The case chronicles the 200 year old legacy of the family business of the Rothschild

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Principles and Practice of Management
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• Principles and Practice of Management
•  
• CASE STUDY (20 Marks)
• The case chronicles the 200 year old legacy
  of the family business of the Rothschild Family.
  Started by Mayer Amschel Rothschild in 1790, in
  Frankfurt, the banking business of the family
  ruled Europe for centuries (dominated
  financially). The 5 sons of Mayer strategically
  placed in different financial centers of Europe
  took advantage of International events, thus
  creating their initial wealth. The case focuses
  on the reasons for the success and failure of
  family business at different times. It explores
  the concepts of family values, Succession
  Planning, inheritance planning, growing
  entrepreneurs within the family, controlling
  ownership of business, and adapting to changing
  times. Mayer was born in 1744 in a ghetto of
  Frankfurt known as the Frankfurter Judengasse,
  which was home to the largest Jewish community in
  Germany.

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• After losing his parents at the tender age
  of twelve, Mayer struggled to make his up to
  become a court Jew . He joined the banking firm
  of his fathers colleague, Jacob Wolf
  Oppenheimer, and later established himself as a
  rare coin trader. His clients included the prince
  of HesseKassel. The good connections that Mayer
  developed during this period earned him the title
  of court agent. By 1780, Mayer had become a well
  known trader of coins, medals, and antiques in
  Frankfurt . He made enough money to buy a new
  house in 1787. The growing circle of suppliers
  and customers in his existing business gave him
  the impetus to move into the banking business by
  the early 1790s. Over the next few years, Mayers
  banking business achieved remarkable growth and,
  by 1797, he was counted among the richest Jews in
  Frankfurt. Mayer had 5 sons and 5 daughters. By
  the end of the 18th century, his banking business
  had become too big for him to control alone.

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• One of the majorreasons for the success of
  the Rothschild family was the individual success
  of the five sons of Mayer. According to Amschel,
  Nathan acted like the commanding general in
  London, and the four brothers were like his
  soldiers and everyone played a very important
  role in taking the familys business forward.
  However, the individual success of the
  descendants was not under the control of any
  single person as the family got bigger from the
  third generation onward and the businesses grew
  more independent. To make every business of the
  family a success in the future would be tough
  without coordination of all the other family
  members. Every crisis in Europe opened up new
  opportunities for the Rothschild family rather,
  they utilized the conditions to their benefit.
  When the ghetto of Frankfurt was bombed by the
  French army in 1796, it reduced the restrictions
  placed upon Jews in Germany. As a result, Mayers
  business flourished and his newly started banking
  business received a boost..

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• After the battle of Waterloo, Nathan and
  his brothers concentrated on expanding the
  business and increasing the wealth of the family
  primarily by giving loans to governments. The
  London House with the help of Paris, Frankfurt,
  Naples, and Vienna, between the years 1815 and
  1859, issued a total of 50 loans worth 250
  million sterling pounds, mainly to governments
  which were in need . The Rothschild family banks
  altogether became the most powerful bank in
  financial history and dominated bond issues.
  According to some industry experts, the principal
  contribution of the Rothschild family to
  nineteenth century capitalism was the development
  of the bond market. The early days of the 19th
  century saw the introduction of the taxation
  system and the Rothschilds style of operating
  with a single commercial account couldnt sustain
  itself. The different Houses continued with their
  separate businesses independently. The failure of
  the RothschildsAustrian bank in the 1930s, the
  Nazis seizing the familys property in Austria,
  and the nationalization of the French Bank in the
  1980s showed a breakdown in the power and control
  the Rothschild family had enjoyed for nearly 200
  years...

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• Answer the following question.
• Q1. Comment on the success of the family business
  of Rothschilds and their strategic moves.
• Q2. Explain how the family beliefs, culture, and
  faith in religion played an important role in
  decision making of the owners.

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