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Social Entrepreneurship Notes 2
Social Entrepreneurship Notes 2
Part 2
Faculty: Amrish Sahgal
Formulating Strategy
The key questions that need to be asked and logically follow each other in this
context are:
1. Where are we now?
2. Where do we want to be?
3. How might we get there?
4. Which way is best?
5. How can we ensure arrival?
Strategic Management Overview
C. Input
Strategic Priorities
IDEA GENERATION
Definition of a Good Idea
Meets a significant customer need a market
Return on investment
Risk managed
Competitive advantage
Cost
Performance
Leverages a strength/asset
Fits with mission/values, Social consciousness, Opportunity identification,
Demand analysis and market potential.
Creative ventures
Idea generation mechanisms
Brainstorming
Focus groups
Surveys
Why Social Enterprises Fail Ideas Opportunities
Bad ideas
Maslows Hierarchy
Opportunity sources
Technological change
Public policy shifts
1: Identification
Entrepreneurs are required to identify and classify resources they currently have and
can obtain control over, in their initial efforts to create a new venture
1: Identification
Location planning.
Targeting
All products / brands are targeted at some particular segment of the market.
Each element of the market mix is designed so as to appeal to and attract a
particular class, type, level, location, lifestyle, age, sex, economic status, etc.,
of consumer.
The marketer selects which segments present the greatest opportunity
which are its target markets.
For each chosen target market, the firm develops a market offering
The offering is positioned in the minds of the target buyers as delivering
some central benefit(s)
Identifying a particular specific customer segment and delivering value to that
segment is known as targeting.
Desirable Criteria for Segmentation
1. Sizable: The segment must be of sufficient size in terms of potential sales
2. Identifiable: Members should have some common characteristics enabling
identification of the segment
3. Reachable: Both by communication and by our distribution
4. Respond Differently: Preferences should differ from other segments
5. Coherent: Within-segment variation in behaviour should be smaller than
between-segment variation.
Differentiation
This is the process of adding a set of meaningful and valued differences to
distinguish the companys offering from competitors offerings.
Differentiation
Some differentiation strategies:
Product Features
Performance
Exclusivity & Style
Packaging
Design
Ease or convenience of use
Maintenance and Repairability.
Exercise
How would you differentiate between:
Pashmina and Ruffle shawls
Silk carpets and staple fibre carpets
Positioning
To create a certain mental perception about a brand in the mind of the consumer.
This covers:
The product: the meaning that the product features have for the consumer
Approaches to Positioning
By specific product attributes
By distinct benefits to users
By specific usage
By user category or application i.e. exclusivity
By product class association
By price / quality
By packaging appeal utility or convenience
By lifestyle of users
By reference groups.
Strategies for Positioning
Examples
Value for money
Economy
Social status
Exclusivity
Trendy lifestyle
Sporty
Healthy.
Positioning of Handicrafts
Raised from within the enterprise. Owners capital, loans from partners,
retained profits, reserves, equity, deposits
External Sources
Borrowings from friends, relatives
Borrowings from Banks, Financial Institutions
Credit facilities from banks or suppliers
Term loans from financial institutions
Seed Money / subsidies from Government
Venture Capital.
Capital Structure
Shares:
A portion of the capital of the company
Shareholder is a member of the company
Earns dividend: share of profits if made
Shareholders have rights to control the company
Shares are not repaid. (exception: redeemable preference shares)
In case of liquidation shares get last priority.
Shares vs Debentures
Debentures:
A portion of the debt of the company
Debenture holder is a creditor of the company
Earns interest even if no profit made
No rights to control the company or vote
Debentures are usually repaid or converted to shares
In case of liquidation debentures get priority over shares. If secured, first lien
on asset.
Major Lending Institutions
HealthDoes the venture improve the health of your target population? Does
it address a serious disease resulting from lack of nutrition, medical care, a
low standard of living? Is your venture making the community safer?
EducationalIs your venture helping improve the standard of living for
children? Will participation in your venture open doors of opportunity and
what are these doors? By participating in your venture how will someones life
change?
EnvironmentAs a result of your actions, will a vital natural resource be
saved? Why is this natural resource important to our community? How will
your venture improve the environment?...
Employment & Income Generation Is your venture likely to provide
economically gainful employment for the target group? Will this employment
be sustainable?
Outcomesultimate changes one is trying to make in the world, cognitive,
behavioural, gain in skills, knowledge, etc.
Rule of thumba social purpose makes an unhappy person happier, a poor
person secure a better financial standard of living, an unhealthy person
healthier, etc.
Are socially responsible core values expressed throughout the venture?
Consistency:
Feasibility!
cost-benefit analysis
Costs and social impacts of an investment are expressed in monetary terms and
then assessed according to one or more of three measures:
Net present valuethe aggregate value of all costs, revenues, and social
impacts discounted to reflect the same accounting period
Investment limit in Plant & Machinery for SS units Rs 60 lakhs and for ancillary
units Rs 75 lakhs
836 items exclusively reserved for SS sector
Central Investment Subsidy in rural / backward areas
Small Industries Development Bank of India (SIDBI) established
Delicensing new units with investment of 25 crores in fixed assets in nonbackward and 75 crores in backward areas.
Govt Policy for Small Scale Enterprises
Ancillary unit is one that sells not less than 50% of its manufacture to one or
more industrial units
Export units are those that export at least 30% of their annual production. The
ceiling for investment is 75 lakhs.
LEGAL ASPECTS