Lecture 3.

Social business. 2 types of social businesses. A social enterprise can set up 2 types of social business.

Social system. Industry linkage as a system. Lowering the school fee. Increasing the shcholarship
amount.

Stakeholders: importance of stakeholders. Types of stakeholders. The many players. We need to

leverage the other players.
Social Business.

What is a SB? Can be traced back to Yunus, who won the nobel price with the Gremen Bank. He fought
poverty with microloans. Called back to Bangladesh. History of Pakistan. They only needed a small
amount of money to get their business away from the middlemen. He started microfancing, or
microcredit. All his borrowers pay him back.

A lot of other companies give a bad name to microcreditors, as they give a very high intereset rate. It
doesn’t conjure a positive image anymore.

Was coined by this guy, Yunus. Who’s vision was to eliminate poverty in Bangladesh.

Social vision:

Social business has a primary goal of address a social/environmental/economic need/homeless

needs/illness/pollution. Must have a balance between making profits and channelling funds to further
social/environmental causes. If you donate this year, by the end of the year it’s spent. If you invest in a
social enterprise, then it’s perpetual. You give money and it’s not sustainable.

Social business is a for profit business of a non-profit or a for-profit enterprise.

The raison d’etre (reason of existence): is to further social causes for humanity, particularly in the social,
environmental, economic spheres. If you have a company that you like, look into their company and see
if it’s really a social business.

Pledge 1% of sales to do good. is giving 10 % of profit to social good make you a social business?

Social business values social metrics.

Social Impacts: They want to know the impact on the community and the environment.
2 Types of Social Business.

Active/passive business activities: Active has a business operation.

Passive: Rental income. Dividend income. Royalty Income. Commission fees.

Your business doesn’t directly contribute to the social cause. You want to help the homeless people.
And you’re operating a café. That is an indirect. Contribute indirectly, because your profit can just be
channeled to the right profit or intermediate problem.

Type 2

You’re actively involved. Significant portions are

You want to reduce the use of plastic bottles. You make a company that doesn’t use plastic. You are
directly involved with the problem. You are involved. With sales from social activities. SEE? SET itself and
its staff actively involved with Third Sector.
Social System: SYS

What is a social system? A human contruct that is conceptual in nature. Not visible but ingrained in our
daily life.

In sociology a social system SYS is a set of patterned networks or organization of interralationships

between individuals, groups and institutions.

Can be catagorized into specific industries. Health care. Food and Beverage. Automotive. Every industry
has their own activities.

There is social structure with an industry linkage: Industry linkage more in the next slide.

We are talking about social and entrepreneurship. You should know which industry and system you are
in.

Industry Linkage: Precious metal industry.

Miners. of stones.
Suppliers.
Manufactures cut and claritize the stone. Chocosol main purpose is here.
Wholesalers.
Retailers. Seen in the shopping mall.
End users: During world war 2 a lot of people put a lot of money in neutral companies. Switzerland.

Covers all organizations within a specific industry. Chocosol chocolate with the plants that don’t need to
have fields cleared.

Entrepreneurs aren’t perfect.

What industry, but also what segment do you want to be in the linkage?
Higher education system at Trent U.

Innovation Cluster

What specific social problems within specific linkage segments of a specific industry would you like to
solve?

How does SE Social Entrepreneur. Or Social Enterprise intend to tackle on the problem.

How many staff and fund contribution.

When to start working towards the social cause? Social enterprise sells.

The picture is the stakeholders.

Students think about their good grades. Professors want the money to teach. Administrators look for
scholarships. Government does fundings.
Stakeholders: They have a stake in the system.

If something changes in the industry. Stakeholder groups come from within the industry or outside the
industry. External: Governments, professionals, local communities, and end users…

Any changes in stakeholders might affect the product. The looming electric cars will disrupt the entire
motomobile manufacturing industry. We learn from the service. Electric vehicle has a battery lifespan,
they can continue driving without going back to the service guy.

Stakeholders have vested interest to protect the system.

Generally dislike radical change they have an inertia to changes.

Alternative business models may be disruptive. Result in potential friction.

Need support of key stakeholders.

Look at the four quadrants. We talk about the low power low interest. You don’t have to be so
concerned about them.
Defenders have high interest and low power, but they will defend because they believe in your business
model.
Promoters are very interested and they have capital.
Latents are very uncertain and unpredictable. They are not interested about the business. Keep them
satisfied. Focus on promoters.