Business Beyond Profit Motivation

Chapter 4
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Business Beyond
Profit Motivation
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Learning Objectives
The learners shall be able to:
 Explain the importance of establishing and sustaining

a business enterprise as source of job opportunities
and financial freedom;
 Encourage employees to play active roles as decision

makers in the business enterprise;
 Suggest innovative ways of developing new products

and introducing.
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One of the paradoxes of
business is that the most
profitable companies are not
those that are most profit-
focused. Businesses with a
strong sense of purpose are
more successful.
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Social Enterprise
 Businesses that are changing the world for

the better.
 They make their money from selling goods
and services in the open market, but they
reinvest their profit back into the business or
the local community.
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Social Enterprise
 In general, a Social Enterprise is a business
to achieve specific social objectives such as
providing services or products needed by
the community, creating employment and
training opportunities for the socially
disadvantage, protecting the environment,
funding other social services through
profits earned.
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A Social Enterprise is innovative and
unique because:
 It aims to make profit, and then use these profits to
support its charitable, social and/or environmental
goals. It is self-sustaining, and do not rely on
donations to survive. Definitely, social enterprise is not
a charity
 When a consumer purchases a product or a service
from a social enterprise, he/she makes a positive
impact.
 A social enterprise has social aims and ethical values.
Business
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Enterprise versus Social Enterprise
Business Enterprise Social Enterprise

The company’s primary The company’s primary
goal is to make profit goal is social change and
while supporting social uses profits to reach it.
change through their
policies of corporate social
responsibility.
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Sample Social Enterprises
 BAMBIKE –HAND MADE BAMBOO BICYCLES
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Advantages of Social Enterprise
1. Financial Freedom
 The most understandable of social enterprise’s

potential benefits is the opportunity to gain financial
sustainability and independence. Normally, the
organizations that have sought to address social,
cultural and environmental challenges have been
non-profit organizations that have relied on charitable
donations and government grants to fund their
activities.
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2. Growth of scope and size of services to community
 Under traditional models of funding through grants and

donations, organizations have a difficult time growing the
size or scope of their services. The addition of financial
resources from a business allows the organizations to
spend money on trying out new services not otherwise
funded. It also allows them to invest in growing the scope
of the business and social service. Essentially, social
enterprise provides a way for an organization to make their
funds go further. (Smith, Cronley, and Barr, 2012
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3. Business can contribute to the mission
 Beyond providing purely financial resources, social
enterprise also gives organizations opportunities to
explore innovative ways of achieving their mission
 For instance, a business could hire only workers who have

a disability or a financial institution could provide loans at a
discounted rate to environmentally friendly businesses.
Ultimately, social enterprise may not only increase funding
but also help organizations carry out their social missions
directly.
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4. Perceptions of organization by staff and donors

 Undertaking social enterprise may also have an impact on
how an organization is perceived.
 For instance, donors from a business background may

view the use of business activities to achieve social
missions as a positive approach.
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5. Marketing and Promotion is very easy
6. Services can be customized
7.Cost effectiveness is another advantage of a social

enterprise
8. Job Creation
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Common Frameworks used by
successful Social Enterprises
1. Cross-compensation: One group of customers pays for
the service. Profits from this group are used to
subsidized the service from another.
Customer Social Enterprise Beneficiaries

Social Business Model:
Create a baby blanket with information about how to take care of a baby, such as
when to immunize, how big a baby should be at a specific age, and how often to
feed the baby. The regions where baby education is scarce are the same regions
where income tends to be low. Therefore, these blankets could be given freely to
new mothers in low-income areas, while they could be sold to new mothers in
wealthier areas. Proceeds from sales would fund blankets and education for new
mothers in poor areas.
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2. Fee for Service: Beneficiaries pay directly for the good or
services provided by the social enterprise.
Beneficiaries Social Enterprise Beneficiaries
Social Enterprise Model:
Sell a piece of exercise equipment that is simple to use and

affordable. Promote the equipment as an alternative to full
gym access for those who can’t afford it. Use profits and
product to subsidize outreach programs that promote
healthy living.
successful
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3. Employment and Skills Training: The sole purpose is to

provide living wages, skills development, and job training to
the beneficiaries: the employees.

Open a bakery/restaurant or another food-providing establishment that
focuses on building employment skills for underemployed groups, such
as at-risk youth or former drug addicts. The profit from sales of food and
beverage go to wages, training, and social betterment programs for the
staff-beneficiaries.
successful
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4. Market Intermediary: The social enterprise acts as an

intermediary, or distributor, to an expanded market. The
beneficiaries are the suppliers of the product or service that
are being distributed to the market.
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 5. Cooperative: A profit or non-profit business that is

owned by the members who also use its services,
providing any type of goods or services.
A small community normally doesn’t have much to offer a business, unless

you make it a place that has the best business service in one area. For
instance, you could create an internet service that is owned by the
community and provides internet access at ten-times the bandwidth for the
same price as those in another community would have to pay. The cost
could be subsidized by the community, but it would attract high-tech
businesses to locate in the community, fueling the local economy and
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 6. Independent Support: The social enterprise

delivers product to an external market that is separate
from beneficiary and social impact generated. Funds
are used to support social programs to the beneficiary.
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 7. Market Connector – The social enterprise

facilitates trade relationships between beneficiaries
and the market.

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Chapter 4

The learners shall be able to:

 Explain the importance of establishing and sustaining

 Encourage employees to play active roles as decision

 Suggest innovative ways of developing new products

 Businesses that are changing the world for

Business Enterprise Social Enterprise

 The most understandable of social enterprise’s

 Under traditional models of funding through grants and

 For instance, a business could hire only workers who have

4. Perceptions of organization by staff and donors

 For instance, donors from a business background may

5. Marketing and Promotion is very easy

6. Services can be customized

7.Cost effectiveness is another advantage of a social

Customer Social Enterprise Beneficiaries

Beneficiaries Social Enterprise Beneficiaries

Social Enterprise Model:

Sell a piece of exercise equipment that is simple to use and

3. Employment and Skills Training: The sole purpose is to

Social Enterprise Model:

4. Market Intermediary: The social enterprise acts as an

 5. Cooperative: A profit or non-profit business that is

A small community normally doesn’t have much to offer a business, unless

 6. Independent Support: The social enterprise

 7. Market Connector – The social enterprise

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