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Social Enterprise Essays

This report will focus on the strategies being adopted by west-midlands based social enterprise, including strategic management, marketing, the legal structure adapted and finally the creation and measurement of the social value and impact. The report will be demonstrated using the case study of DYNAMIC, their approach to strategic management and measurement of social impact using different theories. Furthermore, recommendations will be made for the future growth of the organisation taking various implications into account. The report will then be ended with a conclusion. Introduction to Social Enterprises
The increasing acknowledgement of the third sector in the global market, with the broader interest in the non-conventional entrepreneurial dynamics addressing current challenges, has led to the formation of social enterprises. (Johnson T. et al. , 2006) Department of trade and industry (DTI) (cited in Gunn & Durkin 2010) defines social enterprise as, ‘A social enterprise is a business with primarily social objectives whose surpluses are simply reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise the profit for shareholders and owners’.
It can be concluded from the above said definition that the social enterprises likewise commercial organisations, regularly produce goods and services for consistent cash flow into the organisation. But in this case, the generated surplus is re-invested back in the community for the social benefit. Introduction to DYNAMIC DYNAMIC is a specialist marketing consultancy for social enterprises, community interest companies, charities and socially responsible businesses based in the west midlands.
From launch of a new product to finding and retaining the customers, Dynamic marketing offers the sector affordable and professional marketing services to the value driven organisations by understanding their mission of creating the social value in the community (DYNAMIC, 2012). It is evident from the research that the operations of the dynamic marketing consultancy are diverse in terms that being a social enterprise, it helps west midlands based value driven organisations in order to survive in the market.
As suggested by McLoughlin & Aaker in 2010, marketing in an organisation helps to understand the customers, competitors, markets and submarkets and environment forces and trends. It also analyses the internal assets such as brand management and distribution channels. DYNAMIC has delivered its services in the sector of marketing to most of the social enterprises to their budget accordingly. The vast list of some of its clients includes Birmingham and Solihull Women’s Aid, Coventry and Warwickshire CDA and Citizen Coaching CIC. Dynamic, 2012) In all the above mentioned SE’s DYNAMIC has been able to successfully deliver their expertise services ranging from Marketing Audit, Branding, launch of new products etc. (DYNAMIC, 2012) Legal Structure In relation to the legal structure, research reveals that there has been no evidence that what form of social enterprise does DYNAMIC claims to be.
Social enterprise UK (2013) states three most commonly used legal forms are: (i)Community Interest Company (CIC): it is created specifically for social enterprises ensuring that the organisation cannot deviate from its social mission. ii)Industrial and Provident society (IPS): Form of co-operatives and community benefit societies. (iii)Companies limited by guarantee or share: Most commonly used and flexible in terms of governance. However, looking at the above forms of legal structures, DYNAMIC fits into the category of Community interest companies, as its sole objective is to help the west-midlands based social enterprises in the marketing sector. As community interest companies (2013) suggests that CIC provides a higher profile for social enterprises and not-for-profit companies.
Similarly, DYNAMIC provides services to the social enterprises in the marketing sector which helps to raise their portfolio. (DYNAMIC, 2012) Strategic Management Strategic management is the process of accessing the organisation and its environment in order to meet the firm’s long term objectives of adapting and adjusting to its environment through manipulation of opportunities and reduction of threats. Despite the changing needs of the market, strategic management allows the sustainability of the product existence in the market (Amason A. C. , 2010).
However, Courtney (2002) argues that there is no best way to devise a strategy. The appropriate development of strategies is the one which is matched to the realities of the organisation. Strategic management in words of Higgins and Vincze (Cited in Alkhafaji, 2003) is ‘the process of managing the pursuit of the organisation’s mission while managing the relationship of the organisation to its environment, especially with respect to environmental stakeholders: the major constituents in its internal and external environment affected by its action.
Strategic management helps the organisation to communicate their value proposition to customers, investors and employees in a way that each individual understand its contribution to the whole. This process also requires a careful evaluation of the firm’s environment before making any decisions and ultimately putting policies into action. This whole process results in the formation and implementation of the strategies formed and designed to achieve the pre-determined objectives of the organisation. (Sadler P. , 2003) Doherty B. et al. 2009) describes strategic management as the ‘the most managerialist of the management specialities’. Therefore in the design of strategic management, a strategic action and direction should be agreed by all the managers. Strategic Management in Social Enterprises Social enterprises in the current economy should consider use of strategic management in their business operations to ensure that their approaches to competitors, social, financial, political and technological are in a synchronised manner without changing the main mission of creating social value in the society.
Although each organisation is different, it is clear from the findings that strategy making in the social enterprises is more likely to be affected by two factors which make it different from the private sector. First, the process is likely to be informed by inputs from a wider range of stakeholders, which is based on more consensus-building rather than rationale choice. Second, being a social enterprise the organisation has to develop strategies driven more by social values rather than customer focussed.
Sharp et al. (2007) argue that strategy development for Social enterprises when it’s appreciative, reflective, and participatory and outcome focussed. The strategic management process will guide the organisation to address the following issues: First, determining the organisation’s mission/vision. Second, evaluating the organisation’s current strategic position Third, specifying realistic but challenging strategies objectives. Fourth, identifying and screening possible strategies for attaining the agreed objectives.
After this whole procedure, the social enterprises may come across some of the concepts on which they need to scale down, in order to get back to the mission/core values. In case of DYNAMIC, being itself a marketing consultancy organisation, the Strategic Marketing and Marketing Mix for Social Enterprises Strategic marketing management entails the decision of the marketing department with a view to long term growth and survival in competitive market. Strategic marketing management likewise, marketing management is a continuous process and taken at the top levels of the management.
Marketing decisions and strategies at this level are necessarily influenced by the decisions and strategies that apply in other functional areas and vice-versa. (Cant M. C. , et al. , 2009) Once the marketing goal has been identified, the organisation will be in a position to develop a marketing plan, outlining how to achieve those goals. Because of the 4 p’s (product, price, place & promotion) involved in the marketing mix, it is essential for the organisation to plan how to combine all those elements in a way that will help the social enterprise to be successful.
Marketing can play a key role in ensuring that the social enterprise continues to trade which includes building up customer loyalty and creating a business that is self-sustaining. Ultimately, by making money the organisation is making a direct difference to the community. By raising awareness about the motive, business is concerned about can also make a big difference to the community. Homburg et al. , 2009 (cited in Taylor R. 2011) defines non-profit marketing as follows, ‘Marketing for non-profit organisations is a philosophy that includes internal and external activities that aim to contribute to the fulfilment of an organisation’s overall mission’. Key marketing strategies include various above the line media (T. V. , radio, newspapers) and below the line (Websites, Leaflets etc. ) and similarly in social enterprises, they can compete each other using a strong relationship marketing approach rather than using the traditional marketing strategies.
DYNAMIC, in terms of marketing uses below the line media and it is suggestive from the website that there has been pre-dominant use of digital marketing, as the organisation try to engage the consumer through blogging and also providing the client database. Likewise commercial organisations 4p’s of marketing mix also holds an important place in the social enterprise sector. In order to deliver value to its customers, organisations uses the combination of all these tools, this attracts the consumer to the ultimate product/services. Kotler & Armstrong, 2010) The marketing mix is a blend of four variables to fit the needs and preferences of the specific target market. A specific combination of these variables determines the success of marketing efforts i. e. providing the right product, at right place, at right time and at right price (Barker & Angelopulo, 2006). In the case of DYNAMIC, it uses a combination of the tools of marketing mix to provide expertise services in the field of marketing to other social enterprises based in the west midlands at affordable prices.
The Social Enterprise Mark In UK, social enterprise mark was launched in 2010, to provide social enterprises with a very clear way to demonstrate they met a common standard. The mark was only awarded to those organisations that primarily work for the social benefit of the society and reinvested at least 50% of their profits in achieving social goals (Lumpkin & Katz, 2011). Although, there is no obligation for a social enterprise to obtain a social enterprise mark to get recognised itself.
Similarly, in the case of DYNAMIC, research reveals that the enterprise has not been awarded the mark. However, Social Enterprise (2013) suggests that achieving the Social enterprise mark will establish business as a choice for everyone. The mark will guarantee that the business is trading for the social benefit of the community. Measuring Social Values & Social Impact In the private sector, performance measurement enables firms to collect data that identify potential improvements to their business models.
By acting on this data, a company can ultimately increase its financial performance which is the main motive of the organisation. Performance measurement serves a similar purpose when applied to solve social problems. It provides the social enterprises vital information for assessing an organisation’s efficiency, sustainability and progress towards achieving its social mission. (Wood & Leighton, 2010) An effective performance measurement system offers a comprehensive, flexible framework for any organisation dedicated to social impact.
The performance measurement system constitutes a cycle that makes it possible to measure and adjust an organisation’s activities and operations in relation to its mission and its vision of its success, by describing what the world will look like if the organisation succeeded in achieving its mission. For measuring the social impact, Social Return on investment (SROI) is the most commonly used tool which attempts to measure values created by a non-profit, NGO or business. SROI is an approach to understanding and managing the impacts of a project, an organisation or a policy.
It is based on the stakeholders and puts financial values on the impacts identified by the stakeholders’ which do not have market values. (Mandal, 2009) SROI is an approach to understanding and managing the impacts of a project, organisation or policy. It is based on stakeholders and puts financial value on the important impacts identified by stakeholders that do not have market values. The aim is to include the values of people that are often excluded from markets in the same terms as used in markets that are money, in order to give people a voice in resource allocation decisions. Social Enterprise Alliance, 2010) The SROI ratio shows the value of the social and environmental impact that has been created in financial terms. This makes it possible to weigh social benefit against the cost of investment. SROI also offers a framework for exploring how change is happening as a result of an intervention, showing ways in which this can be improved upon. Through the SROI process we learn how value is created by an organisation, and this is just as important as what the ratio tells us.
Social accounting and audit is another way of measuring the social impact created by the social enterprise. In the words of Social Audit Network (2011), Social accounting and audit helps the organisation to improve and account for the difference being made in the society. It helps the organisation to plan and manage, as well as demonstrate the achievements made so far. It is a flexible framework which enables organisations to build on existing documentation and report. Social enterprise London (2012) defines balance scorecard as a mechanism used to track both qualitative and uantitative data simultaneously which gives the organisation a means to measure and communicate their social impacts. By application of this model to DYNAMIC, it is possible to examine whether the organisation is stuck to the core values/missions and are expanding the social impact. DYNAMIC aims to offer ‘marketing for value driven organisations’ (Dynamic, 2012) Performance measurement is an essential tool for increasing the social impact and there is no better way for the organisation to learn from its success and failures.
All organisations should measure their performance and should put the results forward to provide solutions to the existing social problems. The Future Growth and barriers to growth Conclusion To conclude, it can be said that there should be an optimum use of both business and social missions throughout the operations of the social enterprises. The SE’s should run a successful organisation with the motive of social welfare by considering the social mission and being business orientated, should also generate surplus which could be re-invested back into the community.
The literature reveals that the past has shown a drastic growth in the social enterprise sector whereas due to the increase in number and competition, the organisation should plan accordingly in every aspect accordingly to survive in the market. Despite of developing various marketing strategies for the survival of the social enterprises, literature reveals that many of the organisations will fail to achieve sustainability in the market.
In deciding to create social value through the social enterprise business model, business factors such as cash flow and market competition become significant to the sustainability of the venture. Social enterprise aren’t immune to recession, as the social enterprises grow, the need is to prepare for regular crises. Most of the social enterprises will shut due to fall in demand of goods and services and mainly due to lack of funds. (Higgins & Finnie,) Higgins G. , Finnie J. (0) Scaling up or shutting down the venture (succeeding at social enterprises:hsrd won lessons for social enterprises wali reference ethe v)
References

Alkhafaji A.F. (2003) Strategic Management: Formation, Implementation and control ion Dynamic Environment. Routledge pp. 31-32 Amason A.C. (2010) Strategic Management: From theory to practice. Taylor & Francis pp. 5-6 Barker R., Angelopulo G.C. (2006) Integrated Organisational Communication. Juta and Company Ltd. pp.137-139 Cant M.C., Strydom J.W., Jooste C.J. (2009) Marketing Management. Juta and Company Ltd. pp. 26-28 Community Interest Companies (2013) The Benefits of a Community Interest Companies. The CIC Regulatory case studies series. http://www.bis.gov.uk/assets/cicregulator/docs/leaflets/10-1388-community-interest-companies-benefits-of-a-cic-leaflet.pdf accessed 13/01/2013 Courtney R. (2002) Strategic management for Voluntary Nonprofit Organisations. Routledge pp. 109-111 Doherty B., Foster G., Mason C., Meehan J., Meehan K., Rotheroe N.,Royce M. (2009) Management for Social Enterprise. Sage Publications Ltd. pp. 56-58 DYNAMIC (2012) DYNAMIC services http://www.dynamicmarketing.org.uk/services accessed 13/01/2013 DYNAMIC (2012) Clients http://www.dynamicmarketing.org.uk/clients accessed 13/01/2013 Gunn R., Durkin C. (2010) Social Entrepreneurship: A skills approach. The Policy Press pp. 20-22 Johnson T., Nyssens M., Adam S. (2006)
Social Enterprise: at the crossroads of Market, Public Policies and Civil Society. Taylor & Francis pp. 9-11 Kotler, P. & Armstrong, G. (2010) Principles of Marketing. Thirteenth edition. Pearson Education Inc, New Jersey. Lumpkin G.T., Katz J.A. (2011) Social and Sustainable Entrepreneurship. Advances in entrepreneurship, firm emergence and growth Vol. 13 Emerald Group Publishing pp. 182-183 Mandal B.N. (2009) Global Encyclopaedia of Welfare Economics. Global Vision Publishing House pp. 273-274 McLoughlin D., Aaker D.A. (2010) Strategic Market Management: Global perspectives. John Wiley & Sons pp. 15-16 Sadler P. (2003) Strategic management 2nd edition. Kogan Page Publishers pp. 13-15 Social Audit Network (2011) Social Accounting and Audit http://www.socialauditnetwork.org.uk/getting-started/what-is-social-accounting-and-audit/ accessed 14/01/2013 Social Enterprise Alliance (2010) Succeeding at social Enterprise: Hard-won lessons for non-profits and social entrepreneurs. John Wiley & Sons pp. 60-62 Social Enterprise London (2012) Balanced Scorecard http://www.sel.org.uk/Balanced-scorecard/ accessed 14/01/2013 Social enterprise UK (2013) About Social Enterprise

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