Basic-Social Business Concept
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Transcript of Basic-Social Business Concept
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8/12/2019 Basic-Social Business Concept
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Social Business Concept
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Session Objectives
Understanding Social Business Concept Philosophical grounding or underpinning
Failure of capitalism: externalities, inequality, pollution
Components of the Social Business Economic and Market
System
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Understanding Social Business
What is Social
business
A. Business to solve
Social Problems
What is thedifference between
usual business and
Social business
Why we need to
call it business and
NOT social work or
charity
Should CITIZENStake actions?
Why not
foundation , or
NGO, or charity
fund
Isnt it the
governments job to
solve the social
problems andinfrastructures
Businesses are
already doing it
CSR, Isnt it?
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What is Social Business
A social business is a social problem solving basedbusiness from which investors take out only theoriginal investment out of the profit generated and donot take any further dividend from it
The goal is to make it sustainable for the sake ofsolving a social or common citizen problem
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A Social Business is a Business
A social business is also a business serving the market
but profit is NOT the bottom line (intermediate line)
Profit is just a means to be sustainable to continue on itsown
Bottom line is benefits to the society and poor
Products and services for the poor
Food, nutrition, shoes, water, cloth, mosquito net,education, health services
In a market oriented way, not a CHARITY
Indicators:
How many people get the benefit/ avoid a harm
how many people are employed
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The Idea of Social Business An idea whose time has come
Capitalism II capitalism needs reformation and reengineering. Paradigm shift of economic theories from Adam Smith selfness to Yunus
selflessness Social business to take a place in the economic and market structure
Social business is a non-loss non-dividend business
Solving a social problem in a sustainable way investors will invest in the business as shareholders,
will get the dividend or return on investment up to the amount of original capital
they invest,
and then will not take any dividend beyond that.
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SB concept: Why would anyone invest in a Social
Business People will invest because they believe in a cause a social problem that
needs to be solved.
For example, child nutrition, population or public health, hygienic toilet, clean
water, good food, youth employment and so on.
A lot of philanthropic money is already spent (some wasted) as one waygive away to many individuals and organizations.
Many give away just to avoid the hassle of fund seeker or face saving
A portion of this can surely be attracted to Social businesses
who will dislike to see their money keeps coming back whilebenefiting society and people
SB just combines the philanthropic intention of the investors with
the market sustainability spirit of business
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SB concept: Why Cant NGOs and Nonprofits cans solve all
those social problems
NGOs and Trust and Charity and other non profit entities will be
there and continue.
But major problem with most NGOs
they depend heavily on external or donor funds which are uncertain to
find year on year and
they have to devote one major portion of effort in chasing fund ratherthan chasing the social goal itself.
Scope of corruption is evident.
Tight reporting (for accountability and corruption) hold back
creativity and dynamism.
Again, NGOs devote more time on reporting formats than goals itself.
So in many cases, NGO model can be replaced with more
sustainable social business model.
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SB concept: Why NOT or shouldn't the Government do it? Isnt
government already doing it?
GOVERNMENT
Why it would mind if some SBs make their job easy
any sensible government would love it! Embrace it!
Yes, GOV is already doing many things
PPP, outsourcing, privatization
All to make GOV more efficient and effective/// to reduce load
Yet experience is less glorious in many cases
Confidence in government is declining // GOV is such a huge machine
to put management into work
Debate ongoing: what and how much government should do? Large
vs. minimal
The role of government is of enabler and facilitator of SB
The role of SB is to help government by solving some of the
common citizen and social problems in a market sustainable way//
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SB concept: So what is the differences between PMB and SMB
Profit motivated selfishness
motivated by market gap driven
profit maximization for the investors
and shareholders
leaves the social problem to the
Government and NGOs. Businesses
should do business, they will take
care of the social stuffs.
Key Success Indicators or KeyPerformance Indicators are profits,
revenue, market share, payback
period, rate of return, and growth;
more of everything is good.
Social problem motivated -
selflessness
motivated by solution to a social or
community problem
A social business takes up the mission
of solving social problem in a
sustainable market oriented way
either separately or may partner with
PMB, government, or NGOs.
A SB KPIsare broadly two:
no of people benefited and
no. of people getting regular and
sustainable employment.
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SB concept: So what is the differences between PMB and SMB
In a PMB CEOis always on the run for
achieving payback as fast as possible
on behalf of shareholders;
Shareholders are seeking ROI, capital
gains, higher the better (10 % isunacceptable, FD gives 10%)
follows the consumers from up
down,that is, they target who can
pay morefor their products andservices; focus on HNW high value
customers.
In SB, a CEO must ensure revenue
minus cost, a surplus to be self
sustained but fast ROI itself is not a
super goal, social impactis;
Shareholders seeking sustainablechange and development, rate of
return does not matter
follows the consumer from down up
who cannot afford to pay atprevailing market price (even at a low
end segmentation price of the
PMBs), so a SB wants to start at a
price the poorest can pay
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Social Business: example 1
Need: nutrition for children Problem: poor people cannot afford
nutritional food for their children
Solution: Grameen Dannon company produces low priced yougurt for children. Now
poor people have access to nutrition.
Indicator:
how many children get access to nutrition, howmany escape diseases due to malnutrition
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Social Business: example 2
Need: water safe drinking water Problem: poor people cannot afford bottled
water; Arsenic and other problems in drinkingwater make it expensive to have safe water.
Solution: Grameen Veolia Water Company.
Water treatment plant in need area to supply safedrinking water to the poor.
Indicator: how many people get access to safe drinking water;
how many escape diseases due to unsafe clean water
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Social Business: example 3
Need: safety from mosquito
Problem: poor people cannot afford mosquito
nets and prone to malaria
Solution: Grameen BASF Chemically treated mosquito nets for the poor.
Indicator:
how many people escape malaria and other
diseases due to mosquito and other insects.
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Social Business: example 4
Need: access to healthcare Problem: poor people do not have access to
doctors consultation and health service advice.
Solution: Grameen Intel
Utilizing ICT to create sustainable model to ensureaccess to healthcare in remote areas.
Indicator:
how many people get access to healthcare servicesand advice. How many escape simple diseases due tolack of access to such services.
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Social Business: example 5
Need: cover the barefoot - shoes
Problem: poor people cannot afford good qualityshoes
Solution: Grameen Adidas No child or adult without shoes; its pleasant with
shoes to walk on dusty and shattered roads;
Also it protects people from parasitic diseases.
Indicator:
how many people get to buy such low cost shoes; howmany escape parasitic diseases due to walkingbarefoot and using latrine barefoot.