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INNOVATIVE BUSINESS
MODEL ADDRESSING
GLOBAL CHALLENGESA COMPARATIVE ANALYSIS OF SOCIAL VENTURING CO-
OPERATIVE ENTREPRENEURSHIP BUSINESS MODEL VS
TRADITIONAL BUSINESS MODELS
BUSINESS MODEL DEFINITION
• A BUSINESS MODEL DESCRIBES THE RATIONALE OF HOW AN ORGANIZATION
CREATES, DELIVERS, AND CAPTURES VALUE, IN ECONOMIC, SOCIAL, CULTURAL
OR OTHER CONTEXTS (ALEXANDER OSTERWALDER, PIGNEUR YVES (2010)
PLOTTING BUSINESS MODELS IN A CONTINUUM
• TYPOLOGY: INVESTOR OWNED FIRM BUSINESS MODEL (IOF-BM), TRADITIONAL CO-OP BUSINESS MODEL (TC-BM),
NEW GENERATION CO-OPERATIVE BUSINESS MODEL (NGC-BM), SOCIAL VENTURING BUSINESS MODEL (SV-BM)
• 100% PROFIT CONTINUUM 0% PROFIT
• IOF-BM TC-BM NOT-FOR- NGC-BM
PROFIT SV-BM
SVCE-BM
GLOBAL CHALLENGES
• CLIMATE CHANGE – FOSSIL FUEL – COAL, OIL, & NATURAL GAS – BURNING OF THESE IS
THE CAUSE OF CLIMATE CHANGE. COAL GENERATES 40% OF ALL GLOBAL ELECTRICITY, WHEN
THE TRUE COST IS TAKEN INTO ACCOUNT, RENEWABLE ENERGY BEGINS TO LOOK BY FAR THE BEST
OPTION FOR HEALTH & SUSTAINABLE FUTURE
• WEANING HUMANITY OFF COAL IS NOT EASY
• UNSUSTAINABLE USE OF RAW MATERIALS – LEADS TO CLIMATE CHANGE
• USE OF INAPPROPRIATE TECHNOLOGY – LEADS TO CLIMATE CHANGE
GLOBAL CHALLENGES CONT’D
• URBANIZATION, LIVELIHOOD & FOOD SECURITY
• THERE IS A DIRECT RELATIONSHIP BETWEEN INDUSTRIAL GROWTH AND URBANIZATION (DANIEL YET FHANG LO (2010), DAVIS & HENDERSON (2003), ELLISON & GLASER (1997)
• URBAN PLACES EXIST LARGELY BECAUSE OF SOME SORT OF AGGLOMERATION ECONOMIES IN PRODUCTION THAT IS NOT PRESENT IN RURAL ENVIRONMENT –
THEREFOR AGGLOMERATION OF ECONOMIES IN RURAL AREAS WOULD SPREAD OUT URBANIZATION
• THE INDUSTRY IMPROVES THE LIVELIHOOD & FOOD SECURITY BY SUPPLYING THE URBAN
DWELLERS WITH SUFFICIENT QUANTITIES AND QUALITY OF BOTH RAW AGRO-FOOD &
AGRO-FOOD PRODUCTS & AT RIGHT TIME, PLACE THROUGH AN EFFICIENT & EFFECTIVE
LOGISTIC SYSTEM
DIFFERENCES BTN BUSINESS MODELS
Variable IOF-bm TC-bm SV-bm SVCE-bm
Theories Classical &neoclassical Institutional & behavioural Institutional & behavioural Institutional & behavioural
Climate change Poor Good Good Very good
Profitability Very good Poor Depends Good
Objectives Profit maximization Profit & social Profit, social or both Profit as a means to achieve social
Weaknesses Negative externalities Poor property rights Dependency syndrome, donor fatigue,
-
Entrepreneurship Make money Make money & serve members
Serve members Calling – solving ill problems
Exit strategies for stakeholder ownership
None other than sale of equity to other investors
none None other than winding the project
Handing over ownership to stakeholders
SVCE-BM SPANNING SPHERE Primary production Secondary level value addition or Tertiary level
Processing
Specified number ofsmallholder
farmersValue addition
enterprise
Wholesale co-op or
Retail co-opDelivery rights & equity shares
Holding equity shares & delivery rights in tertiary enterprise
Sale to co-op or open mkt
Open market/commercial or retail for excess commodity/product
Distributor/ market agent
Act as
Act as
Offer farm inputs, equipment, training, consultancy, research etc. by host individuals & institutions (philanthropist / social venturing entrepreneur/investor)
SVCE-BM BUILDING BLOCKSInfrastructure
Key partners Class A = Capital , Class B = Debt & risk , Class C = Service provision, D = Product development , Class E = Business partners
Mission
Objectives Key resources • Plant & equipment; • Procurement & distribution network; etc.
Key activitiesProduction & operations management; • Planning & co-ordination; Product & market development; etc
Value preposition
1. Customer value Preposition2. Member value preposition3. Partner value preposition
Guaranteed product nutrition, health & safety; • guaranteed right quantity, time and place deliveryFair commodity prices, skills development, dividends etc.Jobs created; • Contribution to local economy (taxes); • Improved standard of living; Green technology
Customers
Customer segment Niche market
Customer relationships1. Customers
2. Member & partner
Contract management, Quality assurance, Timely response to queries, Product/service availability, Ethical communicationsTimely financial & operational reports, Adherence to common ethics, values & contractual obligations, Efficient communication
Channels 1. Customers2. Member & partner
Own channels or other distributors or both
Revenue
Costs
Revenue streamsCo-operative – farmer owned; • Employee owned company facilitated via employee stock ownership plan; • Divestment to local entrepreneur(s) • Investment fund providing equity like a “Social enterprise Development Fund”; • (see appendix fig. 5.2.3.1f) (Owner-controlled, Manager-controlled, supplier-controlled & community-controlled – a hybrid structure ownership) is anticipated to sustaining the SVE model in practice
Impact • Member retained ownership & control; • Member welfare; • Education & skills training received; • Women participation in economic activities; • Reduction in death or communicable disease; • Access to quality education, water, sanitation etc.• Use of environmentally friendly methods;
Exit strategies Co-operative – farmer owned; • Employee owned company facilitated via employee stock ownership plan; • Divestment to local entrepreneur(s) • Investment fund providing equity like a “Social enterprise Development Fund”, (Owner-controlled, Manager-controlled, supplier-controlled & community-controlled – a hybrid structure ownership) is anticipated to sustaining the SVE model in practice