Module 2

Stakeholder vs Stockholder

Stakeholder: An organisation or a person, such as an employee, customer, or citizen who is

involved with an organisation, society, etc. and therefore has responsibilities towards it and
an interest in its success  anyone who is impacted by the organisation.

- Collect information about stakeholders: interest, influence, involvement, impact

- Classify stakeholders into group which inform you where your focus should be

Stockholder (shareholder): A person who owns shares in a company and therefore gets part
of the company’s profits and the right table vote on how the company is controlled.

Are you involved in any organisations or clubs? Then you're a stakeholder. Have you bought
shares in a company? You're a stockholder, but you will also have an interest in the
company too. All stockholders are stakeholders but not all stakeholders have bought stocks.

Mission statement: short written description of the aims of a business, charity, government
department or public organisation.
Vision statement: a statement of what a company or an organisation would like to achieve
in the future.
Values: the principles that help you to decide what is right and wrong, and how to act in
various situations.

Organisational Culture: The types of attitudes and agreed ways of working shared by the
employees of a company or organisation
- How to communicate, build and adhere to communicated culture
- In come organisation, culture is lacking  company does not work well
o This is why mission statement is integral
- Importance of employees liking company

- Trust in businesses

Profit Maximisation (PM)

 Offshoring to maximise profit
- Changing or moving part of a process to another country or region
- Reduce costs because of lower labour costs, tax breaks, subsidies that reduce costs
- Fairly unpopular as side effects = unemployment in country that organisation is
located in

Corporate social responsibility

CSR: Actions that appear to further some good beyond the interests of the firm and that
which is required by law
- Donations
- Sponsorships
- Funding community projects

E.g. Fairtrade: advocates for better working conditions and improved terms of trade for
farmers and workers in developing countries  Cadbury Australia, Cocoa Life
E.g. Reducing food waste

Philanthropy: Individuals who use their wealth to bring about social change  invest time,
knowledge and finance

Warren Buffet
As the third or fourth wealthiest man in the world, he has pledged 99% of his fortune to
philanthropic causes (Shifrin, 2013).
He has started a group called the "Giving Pledge" which recruits fellow billionaires to give up
50% or more of their wealth through their lifetimes and beyond. For example, they can
leave part of their fortune in a will or continue donating throughout their lifetime.

Bill Gates
In 2000 Bill Gates set up the "Bill and Melinda Gates Foundation" which aims to combat
poverty and address pervasive global issues. It has an endowment of over $40 billion
(BMGF, 2015).

Oprah Winfrey
Oprah Winfrey has donated $150 million to establish the "Oprah Winfrey Leadership
Academy for Girls". Females eligible for entry are students who come from impoverished,
AIDS-ravaged communities. Graduates from this Academy have gone on to study at
Stanford, Brown and Oxford after graduating (Forbes, 2018).

Important things to think about with CSR:

- What counts?
- Longevity of the change?
- How much counts?
- Who decides
o Ethics and legality of spending shareholders money on ventures unrelated to
organisations profitability and performance
o At which point does CSR turn in poor financial management

Creating Shared Value (CSV)

- Relatively contemporary idea  organisation looks at how it will remain a
sustainable business in the future
- To be considered CSV, it must benefit organisation and another stakeholders
- To engage in CSV:
o Reconceiving products and markets
o Redefining productivity in the value chain
 o Local cluster development

Social Enterprise (SE)

Social Enterprise: Established to respond to unmet social needs through business-like and
innovative means
- Profit or non-profit
- Seek sustainable earned income strategies
- Use business as a vehicle and a way of thinking

E.g. Grameen Bank

- Microfinance organisation
- Goal of developing a credit system for the rural poor
- Banking was based on trust, accountability, participation and creativity, not collateral
E.g. “Who gives a crap” toilet paper

Social vs commercial entrepreneurs:

 - How do CSR and CSV overlap
- Push for businesses to have a ‘responsible business mindset’

For profit entrepreneurs are necessarily ‘evil’ as they have to care about their customers
and workers to gain profit

- With shareholder primary mindset, the Environment/Plant and People/Society are

separate to Profit/Economic Performance
- In Responsible Business Mindset they are connected
o Triple Bottom Line
Embedding a Social Purpose
- For many businesses, CSR is critical for them making a profit
- CSV is core foundation of how business operates
- Led to emergence of ‘hybrid model’
o Profit and sustainability
- Embed a social purpose into organisation’s operations to help motivate employees
and attract customers
- Part of business that specifically focuses on that social purpose  directing financial
and people resources to work on social ventures

 Profit Maximisation
- Free-enterprise, private property system
- Bottom-line focused
- Employee is responsible to owners, business responsible to stakeholders
- Must operate within the rules of the game, including all levels of law
- Organisations have a moral and ethical responsibility to maximise profit
- Social responsibility is an ethical issue owned by the people, not organisations
- E.g. Offshoring production

 Corporate Social Responsibility (CSR)

- Doing good
- Philanthropy, citizenship, sustainability
- Discretionary or in response to external pressure
- Separate from profit maximisation
- Agenda is determined by external reporting and personal preferences
- Impact limited by corporate footprint and CSR budget
- E.g. Fair trade purchasing

 Creating Shared Value (CSV)

- Economic, societal and sustainable benefits relative to cost
- Joint company and community value creation
- Integral to competing
- Integral to profit maximisation
- Agenda is company specific and internally generate
- Realigns the entire company budget
- E.g. Transforming procurement to increase quality and yield, The Odd Bunch at
Woollies  selling ugly fruit

 Social Enterprise
Case Study

- Landmark initiative: ‘Beyond Corporate Purpose; Elephants, Rhinos and People

(ERP)’
- Groupelephant.com originated from EPI-USE  software and services firm
- Poverty alleviation in rural Southern African communities
- In 2015, launched ERP to instil a renewed sense of purpose in the group
- Allocated 1% of profit to fund its non-profit and community enterprise activities
- Differed from other companies with restructuring, non-profit activities were brought
‘in-house’ under a hybrid business model
- Promote same business discipline and dynamism in non-profit organisation
- Hybrid model reflected broader trends; CSR  emphasized greater integration of
impact objectives with core business strategies and models
- Groupelephant.com considered ERP initiative different to CSW
- Groupelephant.com had achieved highest ever aggregated revenue  US$390m
- Group included 25 companies/brands, over 3000 employees in 33 counties
- Workplace culture focused on individual initiative and collaboration
- Known for emphasis on its people, rewarding innovation, encouraging launch of new
businesses
- Aimed to go ‘Beyond Corporate Purpose’
- NEW HYBRID MODEL  3 zones
1. EPI_USE and other commercial brands became for-profit software and services
business
o 1% of profit goes towards funding zone 2 and 3
2. Non-profit organisations focused on preservation and protection of elephants and
rhinos  strategy based on poverty alleviation
3. Impact investment zone  launch companies focused on ecotourism asset
management, wildlife-related property developments, agriculture, waste-
management
o Profits reinvested in future non-profit activities  capital recycling effect

 Motivators for ERP

- Personal
- Company in search of new sources of inspiration and motivation  leverage
collective power of the group

- Exploitation of rural poverty, indirectly, was a leading cause of diminishing wildlife

populations

 First 5 years
- Wanted to run its own Zone 2 non-profit instead of distributing money to outside
charities (common in other traditional corporations)
- Didn’t want ERP initiatives to be at the mercy of the dynamics of these charities 
disorganized, underfunded
- Wanted Zone 2 ERP to have business-like discipline in excuting its mission
 Merger with P.E.A.C.E Foundation Trust
- PFT specialized in rural poverty alleviation
- Developed a model that created cooperative-based projects to generate
employment, improve education, provide essential and centralized services to
support rural cooperatives

- Relied on combination of planning and entrepreneurial experimentation

- Group’s for-profit side doesn’t have a management structure  growing number of
leaders  gather followers

 ERP Initiatives
- Bikes4ERP
o Distributed bicycles in rural areas to students who need to walk >30 mins to
school
o Increased school attendance from 50% to 90%
- ERP Air Force and Surveillance Program
o Used combination of technologies to protect elephants and rhinos
o Monitored animals straying off safe conservation areas
o Detected potential poachers
o Helped eliminate rhino poaching at Rietvlei
o Allowed groupelephant.com’s for-profit employees to serve as volunteer
rangers
- Beehive fences
o Deter elephants from entering and damaging community crops
o Helped mitigate human-elephant conflict
o By-product of honey became additional income for communities
- Math/science, technology and education academies
o Tech incorporated into ongoing educational programs
o Teaching underprivileged school age children how to code
o Improved math and science scores
- Recycling and other community-based ventures
o Recycling program organized individual waste collectors into cooperatives
with goal of cleaning up environment and improving livelihoods
o Reported improved job stability, better working conditions, job satisfaction
o Feeling of ‘ownership’ from being part of cooperative
o Greenhouse farming, solar energy generation
- Emergency Food Relief
o Distributed 2 million meals to 2700 families in COVID

- ERP used ‘Social Impact Reporting Tool’ (SIRT)

- Intention to become more methodical and strategic in evaluating programs and
identifying impacts
 Challenges with Zone 3
- Originally envisioned that Zone 3 would launch and invest in companies focused on
ecotourism asset management and wildlife-related property developments
- Impact investing zone had not yet achieved intended results
- Met with long delays due to legal and administrative hurdles  community owned
land
- Rietvlei surveillance program and Beehives, Madikwe ecotourism project could offer
another template for replicating successful projects

 External fundraising
- Challenge for Zone 2 and 3 = raising outside contributions
- Almost all funding came from Zone 1’s 1% revenue allotment
- Allowed some independence to take unconventional moves, however hadn’t
established themselves as effective fundraising organization

 Change in ERP strategy and leadership

- Most early ERP initiatives focused on tactical interventions, animal relocations
- Strategy fell into disfavour by mid 2019
- High-risk interventions by relocating elephants
- Revised approach focused on more holistic, longer-term programs  implementing
surveillance systems, renewing emphasis on poverty alleviation
- Named Este Smith as new managing director
- Geographical expansion  ERP exploring long-term land deals in Zimbabwe and
Botswana
- Continued with poverty alleviation programs  social programs and community
ventures

 Impact of ERP initiative on Zone 1

- ERP initiative had meaningful effect on revenue growth, even if not directly
quantifiable
- Dramatic increase since program was launched
- Positive impact was well beyond expected
- Trading partners
o ERP initiative fundamentally transformed Group’s relationship with SAP
o SAP execs join ERP initiatives, contributing time and money from both
corporate and personal capacities  signing significant for-profit contracts
- Employees
o Retaining current employees e.g. Este Smith
o Attraction for prospective employees
o Employees <40 years made up 40% of workforce
o Increasingly sought socially responsible place to work
- Clients
o Attracted clients to do business with them
 o When choosing between two companies with equivalent offers, ‘I’d prefer to
do business with the company that was more socially responsible’ (Stuart
Sackman, Vice President at ADP)
o Seen in positive light by people who joined the Group pursuant to
acquisitions

 Scaling ERP and sustainability

- Focused in South Africa  accounted for only 10% of Group’s revenue
- Limited opportunity for those working outside of SA to participate in person
- Talk of expanding BCP:ERP program to other parks of the world  creating new
initiatives and NGO partnerships focused on saving wildlife
- 1% contribution of revenue = US$390 mil  possible financial constraint
- How to ‘acquire’ non-profits’ more rapidly
- Dramatically expand footprint and capability  how to deal with problem of scaling
- Exploring partnerships in other areas of the world
- Diversified conglomerate of non-profit initiatives across the world
- Create environment for fuller participation
- Potential dilution of financial resources and increased complexity  indicated plans
for a maximum of one new initiative per year for next 2-3 years  sharing Zone 1
funding and staff time
- Explored alternative types of deals for conservation land  replicating successful
programs in other areas, franchising promising community-based ventures,
expanding ERP Mercantile online store
- Considered financial strategies for leveraging impact  crowdfunding, philanthropic
donations, external impact investment capital
- External funding would bring new stakeholders into the fold  adding complexity
- Faced strategic choice of expanding impact initiatives globally or focusing on
consolidating and enhancing its presence in SA
o Each of these strategies involved trade-offs and capital-rationing decisions

- Durability of ERP over 5 years

- How to achieve greater social and environmental impact whilst involving majority of
company’s employees
1. How did the ERP initiative impact the various stakeholders (i.e. employees, clients,
mergers, partners and investors) and the organisation’s core business (i.e.
corporate culture, brand, reputation, and revenue)? What were the benefits and
disadvantages/potential disadvantages?

 Employees
- Under hybrid model, groupelephant.com had achieved highest ever aggregated
revenue in fiscal year 2019-2020  25 companies/brand, over 3000 employees
- Increased employment
- Retaining current employees e.g. Este Smith
- Attraction for prospective employees
- Employees <40 years made up 40% of workforce
- Increasingly sought socially responsible place to work
- Recycling program  reported improved job stability, better working conditions, job
satisfaction, feeling of ‘ownership’ from being part of cooperative

 Clients
- Attracted clients to do business with them
- When choosing between two companies with equivalent offers, ‘I’d prefer to do
business with the company that was more socially responsible’ (Stuart Sackman, Vice
President at ADP)
- Seen in positive light by people who joined the Group pursuant to acquisitions

 Mergers
- Merger with P.E.A.C.E Foundation trust  specialized in rural poverty alleviation
- PFT specialized in rural poverty alleviation
- Developed a model that created cooperative-based projects to generate
employment, improve education, provide essential and centralized services to
support rural cooperatives

 Partners
- Trading partners  SAP
- SAP would make service provider recommendations to clients
- Single largest vendor alliance partner
- Tager believed that ERP initiative fundamentally transformed the group’s
relationship with SAP (p. 10)
- SAP chose to showcase ERP Air Force
- Top execs from SAP join in ERP initiatives, contributing both time and money

 Investors
- External funding = including more stakeholders
- Additional funding could be raised from external sources e.g. philanthropic donors
(for Zone 2) and impact investors (for Zone 3)

- Working with a socially/ethically conscious brand increased company’s image

- Increased relationship with investors
- Group’s Zone 1 grew dramatically between 2015-2020
- Gross revenue rose to US$390 million for 2019-2020 fiscal year
- ERP was focused on SA  only 10% of groups revenue
- 2021  Gross revenue over US$400 million, generating record profit for the Group
- Increased customer loyalty
- By adopting a CSV strategy, businesses can differentiate themselves in the market by
showing their dedication to social issues
- Access to new markets  access new partnerships with new outlook on business

2. Evaluate the effectiveness of the hybrid model to achieve the impact objectives
(conservation poverty alleviation). What worked well and what were some of the
challenges?
- Hybrid Model: combination of both social activism and business discipline
- Allocated 1% of total revenue from its for-profit business as primary source of
funding
- Restructuring, non-profit activities were brought ‘in-house’ under a hybrid business
model
- Promote same type of business discipline and dynamism in the non-profit
community enterprise activities as in the for-profit business
- Promote entrepreneurship and innovation which propelled their goals of
conservation poverty alleviation forward
- Greater focus on development of groupelephant.com, rather than it being a ‘side
project’
- Reflected broader trends  CSR initiatives increasingly emphasized greater
integration of impact objectives with core business strategies and business models
- Comprised of 3 zones which allows cash flow throughout the business and their
social work to run more smoothly
- Business  Not-for-profit  impact investment
- Investment back into business
- Challenges with Zone 3
o Envisioned that Zone 3 would launch and invest in companies focused on
ecotourism asset management and wildlife-related property developments
etc.
o Impact investing zone had not yet achieved the intended results
o Had not been able to differentiate Zone 2 and 3 as effectively as they wanted
o Ended up being put into one indivisible non-profit zone
- Challenge of external fundraising  almost all fundraising came from Group 1’s
dedicated revenue
- Zone 2 and 3 limited to the profit of Zone 1
- Objectives of minimising/alleviating poverty
- Reducing poaching of rhinos and elephants

- Combine elements of both for-profit and non-profit organizations to achieve their

goals
- On the for-profit side, Groupelephant.com operates as a technology services
company, providing a range of services and solutions to clients in various industries
- They generate revenue by providing these services and use the profits to fund their
social impact initiatives.
- On the non-profit side, Groupelephant.com operates several programs and
initiatives focused on social and environmental impact.
- These programs are funded by the profits generated by the for-profit side of the
business, as well as by donations and grants.
- This hybrid model allows Groupelephant.com to use the resources and expertise of
their for-profit business to create positive social and environmental impact through
their non-profit initiatives.
- It also enables them to have a sustainable funding source for their non-profit work,
which may not be possible through traditional non-profit models.
- Groupelephant.com's hybrid model is an innovative approach to creating shared
value and achieving social impact through a sustainable business model.
 Challenges
- Balancing profit and social impact  need to generate enough revenue to sustain
itself and support its non-profit initiatives
- May face sustainability issues  possibility for it to last a long time

3. What could the Group do to expand the ERP initiative to include more employees
and have a greater impact?
 Scaling ERP and sustainability
- Focused in South Africa  accounted for only 10% of Group’s revenue
- Limited opportunity for those working outside of SA to participate in person
- Talk of expanding BCP:ERP program to other parks of the world  creating new
initiatives and NGO partnerships focused on saving wildlife
- 1% contribution of revenue = US$390 mil  possible financial constraint
- How to ‘acquire’ non-profits’ more rapidly
- Dramatically expand footprint and capability  how to deal with problem of scaling
- Exploring partnerships in other areas of the world
- Diversified conglomerate of non-profit initiatives across the world
- Create environment for fuller participation
- Potential dilution of financial resources and increased complexity  indicated plans
for a maximum of one new initiative per year for next 2-3 years  sharing Zone 1
funding and staff time
- Explored alternative types of deals for conservation land  replicating successful
programs in other areas, franchising promising community-based ventures,
expanding ERP Mercantile online store
- Considered financial strategies for leveraging impact  crowdfunding, philanthropic
donations, external impact investment capital
- External funding would bring new stakeholders into the fold  adding complexity
- Faced strategic choice of expanding impact initiatives globally or focusing on
consolidating and enhancing its presence in SA
o Each of these strategies involved trade-offs and capital-rationing decisions