Welcome to the Family Business Simulation: Honey
Heritage.

This simulation is about navigating the unique challenges
often present when running a family business over many
years and multiple generations. As you begin, you will
read the origin story of the honey farm as well as the
early business and lifestyle decisions made by the family.
Once you move through the first generation, you will be
presented with decisions that you must make for the
family business. It’s important to weigh each decision
carefully. Remember that you can always view the
family’s current members by going to the Family Tree
page. Make sure to play through the tutorial before
getting started.

Good luck on your multi-generational journey with
Alshaghathirah

______________________________________

September 1972 Generation 1

Alshaghathirah

Rafael got into the honey business by accident. Hard-working and resourceful, he left school at
a young age to care for his parents, now deceased. He worked odd jobs in a rural town in Brazil
supporting his wife, Vitoria, and their three young children, Lusiana, Edoardo, and João.

One day Rafael was asked to clean out a beehive at his employer’s farmhouse. While he was
removing the hive, he saw the honeycomb with honey and wondered if there was a market for it.
His boss wasn’t interested in the honey, so Rafael asked if he could sell it on his own. Vitoria
helped him pack it into small jars and designed a label for them.

Rafael sold the honey to a local store, which very quickly sold the jars to customers. When the
store owner asked for more honey, Rafael went back to his boss and asked if he could have a
small parcel of land in his employer’s farm to keep the hives. His employer encouraged him, and
in return Rafael assured him a lifetime supply of honey.

May 1976 Generation 1

Alshaghathirah

Rafael increased the number of hives to 200, and his little operation became a booming
business. He began to put hives in other properties around the area, starting with his neighbors,
who were happy to have bees pollinating their gardens. Once he made the rounds of his
neighbors, he began to go further afield. He knew many of the larger houses in the countryside
were second homes of wealthy families who only came to visit during holiday times or
occasional weekends. They, too, were happy to have Rafael maintain his bee boxes on their
properties.

Growing at this rate became very time-consuming. Rafael soon left his odd jobs work and
concentrated solely on his honey business. He realized that he had limited knowledge, so he
went to other beekeepers to learn the business. Vitoria stepped in to handle the honey
production and packing, first in the family kitchen and then in a small, closed factory when the
business outgrew their home.

Rafael: I need to focus on the business and make it grow, it is my only priority right now. There
will be time to enjoy life and luxuries later. I need to do this for my family and kids.

Vitoria: We hardly see you as it is! But this business could soon support a full staff, and you
could have more time with your family in the future. Even still, your children hardly know you; try
to strike a balance.

Rafael focuses time and money on the business
Rafael spends quality time with his family while maintaining business responsibilities

March 1980 Generation 1

Alshaghathirah

A typical day for Rafael was to gather honey from different hives all day long before returning to
the factory.

The company was running very efficiently, but Rafael was in the midst of everything. Every
decision needed his approval. He managed the retailers and the distributors. He signed every
check. He knew all the employees and customers, and most customers preferred to speak to
him directly. Rafael was happy to speak to them at any time and was also known to travel great
distances just to meet them should they have a problem.

But his work was taking a toll, and Vitoria expressed her concerns.

Vitoria: Rafael, we are so proud of all you have accomplished. I am worried, however, that you
are not taking proper care of yourself. You are working such long hours, you should be sleeping
in comfort. You should upgrade your plane tickets and hotels so you can be refreshed.

Rafael: I’m fine, I sleep well when I get home.

May 1983 Generation 2

Alshaghathirah

All of Rafael’s children grew up watching him work hard at the honey farm and feel a deep
connection to the family business. While at university, Lusiana met Ronaldo and they fell in love.
At the wedding, the family gave Ronaldo two drops of honey from Alshaghathirah to welcome
him into the family and symbolically bring him in as part of the company as well. This soon
became a tradition at all family weddings.

Rafael and Vitoria were touched by the idea of their children and future in-laws caring about
Alshaghathirah after all their hard work. They dreamed that one day they would give each of
their grandchildren two drops of honey on their first birthday to welcome them into the honey
farm tradition.

January 1997 Generation 2

Alshaghathirah

In 1993, João married Josefa, a woman he met during a foreign trip. He insisted that it was love
at first sight. Josefa, by her behavior, managed to convince all the other family members that
she was not the right person for João, but João was adamant and refused to listen. Rafael and
Vitoria were against the marriage, but João went ahead with the wedding.

Fights broke out after the wedding, and only two years later they got divorced. They had not
signed a pre-nup, and Josefa claimed half of João’s share of the business.

João was depressed about his failed marriage and upset that he no longer held as much
ownership of Alshaghathirah. Eventually, he met Valentina and fell in love again. They got
married in 1997.

November 1997 Generation 2

Alshaghathirah

Rafael began to rely on Edoardo to run the business more and more. Under Rafael’s guidance,
Edoardo had proven himself a careful businessman, and Rafael began to take a back seat.

Alshaghathirah was on track to become a leading player within the honey industry in Brazil.
There were offices in several major cities within the country, and much of Edoardo’s time was
spent traveling between locations.

João, having finished his education, wanted to work in business development. He enjoyed the
international travel that was taking too much of his brother’s time, as well as the nomadic
lifestyle that came from living out of a suitcase.

At this point, the philanthropic activities managed by Lusiana were more work than one person
with a young family could manage, so she began to build a sizable department of her own.

Rafael considered all three of his children as equal, and therefore paid them all equally.
Work-related expenses (such as travel and accommodations) were covered by drawing funds
from the company.

May 2003 Generation 2

Alshaghathirah

Edoardo has now been running the company most of the time and has earned Rafael’s respect
and confidence on business matters. Still, Rafael has reservations about formally handing
control of Alshaghathirah to Edoardo. Tension is starting to rise, as Edoardo has ideas about
new markets within honey confectionery, but Rafael is not eager to change from their core
business of pure honey. Edoardo’s frustration is increasing, and he threatened to quit the
company if he is not given independent charge. But can Rafael bear to let go?

Rafael: I’ve become used to the respect and prestige that comes with creating a successful
business from the ground up. Plus I love Alshaghathirah; I just don’t think I’m ready to be put on

the sidelines. And there is so much at stake! If Edoardo makes a mistake and the business fails,
what will happen to the family?

Vitoria: We are not as young as we once were, and we should consider how best to enjoy our
twilight years after all of this hard work.

Edoardo: I have been running the business under your guidance, and have been happy doing
so. But you need to let go or I will quit!

Rafael asked Paulo, a long time family friend, for advice.

Paulo: How long will you continue? The business needs fresh blood to continue growing, and
you need to let go. Your son has been working long enough to understand what the business
needs. You should hand over the reins and take a step back.

Continue to oversee business operations

Let go of the company

November 2003 Generation 2

Alshaghathirah

Rafael remains the final word on major business decisions for the time being. Edoardo makes
good on his threats to quit, but returns every time. Evenually he reconciles himself to remaining
a prominent figure under Rafael. The company does not make any drastic changes to its
operations or product lines.

August 2012 Generation 2

Alshaghathirah

Edoardo instills a more participative management as the CEO, where the siblings discuss
issues and, in the case of disagreements, defer to Edoardo.

Edoardo has spent significant time consolidating the business after Rafael’s passing, and now
faces the issues of professionalizing. Lusiana and João have been running their branches of
Alshaghathirah for quite some time, and the business has become so large that outside
expertise could be a good option. Talented high-level managers could help run the company
and handle the operations that are overwhelming the three siblings.

Edoardo: The family business is my responsibility, my legacy. How can I trust someone else to
run this properly? What if they ruin it all? I am not sure what good they will do, but can I take the
risk? I don’t want to be the person who ruined the family business. And will I be allowed to
contribute to the business if the professionals take over? My external advisors are saying that
professionals have run other companies successfully, and these companies have grown and
achieved great heights. What should I do?

Sofia: What? You are not capable? Professionals will probably take the company underground.
Outsiders cannot be better than family members. If you think you are not able to handle the
company, then hand it over to your brother or nephew!

Paulo: Every person has limits to their capabilities. The business has grown to a level far
beyond your capabilities, which is a good thing, and now it could be run better by professional
management. You need to have processes and systems in place so that the business runs
independently of you: this is what professionals can do.

João: (Calling from Paris) I can take over and handle this better than any professional can! As
long as it doesn’t prevent me from traveling, of course.

Lusiana: Would they replace the need for family members? Having more help would alleviate
some stress, but I still want to be involved in the company.

Hire professionals

Keep all major roles in the family

April 2013 Generation 2

Alshaghathirah

Lusiana, Edoardo, and João work together to find a chief operating officer (COO), who hires
three outside professionals to manage the finances, operations, and marketing, respectively.
The new COO comes from a large organic foods company and quickly demonstrates a thorough
understanding of Alshaghathirah’s retail business.

Edoardo: I think that, although many of you expressed doubts, we needed to take this step. We
need to have good people to rely on in order to grow.

Vitoria: I was afraid of this. You have taken the first step toward the destruction of the family
legacy. These professionals will drive the company into the ground. They will never have the
same level of commitment as family members!

Fernanda: I wonder if we really need all these people, which only add to our costs and would
reduce our profits. Why not give additional responsibility to those who are already here?

João: (Calling from Las Vegas) Yeah, you could have asked me to run the business! Anyway,
the trade fair here in Las Vegas was tough; I’m late for my flight to a conference in Honolulu, you
guys figure it out.

December 2016 Generation 2

Alshaghathirah

Until now, the company’s board of directors has been a fairly informal gathering of family
members meeting on an ad-hoc basis. Lusiana questions the wisdom of this practice, as her
professional work with nonprofits exposes her to a variety of governing boards.

Lusiana: External people can enrich our board discussions by offering different points of view.
Sometimes you need that, especially in cases where groups may think alike.

João: (Calling from Honolulu) I think we should give preference to family members; after all,
who knows our business better than us? Our mother died distressed that you brought in
outsiders, Edoardo. Do you want to dishonor her memory by bringing in even more? I’ll call you
when I land in Rome; you can brief me on what happened.

Edoardo: Having independent directors has been recommended by a lot of people. Does this
makes sense for our company? We are now a market leader. How would an external person
help? What would they know about our business? Can we trust a stranger with the
confidentiality of our trade secrets?

Build a mixed board

Retain a family-only board

January 2018 Generation 2

Alshaghathirah

Edoardo: I think it is a right move. I hope that we get an alternate point of view which can serve
as an independent sounding board to vet our decisions.

João: Well, we have professionals in management positions already, what are a few more
outsiders telling us what to do? I don’t know why this is needed, but I will go along with your
decision.

Lusiana: I think you’re being paranoid; this is a great step toward creating a big company that
will really last long after we’re gone!

Paulo: It is a wise choice, but I only hope that you choose a person who can be effective and
more importantly, you listen to them!

June 2019 Generation 2

Alshaghathirah

Alshaghathirah has been growing steadily, and some of the younger managers believe that
internal funds are not enough to cover their growth. Someone suggests that the company
should turn to external investors for their funding requirements. The company has a good track
record and the fundamentals are excellent, so attracting good external investors would not be a
challenge. Outside funds would help Alshaghathirah grow faster, and external investors could
also bring in additional expertise.

Edoardo: I wonder if we need external funds? They would allow us to grow much faster and not
be dependent on our internal business funds. On the other hand, it might mean that we will be
subject to the wishes of those who have invested in our company. But if we want to take the
company to the next level we will need a large cash investment.

Lusiana: Why do you want to grow so fast? We have enough to take care of the family needs
and growing bigger would probably mean letting go of control or sharing control with others. Do
we really need to do this?

Independent Board Member: Why not consider external funds, especially when you are
growing so fast? And you said so yourself, the internal funds are not enough.

August 2019 Generation 2

Alshaghathirah

Edoardo: I think this is the right choice. We are growing at the right rate, there’s no need to rush
things. We can always borrow later if there is a need.

João: Whatever you say, I hope this doesn’t limit my travel budget. My business development
activities are critical for the growth of our business.

Lusiana: Steady growth is more important than fast growth.

October 2020 Generation 2

Alshaghathirah

So far, Alshaghathirah has diversified from pure honey only as far as honey-based
confectionery, candies, syrups, and other treats. The COO shares ideas about branching into
new products, such as personal and household products.

Edoardo: Should we diversify? The business is doing quite well, and diversifying would mean
that we are diverting our profits into another field that we may not be best at.

Sofia: This would mean lower dividends for all, would the rest of the family agree with that?

Rainundo: Diversification is a good strategy as it would help to avoid a situation where all our
eggs are in the same basket. What if something happens to the honey business?

João: (Calling from Beijing) I am not too happy with funds being invested in risky activities when
they could be distributed directly to us.

Focus on and enhance current product lines

Launch R&D effort into personal products

July 2021 Generation 2

Alshaghathirah

Edoardo: I don’t want to move away from pure honey. This business runs in our veins, and it’s
the only business we know.

Lusiana: Our dad would be happy that we are staying true to his legacy.

João: I’m happy with this decision, although if we had diversified I was looking forward to
traveling even more than I already do to handle new divisions.

January 2024 Generation 2

Alshaghathirah

Now that he is 60 years old, Edoardo is thinking about stepping down as CEO. He had always
hoped his daughters Fernanda and Anamaria would take over the family business’ leadership
after him. His youngest daughter, Mia, has a bee allergy and always avoided the business
because of it.

Edoardo prepared Fernanda and Anamaria their whole lives (sent them to the best schools,
offered them jobs he hoped they would enjoy within Alshaghathirah); sadly, neither of them
thrived. Fernanda conflicted with most of her direct reports, and Anamaria lacked ambition and
failed to advance through the ranks.

More broadly, Edoardo wonders if the business would continue to grow under the third
generation. More family members could mean more disagreement and conflict. Who should
lead? Would everyone else be able to follow?

Edoardo: I wonder what I should do? If I keep qualifications as a criteria then the business will
have capable people running it, but that means some family members wouldn’t progress in the
company. Some family members could get very upset since this would prevent some of them
from joining the business. Is the business a right for the family members to join, regardless of
their qualifications? After all, if they were not family members, would I hire them? And what
should I do about my daughters? I had always imagined Fernanda and Anamaria taking my
place when I retired, but most of the family considers them unfit for leadership. I have dedicated
my entire professional life to Alshaghathirah, I don’t want to make the wrong decision.

Sofia: What difference do the qualifications make? Our children are our children. They are part
of the family! It is their right to join the family business, regardless of their education or
experience. Why should there be any conditions for them to join?

Lusiana: A business should be run by competent, capable people, even if they aren’t family.
That is the only way a business can be successful. Look at how well we’ve done since hiring an
outside COO and bringing in other board members.

Fernanda: The business is for the benefit of our family, so it is our right to use it for the benefit
of our family.

Anamaria: The family business supports our lifestyle. Our holidays, our houses, our cars, all of
these come from the business. Our family has put so much sacrifice and hard work into the
company, so it is only natural that the family should benefit from it. I have the right to join and
work in the business, because I am part of the family. And family members should get more,
since they are adding value to the business.

Announce Fernanda as the new CEO

Open a formal CEO search

June 2024 Generation 2

Alshaghathirah

Edoardo: I need to ensure that Alshaghathirah provides employment opportunities for the
family. After all it is a family business, and the family members should run the business
regardless of their qualifications. Their birth into this family is qualification enough. What use is
the business if family cannot join?

João: While I agree that the family should run the business, Fernanda is not the right person for
the job! Let’s hope she doesn’t do irreversible damage.

Sofia: I like this decision. This will create a chance for all our kids to benefit from the family
business. You should also ask our son-in-law to join.

Family Business Advisor: I’m a little concerned about choosing Fernanda over more qualified
family members. Hopefully she is up to the challenge and communicates well with the board.