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.