Entrepreneurship: Theory, Process, Practice - Essay Example

SOCIAL ENTERPRISE Location The term business model may mean that plan that a company or an organization (from personal level or a group) may put into operations in order to generate revenue and make profit as well from the operations (Gold 2010, p. 78). In business slogan, model includes the components and the functions of the business, as well as the revenue it engenders not forgetting the expenses accrued (Idowu & Louche 2011, p. 95). Social enterprise and the traditional business model are some of the two examples. A social enterprise is any type of an organization that tries to apply commercial strategies to maximize in the improvement in human and environmental wellbeing. The making of profit for the benefit of shareholders seconds this objective (Bendell 2010, p. 85). A traditional business model is an organizational entity, which specializes to offer consumer goods or services. Therefore, the way an organization makes money, either through simple or complex means. The two models differ in different aspects. For example, a social enterprise may operate in structure as a for-profit or non-profit as in a co-operative or a charity organization. On the side of a traditional business model, designs itself in one way, to offer goods and services, as well as enormous transactions in order to help pay bills, salaries, ad some returns for the owner (Michelini 2012, p. 55). Many entrepreneurs of these models have shown that, unlike in traditional model, which may use market tools in order to be sustainable, a social enterprise is radically a new way of operating by using elements, essentially different from traditional business. One of the notable distinct settings of a social enterprise is its mission. Unlike the traditional enterprise, in social business or enterprise, the social benefit is the purpose for their existence and the generation of economic surplus thus becomes a means to achieve it (Muñoz 2010, p. 68). Compared to the traditional business model setting, the mission of that business venture is to make profit. This is the reason where if a traditional form of business fails to catch up with the business environment, the owner is at will to close it down or transfer to another marketable location. These businesses do have to worry about social benefit since paying of bills and salaries is their main mission. A perfect example would be an NGO like the USAID, a practical example of a social enterprise and a restaurant, which would give a good example for a traditional model of business (Banerjee 2007, p. 85). In United States, USAID Foundation is a social enterprise, which directly addresses the social needs through their services, and through the numbers of disadvantaged people, they employ. A traditional business model is short of such mission and insight. The probability of these traditional to help directly or indirectly people without making profit has never been part of the bigger mission in traditional model. In social enterprise like the USAID, the mission of their input is a fact that modifies the entire operation and the governance of that enterprise (Bendell 2010, p. 75). The other difference that USAID as a social enterprise may differ from a traditional business model like a restaurant is that the value chain, the way it relates to its shareholders, and even how the economic benefits end up in distribution depends largely its social impact mission. Another notable difference that the USAID has shown to be different from any other restaurant is in its governance model of this social business. To them decision-making power is not directly linked to the ownership of the capital as one would find in a restaurant where the owner is the decision (Muñoz 2010, p. 102). This happens so in USAID since their main objective is to generate leadership ideas in the communities or countries where they are working. By doing so, they end up involving the various groups affected by the business-customers, employees, and partners in the decision making process. In traditional model, the owner is the sole decision maker and even cares less on how that decision affects customers, employees or any other supply partners in his business. These differences in the two models have diverse implications in the way the businesses operate and execute their duties. For example, in social enterprise, it is likely that their economic breakeven potential or capability comes at a later stage than in traditional model type of business (Idowu & Louche 2011, p. 75). For example, in USAID, the impact they would want to put on the social realm is more important than the zeal to make profits. This is entirely depended on its social mission. For example, in USAID, most of its value chain may end up recruiting either people with disabilities or people who are suffering. They use employment as a means for social inclusion to all its people they deal with during their operations. It is very rare in traditional model type to curve such a conclusion (Bendell 2010, p. 107). The traditional models, like a restaurant, do not employ, first, any individual who is a liability to their operations. The aim of the business is a set objective of the owner to maximize on profits rather than creating as any social impact. Due to this set objective, the customers and the supply partners in a restaurant are just a means of the owner to gain and pile his profits. The social enterprise may also take in the higher production costs of training the people they would help in the end of the day. Take for instance the inclusion of USAID in fighting AIDS in Africa; they first may take a group of already infected people whom they train in order to reach the greater objective (Muñoz 2010, p. 90). The trained individuals then become means to educating and creating awareness among all. The USAID takes that responsibility to empower them and mentor them in order they can become part of the production chain effectively. In many instances, these recruits get paid by the same social enterprise, hence making a major difference in the way the traditional restaurant business model may operate. In the latter’s case, they only absorb in an already qualified human labor to bring out their objectives clearly. The biggest implication to this difference is that in social enterprise, they do not revolve into one perspective, be it for business and not for business purposes. Theirs is a broad objective, an inclusive mechanism that aims at building the entire society (Michelini 2012, p. 72). Among the notable social enterprise like Gustavo Gennuso, who goes into global rural areas to distribute accessible social technologies in order to improve the rural communities’ life quality is an example of the implications social enterprises bring. Like USAID, there is a whole learning curve in the course of refining this new social business archetype and that is vital even though the costs are high. One would not compare this impact of social enterprise to that of traditional model. What else would a traditional enterprise do rather than only to provide goods and services? There is less in terms of empowerment and mentoring to the customers, partners, and supply chain (Gold 2010, p. 95). The motive is profit attached and nothing else. On another note, the differences also, like in any other business, the team that implements that enterprises’ mission is critical to its performance. In reporting to their activities, one would ask which model would be suitable to run a social enterprise that has it mission divided into being profitable as well as generating a positive social transformation. In order to arrive to these dimensions, the operations and activities of social enterprise like USAID attract a lot of diversification (Volkmann, Tokarski & Ernst 2012, p. 70). They also have to rise above the profitable margin and objective driven by traditional business model. The social enterprise also has to attract people with extensive experience in developing mechanisms of inclusion and participation of the target group. This is what defines the USAID operations for it normally relay on vulnerable communities, individuals in order to achieve their goal and greater objective. The operations of traditional business model does not require this extensive experience to meet its profit target since most of the times the owner of the restaurant, for example, has his business plan. In order to meet these objectives, the challenges that social business model face is to get individuals who possess this double profile (Bendell 2010, p. 97). Most notable achievement of the USAID has come through integrating their operations teams with the social teams, who are already in the organization. This ensures there are no tensions in the executive duties and working towards the social impact objective. This hardly comes in the operations of traditional business model. The owner of a particular restaurant may find it personal to integrating the operational team in his disposal and the leadership (Michelini 2012, p. 105). The void creating by this results in tensions in the enterprise and sometimes may even affect the objective of the owner. All these differences have created different dimensions in the way these business models respond to their operations and activities in order to arrive at their objectives. A corporate entity is an organization that comes into effect through governmental laws and approval. Through these legislations, the company, and the organization has the right to act as an artificial person in order to carry on any business. Charles Handy reserves the rights for his claims that corporate entities should borrow an example from social enterprises. The latter has its hand in philanthropic responsibility, economic responsibility, ethical responsibility, and legal responsibility theories (Volkmann, Tokarski & Ernst 2012, p. 86). The social enterprise set out a perfect example of what enterprising institution ought to operate in any society. In their mandate, they emphasize on two profiles. The most prioritized profile is the course to create a lasting social impact on the target group. This is the responsibility that comes first in order to interact ethically with the community in which they set their ventures. Charles Handy calls on all corporate entities to exploit these avenues of empowering the communities they work or invest in rather than prioritizing the shareholders objectives only. The other social enterprise profile that follows in their venture is emphasizing the responsibility towards making profit for that enterprise (Kuratko 2014, p. 80). This is the larger scope of corporate social responsibility, a specific theory that Handy’s observations relied upon. The corporate entity ought to live according to its social responsibility theory of promoting the surrounding community as it operates as seen in social enterprises. One may not entirely call it the philanthropic responsibility for social enterprises but literary they try in contributing towards the community’s development (Bendell 2010, p. 50). According to Handy, the corporate sector should replicate the same; contribute to the society’s projects even when they are independent of the particular business. For example, an industrial chemical company may take the initiative in rehabilitating an empty lot into a certain park. This public act of generosity represents a viewpoint that businesses have that obligation to support the general welfare depending on the needs of the surrounding community (Banerjee 2007, p. 70). Every other individual around the globe does help, so the corporate entities, like social enterprise must take the initiative. Moreover, Handy pointed on the change in the way the stakeholders’ theory applies in the corporate sector as compared to the social enterprise ventures. The corporate sector defines this theory as the mirror image of the corporate social responsibility (Freeman 2010, p. 109). The stakeholder’s theory starts its objective in the world before venturing into the real business. These theorists may begin with those living in the surrounding community, who may wake up one day and find their environment poisoned. What Handy suggested is that the corporate entity ought to start with the business first and look out in the world and call their resources to doing the ethical obligations in that surrounding (Kuratko 2014, p. 124). For example, the factory’s waste should not face disposing by corporate entities without observing safety measures. Like a social enterprise, which would work on safe disposal, or recycle its waste in order not to harm the community or pollute it, the corporate entity should do alike. This is a very important point since those affected by the corporate actions become the indirect stakeholders like the real owners in that industry (Bornstein & Davis 2010, p. 70). This is because they come face to face with the company’s actions, and this gives them the right to participate in managing its operations. Like Charles Handy, the corporate entities have to learn from the social enterprises in order to implement effectively the Corporate Social Responsibility (Gold 2010, p. 120). This would make corporations as responsible ventures like social enterprises. In conclusion, social enterprise and traditional model of business have evolved as different types of business, with each focusing on its objectives. Even with the two models operating with the profiles of profit making and non-profit ventures, they still have different modalities in meeting the social responsibility. The corporate entity operations, through the corporate social responsibility, have an obligation to give back to the community. Therefore, social enterprise forms the basis through which business modules should emulate in order to bring out a complete cycle in meeting the objectives of the company. They should not only work to maximize their profit but also empower the community. 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