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Social Business

Table of content
Introduction
Corporate Social Responsibility
Is Corporate Social Responsibility Important?
Business Sustainability
Business ethics
Traditional Business
Social Business
How does it run?
Types Of Social Business
7 Principals of social Business
Characteristics of Social Business
Sustainable Social Business
Can Social Business Covers The Ethical And Environmental
Issues
Revenues
A Social Business Model
Social Business Arguments:
Positive Aspects of Social Business:
Conclusion

By Rayhan Islam Shuvro

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Introduction:
Thinking about business, the first things come in our mind according to our
economic system, and organization that can be big or small is making profit.
Well, profit may be is the main thing, which is the core intention of a
business, but besides profit making, a business has to deal with many other
things. Business has to act wise, cause, in this competitive world, business
market is too much competitive. Here any small mistake will make you
banished. Every year many new businesses are coming to the market and on
the other side, many businesses are losing their position.
Though, profit is the main focused thing, but profit is not being looked by
every sector of business. There are some organizations; typed Non profit
organization Non profit organization doesnt look for the profit. They look for
some social goals. It can be seen as a charity organization. Their goal is not
to gain some wealth, in terms of giving value to the group of people they
administer to.
There are so many sides in the society, that doesnt get the attention by the
private sectors because; those sides are good for making profit. So people
from those sides usually do not get a better life quality. But government is
the one, who takes some initiative to protect the people, providing some
service to make their life quality better. Sometimes, its the charity that
covers the gap. But if we look at our world, we can see injustice everywhere
when it is the time to remove poverty. The poor people live their life in many
hard ways, everyday, they looks for new work, then to survive, they had to
go through some very tough activities. So as we can see, the process of the
poor people to get help from some party is not a easy and honest process.
But if all people pursued their own economic interest, the whole society
would be benefited. If there is some economic growth of the whole country,
along with everyone, poor people will be benefited. In situations like this,
when almost all hopes are gone, there comes another type of business
known as social business, that actually works for solving social problems.
These organizations fight with poverty, poor education and health condition
etc. This business types are not created to make money and these are unlike
the traditional self focused business, this business doesnt focus on their own
self. By addressing some social objective, they work to solve that. Social
business provides necessary steps for defending social issues. And apart
from these, every business has some moral things to do. They have some
social responsibility to complete. Today, we will talk about to perspectives of
business and they are Social Responsibility and Social Business. At the end of
the topic we will know, whats CSR, and social business, and to compete
with poverty, can social business be a strong weapon.

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Corporate Social Responsibility:


Corporate social responsibility is a management concept where the
corporation believes that a company needs to be responsible for its own
action more socially, ethically and environmentally. The companys corporate
initiative that leads to take responsibility for that companys effect output on
the environment and the impact on social welfare. Apart from the
environmental things, all the moral acts comes under the corporate social
responsibility such as, gender balance, employee and community relations,
labour standards and working conditions, stakeholder engagement. A social
responsibility taken organization always gains the trust of its consumers and
stakeholders.
Some social performance that a company takes are seen here.

Corporate philanthropy: This includes charitable donations to nonprofit groups.


Corporate social initiatives: It is the enhanced form of corporate
philanthropy which is directly related to the companys competencies.
Corporate responsibility: This dimension deals with the hiring of
minority workers, minimizing pollution, wise use of energy, making
safe products and providing safe work environment.
Responsibility to Customers: From the bill of rights by John FK
Kennedy we can have a proper idea about the organizations
responsibility to the customers, such as, rights to safety, right to be
informed, right to choose, right to be heard.
Responsibility to the employers: A safe working place, fair
compensation, equal opportunities, adequate benefits etc.
Responsibility to Society and Environment:
Responsibility to the stakeholders:

Is Corporate Social Responsibility Important?


While profit may be the end goal for any business, responsible businesses
have managed to attract more investors, reduced their risks and addressed
stakeholder concerns. With their barely being a day in the news where a
business hasnt made an embarrassing error of judgement, more interest is
being show in business demonstrating Corporate Social Responsibility. It
makes a great working experience for its workers. And with a happy group of
worker, the company can run really fast. People want to invest on some
organization which will seem to have a proper idea of responsibility. So
business, that takes social responsibility and fulfils them, is always the
investors first choice. So its obviously a better thing for the business. The
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customer is another positive fact for these businesses. Customer satisfaction


is a big fact for the organization. And these businesses attract the attention
of the customers. And by taking social responsibility, the society and
environment gets less harm. So its environment friendly too. CSR can
influence economic, environmental and social factors in more variety of
ways.

Business Sustainability:
Social responsibility and sustainability are closely related terms of business.
Sustainability is the business strategy that makes a long term corporate
growth and profitability by taking some environmental and social issues in
their business model. Their job is not to damage the environment. Corporate
sustainability is a business approach that creates long-term consumer and
employee value, by operating green strategy aim towards the natural
environment. And it also concerns about the cultural, social, economical
environment.

Business ethics:
Business ethics means the moral steps that is taken by an organization or
business
Adam smith said, (1) People of the same trade seldom meet together, even
for merriment and diversion, but the conversation ends in a conspiracy
against the public, or in some contrivance to raise prices." (Smith, A (1776/
1952) an Inquiry into the Nature and Causes of the Wealth of Nations.
Chicago, IL: University of Chicago Press, p. 55)
(2)The emergence of large corporations with limited relationships and
sensitivity to the communities in which they operate accelerated the
development of formal ethics regimes ( Jones, Parker & et al. 2005,
p.17 )
By taking ethical steps an organization can own the heart on consumers and
on the other hand it makes a great experience of work

Traditional Business:
As we see above, we know, a business has some other responsibility than
only profit making, if they want to be in the long run and if they want to be
well known to the consumers. But in developing countries like Bangladesh,
Mayanmar etc, so many traditional businesses are seen. But the economical
growth isnt helping the poor people. Poverty isnt leaving them though they
have thousands of business and charity. So I think, in situations like those,
they should run some cause driven business.

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Social Business:
Social business is a cause driven business, where their motivation is to serve
some social objectives. Here, in social business, the owner can gently get
back their capital money, but they can not gain the money from the profit
and the ambition of the contribution is only to accomplish one or more social
objective by the acts of the company, no personal profit making is desired by
the owner.
The business must make profit and cover all costs at the same time gain
social objectives. Social objectives can be something like, housing for poor,
health care for poor, providing fresh food and drinking water, serving solar
energy service where there is no electricity etc in the path of business.
Professor Mohammad Yunus said in his book Creating a world without
poverty, Social Business and the future of capitalism and Building Social
BusinessThe new kind of capitalism that serves humanity's most pressing
needs.
The impact of the business on people or environment, rather the amount of
profit made in a given period measures the success of social business.
Sustainability of the company indicates that it is running as a business. The
objective of the company is to achieve social goals.

It is created for social benefit rather than private profit. Yunus Social
Business (YSB) initiates and manages Social Business as a development
program, including incubator funds for Social Businesses, in several
countries.
As defined in the Younus Social Business, Global Change

How does it run?


This business generally runs through a structure. First the investor needs to
figure out a social sector where he wants to work, and then the initial
investment follows. After that the products are created and then those
products are being sold. By this the profit comes and the owner gets the
return of his initial investment. Then with the profit money, again the
investment process starts, and this cycle continues

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Identifying a social
issue

Investm
ent

Investo
r

Produc
t

Profit

Sell
s

Types of Social Business:


Type I: The social business that focuses on providing services or
product with a specific social, environmental or ethical objective.
The product produced is for the benefit of the poor. Example:
Grameen Danone.

Type II: This type is a profit making business side which is


owned by the poor who can gain through receiving direct profits
or by some other benefits. The products may produce by the
disadvantaged or poor but those are usually exported to an
international market with net profit.
Example: Grameen Bank

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7 Principals of Social Business:


1. Business objective will be to
overcome poverty, or one or more
problems (such as education,
health, technology access, and
environment) which threaten people
and society; not profit maximization.
2. Financial and economic
sustainability.
3. Investors get back their investment
amount only. No dividend is given
beyond investment money.
4. When investment amount is paid
back, company profit stays with the
company for expansion and
improvement.
5. Environmentally conscious.
6. Workforce gets market wage with
better working conditions.
7. Do it with joy.

Characteristics of Social Business:


o
o
o
o
o
o

It is a cause driven business


Completes all ethical behaviour
It produces environment friendly products or services.
Generally it seems greener than the traditional business
It helps the society and the people.
Uses revenues to reinvest on some new act. And covers all the costs of it
by its own revenue.

Sustainable Social Business:


Social business is generally a sustainable business. It always tries to help the
social or atmospheric environment. So unlike the businesses that pollutes
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air, water or sound, social business organizations are seem to be very careful
about those. And with its revenue, it starts to re-invest on some other social
goal. So it is seen well in the long run. As a sustainable business, it gains the
consumers and stakeholders trust.

Can Social Business Covers The Ethical And Environmental


Issues:
Many environmental issues can be fought by social business. Planting trees,
increasing the forest spaces, that increases the oxygen level in the
atmosphere. These are also includes into the business ethics. So by starting
a social business, the organization runs the ethical behaviour by its own self.
On the other hand, business ethics leads business to behave well with its
workers, act responsible and being a morally well organization. The social
business starts with a goal to improve the poverty or educational system or
something like this. As we can see, theses businesses are morally well from
the very beginning. And Social business is more like sacrificing something for
betterment. And it sacrifices more to act ethical than the other organizations.

Revenues:
o Like typical business, it generates its own revenue to cover its costs
o The owner gets his capital from the revenues of the companys early
time.
o The revenues are generally spent to prevent some problems of society
and reinvested on growth and innovation to start new social business
venture.

A Social business Model:


Grameen BASF can be seen as a social business model. Firstly it makes it
investments to produce some mosquito nets. By doing things like this, they
make a certain amount of profit. And with the profit they make more
resources to reach to more amount of people.
And after then they gets their refund from all the investments and by that, all
the money returns to BASF

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Finishing the local development increases a lot and it increases the number
of the victims of
Malaria.
By these things, a
social business
achieve such social
strategies build up.
As a result, the
company always
gets it results and
can reach the goal
and their sector
increases quite
rapidly
The business gets
self-sustainable as
well as the social
goal is achieved.
Many opportunities
are to be created in this matter. The poor also gets beneficial.

Social Business Arguments:


Social business is not a form of business, which was accepted by all.
According to many people, business function is economic, not social. So they
can see social business is not a business that completes business nature.
Things they focus on in purpose of the arguments on social business are
mainly based on a few topics. They are,
The role of profit: They say, profit making is the only thing, which should
be focused when it is operated. Other than that, social responsibility is not
supposed to be a headache of them. Friedman says that, The notion of
social responsibility in business show a fundamental misconception of the
character and the nature of free economy.
Competitive Disadvantage: Because social action will have a price for the
firm, it also entails a competitive disadvantage. Either works should be done
by government or other government organizations. Sometimes, to make
environment friendly goods, and by not focusing on only profit, the products
come out with slightly high price than the others, because their products

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dont have that safety and pure issues. But many people go for the products
of low costs, this generally makes a competitive disadvantage.
Competence: Friedman said If business has social things to do other than
maximizing the profit for stake holders, how should they know it? Its a
matter to think. When a stakeholder is going to invest money, his main focus
will be profit. And if he knows, his organization is going to work for some
social things, rather than making profit and profit will be re-invested, it takes
a big moral issue to put trust on it.
Legitimacy argument: Social organizations pay taxes to the government,
and when actually the works should be done by government. People says,
when they are paying the government, government should give them space
and leave them alone. Many social business corporations seek to minimize
governments role or the city. On the other hand, Friedman showed, when an
organization works for the social problems, they are being the competitive of
the government because thats obviously a matter of government to solve
that problem.
Rather than these, there are also many disadvantages there, the problem of
determining profit, believing it to be free, costs and priority, weekenders and
many other more. But these are things you will see, if you want to look at the
bad sectors of social business.

Positive Aspects of Social Business:


Social Business is some kind of theme which actually can delete the unfair
balance of a society.
Dr. Muhammad Yunus mentioned in his book that, (3) once poverty is gone,
well need to build museums to display its horrors to future generations.
Theyll wonder why poverty continued so long in human society- how a
people could live in luxury while billions dwelt in misery, deprivation and
despair. 4( Muhammad Yunus, creating a world without poverty : Social
Business and the future of Capitalism )
Such things we can see in the time of World War 2. The economy system was
crashed down at that time, by starting social business; they actually did
overcome the situation.
o Fulfils companys ethical behaviour: Every organization have some
ethical works to do. And by doing social business, it helps to fulfil that.
o Sustainable Business: Mostly it is a sustainable business, that is
more environment friendly with its products and service
o Helps Society: Mass people are targeted in social business for
overcoming their situation.
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o Creates job opportunity : Social business creates some job


opportunity for a large amount of people
o Using of Local Products: By social business, local resources are used
to produce product.

Conclusion:
Social business is still developing and in the middle of a growing process. Its
not still totally developed yet but there are still so many opportunities to
increase the idea to make it on its highest level. Till now there are a few
minor disadvantages too but as this policy fulfils the moral aspects, social
business organizations are seem to have a great work experience. And the
growing impact of this policy should not be unnoticed; such policy should
have taken to eradicate poverty. To make people smile and to make balance
in the society this system should be encouraged by us all.

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