Challenges That the Bendigo Bank in Tambellup and Cranbrook Faces - Case Study Example

Case Study: Bendigo Bank, Tambellup and Cranbrook INTRODUCTION A social enterprise just like the commercial one is created with the intention of making profit, but goes beyond that, it gives the community an identity, this is achieved through several ways but majorly through involving the community in the running of the enterprise. Numerous projects have been carried out with the sole aim of promoting the development of local enterprises as a means of improving the conditions of rural communities (Praszkier and Andrzej 110). A community enterprise utilizes the support of several members of the community to come out comprehensively with the final product and as such, the enterprise becomes the property of the community as opposed to a single individual. The Bendigo bank in Tambellup and Cranbrook is one such kind of social enterprise, rising from humble beginnings to give the two communities their identity. The creation of the community bank is attributable to two individuals, Vicki Brown and Jan Pope, after facing several challenges; they rode on motivating points to spearhead the creation of this bank in their respective community. Overcoming the Feat: Challenges and Motivations they faced. They were motivated by the lack of proper banking services that catered for the needs of the rural community, while listening to a certain show; they reaffirmed Louise Petschler’s concern over poor banking in the country. According to the latter, banking services had deteriorated to the extent that they had failed to provide fair and affordable basic services, additionally, they were providing these at high costs and with poor customer services while closing community branches. CHALLENGES The initiative by Vicki and Jane is typically a commercial interest although with a social context, they face numerous legal, financial, management and development challenges that a typical commercial business faces. However, due to the unique communal premise that the business is built upon, they face a considerably different set of challenges than a typical business faces (Fayolle and Harry 8). The key challenges that Vicki Brown and Jan Pope faced were stakeholder participation, balancing of their key objectives, raising finance, and recruitment of professional staff and expert advice Stakeholder participation The key stakeholders in this initiative were the 700 and 1100 members of community for the two towns Tambellup and Cranbrook respectively. Furthermore, the Bendigo Bank was an important participant in the process, this because the community bank would be a franchise of their own establishment. The process of convincing people to contribute money to investing in an enterprise that was yet to be created proved to be a daunting task to the two and the steering committee that was in charge of the launch. They were apprehensive that the failure of the business would subject to guilt and a lot of burden. The rural community who were to be bank’s customers was concerned about the confidentiality of their financial information; this was expeditiously addressed by the concerned parties. Pessimism that the locals had over the future of the bank coupled with the show that ABC was running at that time concerning failures of local initiatives. Balancing Key Objectives Vicki and Jan had noted that the agricultural communities in their small towns were being inconvenienced as they were forced to travel long distance to undertake this important service. The lack of facilities in the area affected several businesses in the area and not merely these two major sectors of the area’s economy; an estimated $26,000 was being lost per week to other towns. Any community initiative must strive to balance two key objectives, achieve the social purpose for which it was initiated and operate as a sustainable commercial entity (Kickul and Sophie 219). The problem the two initiators faced were the way in which to balance these two objectives. On the other hand, they worried that if the bank performed the first function more than the second function the business might run the risk of closure. While the second had to be handled more carefully to give it the community image, the products and services that the bank would offer must be in line with the interests of the community. Raising Finance As with any enterprise, this business needed capital to launch and cashflow to set balls rolling, a major factor constraining there effort towards realization of the launch and during initial operation. Startup capital was very crucial to get the business through its initial venture stage, that of operations and planning, this before additional incomes starts to flow into the business. The estimates that they had established for the launch of the business was set at $200, 000, however, they had not taken into account the cost of the set up of two premises and the costs involved therein in running two premises. They managed to raise about$295,000 from the community for the launch of the enterprise. Additionally, during the first year of the bank, the bank’s operations were strained due to limited cash, costs of operations rose to unexpected levels and they were compelled to overdraw from Bendigo Bank. They did not have money that could have been used to market the community bank in the two villages. Professional and expert advice Having been used to steering over informal and local initiatives, the formalization of the setup entailed legal and procedural initiative, this was a major upset but was resolved amicably. They faced the problem of hiring staff to the bank; they had to rely on former bank workers to put the business on the path to profound success. MOTIVATION The motivation to launch a social venture is more understood when considering that traditional entrepreneurship entails the identification, evaluation and exploration of opportunities in order to gain personal or shareholder wealth, social entrepreneurs on the other hand recognize, evaluate and exploit opportunities that results in social value. According to London and Richard (47) motivation is a role of having a genuine objective: considering that, determination will lead to achieving the objective and creating the anticipated encouraging results in a sensible period and that the results, are worth the determination. Therefore, in our case social value and personality characteristics played key roles in driving the two individuals towards spearheading the drive to establish the community bank. Social Value They were had several motives including the drive to create social value in the text provided, they did not exhibit any heroic intent on their part. They merely provide leadership to the fulfillment of their idea and as such, the whole effort resembled a team like operation, in which they carried on the functions of a captain, whereas other members performed other complementing roles. They were motivated by the success of the first meetings in their respective towns as the idea gained momentous and unanimous support across the board, despite only attracting less than ten percent of the potential population of members in those two towns. The result of the feasibility study was also a pointer to the potential income outcome from the project in both towns, which included agricultural, small business and personal banking. Local cohesion, they wired out any conflicts that arose in about 20 meetings that were held, implying that the process went ahead unheralded albeit with several challenges on its path. The publicity that the local media gave the project was also instrumental in marketing the project despite the fact that they were cash strapped in allocating funds to that particular purpose. THE NATURE OF SOCIAL ENTREPRENEURSHIP AND INNOVATION According to Kuratko (430) entrepreneurship is typically tied to innovation meaning that the entrepreneur is required to innovate in a number of ways such as new service, quality, process, market, source of supplies, or industry and thereby engage in creative destruction. This can be determined in dual categorization of business organization and innovation entrepreneurship; similarly, there is a difference between high and low entrepreneurship: high which involves a substantial degree of innovation, and low which is concerned with creating a new enterprise. The Bendigo community bank bears all the hallmark of a business enterprise with substantive innovation and creativity such as the use of internet banking, though it is not encouraged. Social entrepreneurship, normally well defined, as entrepreneurial activity with an entrenched social purpose has become an important economic element, the business that the two individuals led in creation was wholly owned by the community, such that at the initial stage the amount contributed by each person was $2000 of the total $295000. The innovative solutions that entrepreneurs validate in their local context are often replicated in other geographical regions, spanning other economic activities in such regions, such as new business and industries in area. This model of banking in Tambellup and Cranbrook was developed because of the success in a similar model amongst small mining communities in Victoria. In academic backgrounds, the term social entrepreneurship, is often derived from two important concepts, entrepreneurship and social, but essentially it involves pursuit of economic, social and societal goals by the enterprising agents. In the case study, the economic potential of such project in the community fuelled the motive of the entrepreneur, while the then present circumstances of performing the same function 100 kilometers away; often, social entrepreneurs have been known as the change negotiators in the society, this certainly insightful in our case analysis. Vicki and Jan’s role in transforming the rural economic community by creating a local based bank, without doubt ascertains they key character as agents of change in the two communities. The backdrop of the two community’s economic potential lay in the agricultural sector, previous banks could not understand the manner in which business in the community was being carried out. Vicki had even tried to call upon other banks and the credit union to come up and assist in setting up a financial institution, but they all refuted the opportunity. The theory of community base enterprise asserts that the social entrepreneurship is usually entrenched in community traditions, natural and social capital, being an essential and indivisible from economic reflections, changing the community into entrepreneur and an enterprise (Ridley-Duff and Mike 2). The idea behind community based enterprise can be explained as a society functioning commercially as both entrepreneur and enterprise in search of a common objective. The towns of both Tambellup and Cranbrook were both entrepreneurs and customers of the establishment, with community providing both the customer base and the staff that facilitates the commercial growth of the enterprise. The concept implies that the community act in entrepreneurial manner, to develop and operate a new enterprise, which is entrenched in its present social fabric. Additionally, these community enterprises are managed and governed with the purpose of pursuing the economic and social objectives of a community in a way that is meant to produce reasonable personal and collective benefits over the long and short term. Social entrepreneurship can broadly be illustrated as kind of link that connects enterprise and goodwill by relating entrepreneurship in the social context (Bornstein 146). Where traditional entrepreneurship involves the identification, evaluation and exploration of opportunities in order to gain personal or shareholder wealth, social entrepreneurs recognise, evaluate and exploit opportunities that results in social value Defining social entrepreneurship seems like a monumental task just because of the sheer number of definitions proposed by authors. Towards the Definition of Entrepreneur: Vicki and Jane Social Entrepreneurs According to Pinderhughes (1), an entrepreneur can be broadly stated as any person who understands that there is little difference between obstacles and opportunity. Vicki Brown and Jane Pope can be described as entrepreneurs; this is because they satisfy the definition of an entrepreneur, albeit within the social bracket. Just like, the commercial entrepreneurs, they perform functions related to risk taking, innovativeness, organization, and creation of a venture. There relentless pursuit for a creation of a business enterprise within their community marks them out as entrepreneur, exposing their positive mental attitude in ensuring the successful launch of the business. The only point to which they depart from the commercial entrepreneur is that they are not involved in the day to day management of the enterprise but rather leave that role to professionals from sourced from the community. Although the critical contextual factors are analogous in many ways, the impact of the context on a social entrepreneur differs from that of a commercial entrepreneur because of the way the communication of a social endeavor's task and performance dimension systems affects innovative behavior. The market-selection processes in the communal environment are comparatively less powerful because they tend to be less strenuous and act over sufficiently longer periods. For example, in the case analysis the Bendigo community bank used some measures to attract the locals into the bank, while pursuing the opportunity of avoiding the loss of important resources to other regions, despite harsh conditions. Implying that the idea of pursuing the opportunity by Vicki and Jane was to fundamentally addresses social change and that the monetary reward was merely collateral to the central drive. Thus, social entrepreneurs may react in an essentially dissimilar conducts to unpleasant background circumstances than traditional entrepreneurs. In the case, the social issue was compelling only to the two communities of Tambellup and Cranbrook and it may encounter several challenges, yet the two individuals sought to make an impact by effectively raising awareness and attention to the issue. Additionally, a social entrepreneur must be skilled at managing a wider diversity of relationships with funders, managers, and staff from a range of backgrounds, volunteers, board members, other partners, with fewer management levers, as financial incentives are less readily available, and management authority over supporters, volunteer staff, and trustees is rather limited. The complexity of relationships also extends to the types of relationships, as social entrepreneurs may often need to work collaboratively with other institutions, local authorities, and businesses to achieve the resources crucial for the launch of the organization. The community made important connection in relation to the pursuit of their business for example; they contacted the relevant authority to assist in conducting a feasibility study on the viability of the business. The government contributed $10000 and each member thereafter contributed $5000 for the study, whose results was a positive outcome, giving the green light for the creation of the business. CONCLUSION The bank was set up because of selfless effort of two women, Vicki and Brown, exhibiting an inherent feature of most social entrepreneur- that is the non-individualized nature of the management of these ventures. They case has shown that the social entrepreneurship are the result of the commitment of the whole community, led by the two chairpersons in Vicki and Jane. They faced several challenges in trying to put the business in sustainable mode, from contribution of $ 295,000 in 1999 to a gross profit of $ 2 million and a portfolio of $34 million. Through the wider circle of support social capital was utilized, and subsequently reciprocated, in a few cases that includes customer linkages. The bank utilized local professionals to enhance its operations, such as the bank manager, Keith McLukie and Beth Trezona who was lured back into the community to serve as Customer Service Officer. Work Cited Bornstein, David. How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford: Oxford University Press, 2007. Print. Fayolle, Alain, and Harry Matlay. Handbook of Research on Social Entrepreneurship. Cheltenham, UK: Edward Elgar, 2010. Print. Kickul, Jill R, and Sophie Bacq. Patterns in Social Entrepreneurship Research. Cheltenham, Glos, UK: Edward Elgar, 2012. Print. Kuratko, Donald F. Entrepreneurship: Theory, Process, Practice. Mason, Ohio: South-Western Cengage learning, 2008. Print. London, Manuel, and Richard G. Morfopoulos. Social Entrepreneurship: How to Start Successful Corporate Social Responsibility and Community-Based Initiatives for Advocacy and Change. New York: Routledge, 2010. Print. Pinderhughes, Paula M. C. How to Be an Entrepreneur and Keep Your Sanity: The African-American Handbook & Guide to Owning, Building, and Maintaining Successfully-Your Own Small Business. Phoenix: Amber Books, 2004. Print. Praszkier, Ryszard, and Andrzej Nowak. Social Entrepreneurship: Theory and Practice. Cambridge: Cambridge University Press, 2012. Print. Ridley-Duff, Rory, and Mike Bull. Understanding Social Enterprise: Theory & Practice. London: SAGE, 2011. Print. Read More