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 while goal is social change and
supporting social change uses profits to reach it.
through their policies of
corporate social
responsibility.
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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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Advantages of Social Enterprise
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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Advantages of Social Enterprise
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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Advantages of Social Enterprise
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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Advantages of Social Enterprise
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
2. Fee for Service: Beneficiaries pay directly for the good or
services provided by the social enterprise.
Beneficiaries Social Enterprise Beneficiaries
Common Frameworks used by
successful
z Social Enterprises
3. Employment and Skills Training: The sole purpose is to
provide living wages, skills development, and job training to
the beneficiaries: the employees.
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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Common Frameworks used by
successful Social Enterprises
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.
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.
