at least 65 percents to 80 percents of total enterprises all over the world.There are about40 percents controlling stake in the family enterprises of the top 500 global.The number of family enterprises has increased at a speed of 15 millions every-year in China.It is no doubt that has been the new power for the economic development of China.60% of the Family Enterprises in China are lack of motivation in long term development.One important factor contributing to this phenomenon is the existence of special human resource management system,especially in the relationship among high ranking managers.The lack of mature management mechanism eliminates the efficiency of internal control of the companies.The major problem faced by the family enterprises is the establishment of reasonable and efficient internal control platform improving the business quality.Hence,the research on predicaments and governance mechanism in internal control of family enterprise is of significance in development of company and the entire economy.Both of the theoretical analysis and case study are as the methods have been taken in this paper.By analyzing the case of South Beauty Company to take the discussion about predicaments and governance mechanism in internal control of family enterprise.First of all,it is review the literature about the internal control,the family enterprise and family business internal control;illustrated about the concepts of family enterprise and internal control;show the characteristics of the family enterprise internal control,the factors which influence on it and the difficulties which has been faced.Secondly,it is introduce the fundamental state of south beauty company,and the situation of the internal control in south beauty company.According to the theories of the internal control and corporate governance,and the characteristics of this case,it is analyze in deeply about the factors of south beauty facing the difficulties from the terms of Internal environment,risk assessment,control measures,information and communication,supervision,etc,then,the advises has been taken.Finally,because of the disadvantages of family enterprises such as concentrating of risk points,etc,The strategies has been made out which in accordance with the situation of Chinese to solve those problems,including that,the optimization of the internal control environment,to strengthen the supervision,to review activities or emphasized the correct defects and to change the wrong understanding of communication,etc.The investigation of disadvantage in the internal control system based on auditing methods refers to the fact of lacking details and systematic analysis.Through the development of 20 years the growth of family enterprises comes to the point of significance.The challenge appears in the procedure of second undertaking.All of the founders of the companies wish a sustainable development of the business in order to build a long standing commercial giant.The combined method used in the thesis is based on theoretical analysis and case study.The predicaments and governance mechanism in internal control of South Beauty Company are investigated in the research,in different aspects of problems including high organizational centralization,financing obstacles,singleness of succession modes and repelling external power.