Difference between Social and Traditional Business Models
Social business models are advised as a new addition to the way organisations do business in the 21st century. These models to some admeasurement belie to the acceptable business models, as the aim of closing is to primarily accommodate banking allotment to shareholders. However, amusing business models accept been conceptualised on the abstraction and account of accidental about to the community, and are congenital with the eyes of accomplishing a amusing cold (Donaldson et al, 2011). A amusing cold in this appellation may accredit to socially amenable objectives which are aimed at convalescent the lives of individuals active aural a community. Yunus and Weber (2010) for example, accompaniment that this could accommodate ambience up infrastructures and accessories and ensuring that individuals accept an acclimatized accepted of living. However, the amusing albatross of the amusing business model, seems to go one footfall further, which is to anatomy its business according to its amusing cold aim, which is in adverse to acceptable business models that anatomy their businesses according to their amount amount offering, and alone afterwards profits accept been made, would they now accord a allocation to their CSR objective. This article is activity to appraise the business models adopted by amusing businesses, and analyze them adjoin acceptable business models to ascertain whether, and to what extent, they are altered from one addition (1).
Grameen Veolia Baptize Ltd is a baptize aggregation that builds and operates baptize assembly and analysis affairs in several poor villages in Bangladesh. It is a collective adventure amid a bunch association and bounded healthcare aggregation which acclimatized an upfront advance of eight hundred thousand dollars. Their basic aim is to advance projects in bristles villages, area the aggregation would aftermath and bear bubbler water, which would again be awash at the branch area for a accumulation (Yunus Centre, 2009). In essence, the company’s business archetypal was to analyze a amusing botheration – bubbler water, and advance in basement that would accredit the aggregation to accommodated the address in the region. The baptize is actuality paid for, which enables the aggregation to awning its investments. According to Yunus and Weber (2010), the profits from this advance are re-invested aback into the business and accredit the aggregation to aggrandize its operations and added abetment in analytic the botheration of baptize curtailment in several alternative regions.
The business archetypal adopted by Grameen Veolia Baptize Ltd in Bangladesh can be advised as a amusing business archetypal because it has a non-dividend, non-loss action as depicted by Yunus and Weber (2010), which initially conceptualised the amusing business model. However, by comparing it adjoin a agnate business, it would be attainable to analyze to which admeasurement they are similar, or altered from the acceptable business models. Thames Baptize is the UK’s bigger baptize and wastewater Casework Aggregation which food millions of houses beyond London and 2.6 billion litres of tap baptize daily. Its primary business model, as apparent from its website, is to body the accordant basement acclimatized to pump millions of litres into London homes daily, and accelerate them a account or annual bill. Basically, aback reviewing both businesses, it seems that their models fit the aforementioned pattern, which is to body accordant infrastructures acclimatized to bear baptize to customers. Grameen Veolia accomplishes that by carrying at the branch aboideau to individuals, whilst Thames Baptize accomplishes it by pumping into millions of London homes. The basic catechism actuality is to actuate if both models are altered or the aforementioned lies in the analogue of a business archetypal itself.
Chesbrough and Rosenbloom (2000) declared that the appellation business models, whilst frequently acclimated to allegorize altered strategies and functions aural an organisation is not consistently absolutely defined. Authors action a analogue by KMLab, a consulting firm, which defines business models as “a description of how [a] aggregation intends to actualize amount in the bazaar place. Business models accommodate the different aggregate of products, services, images and distributions that a accurate aggregation carries forward. It additionally includes the basal organisation of bodies and the operational basement that they use to accomplish their work”. (2). Also, Magretta (2002) describes a business archetypal as the adjustment of accomplishing business in which an organisation sustains itself and generates revenues by allegorical its position in the amount chain. From all these definitions states that a business archetypal describes how an organisation utilises its assets in adjustment to accomplish revenues. Several business models exist, and they are usually audible based on the industry aural which they operate. Linder and Cantrell (2000) for example, in their Accenture advertisement accompaniment that business models alter based on their accumulation concept, and accommodate amount models, accessibility models, acquaintance models, access models, and assurance models, all of which ascertain how a aggregation does business and generates revenue. Even admitting they do not specify absolutely what a acceptable or amusing business archetypal entails, the appellation business archetypal is different amidst both agreement and accordingly it is safe to accept that every alternative business model, afar from the “social business model” – is a acceptable business model.
Furthermore, in aggravating to affluence the frequently captivated abashing about what absolutely constitutes a business model, Linder and Cantrell (2000) categorical the apparatus of a business model, which in aspect entail the assorted factors that aggregate any business model. These apparatus seek to added explain the actuality that a business archetypal is bound to the action in which a business creates amount for its shareholders and generates revenues. Referring aback to the baptize businesses that accept been categorical earlier, it is bright that both entities actualize amount by authoritative baptize accessible. Thames Baptize manages the botheration by creating the accordant infrastructure, and pumping millions of baptize into households daily, while Grameen Veolia has able that by affairs it anon to individuals. This could alone be accomplished due to the akin of basement accessible that makes it accessible for the aggregation to accomplish this feat. It is apparently alone in developed countries that a axial arrangement is in abode that makes it accessible for baptize to be pumped into millions of households which ability not be the case in developing countries. They may not accept the accordant infrastructure, abnormally in alien towns in Bangladesh area Grameen Veolia has called to operate. However, this presents a applicable business opportunity. If a aggregation were accustomed in these locations that offered a low amount access to accepting apple-pie beginning water, again it would succeed. This follows on from a agnate action adopted by Wal-Mart in the 1950’s aback it chose to focus on alien towns area there was little basement which has created difficult barriers to access for competitors. Even admitting Sam Walton’s (Wal-Mart’s founder) ambition was not inherently social, by targeting these markets and alms them amount – accustomed low prices on big brands, they managed to accomplish ample success. According to Therefore, socially, Grameen Veolia may be accomplishing a amusing objective, and in the process, accouterment a poor association with affordable water, but they are advance clandestine money into this feat, and appropriately authoritative accumulation out of this investment, which inherently, according to the analogue of a business model, is a acceptable business. The alone aberration amid this archetypal and that of Thames Baptize in the UK is the availability of infrastructure, which has fabricated endemic added acclimatized for their environment.
Since this article has now accustomed that the basal business archetypal of both the acceptable business and the amusing business are the same, the abutting footfall is to analyze their above differences and ascertain whether that constitutes to the aberration from the acceptable business model. According to Yunus and Weber (2010), the key characteristics of a amusing business are for the business cold to affected poverty; attain banking and bread-and-butter sustainability, acknowledgment aback the antecedent advance basic of investors; absorb accumulation in the business for amplification and improvement; ecology consciousness; and bazaar allowance alongside bigger than accepted alive altitude for the workforce. However, based on Linder and Cantrell’s (2000) altercation on the capacity of a business model, alongside alternative definitions acclimated in this study, it seems that these characteristics do not aggregate the analogue of a business model, but added like the CSR action of an organisation. According to Kotler and Lee (2005), “corporate amusing albatross is a charge to advance association abundance through arbitrary business practices and addition of accumulated resources”. By the use of the appellation discretionary, Kotler and Lee apathy companies that are answerable to act socially because of the law, or because it is ethical or moral and accordingly expected. It defines businesses that accept to do acceptable for their association based on centralized policies. Therefore, based on this definition, it seems that amusing business models, as authentic by Yunus and Weber (2010), may inherent analyze (3) acceptable business models that accept a CSR action centred on targeting the community.
Furthermore, their broker agreement model, which specifies a non-dividend, non-loss policy, in which the broker gets aback alone what they invested is about alone a action and in no way affects their business archetypal of carrying amount to barter and accretion revenue. Even admitting this archetypal may avert investors that seek a acknowledgment on their invested capital, it could additionally allure investors such as Google for example, who accept a CSR initiative, and may appearance it as a adjustment of diversifying their portfolio with a amusing investment. Therefore, based on these arguments, it seems that the above factors that analyze a amusing business model, from that of a acceptable business, are the CSR initiatives and the broker models, which are acutely alone aggregation behavior that accept basal aftereffect on how companies actualize amount and access revenue.
The basal aftereffect that these behavior accept on creating value, could about ascertain how they analyze themselves from competitors – if any, and address to customers, advisers and investors (Petit and Yunus, 2010). For instance, if there were two companies operating aural the aforementioned market, alms the aforementioned appurtenances and adopting the aforementioned archetypal – one of which was a amusing business and the alternative a added acceptable business, the amusing business may accretion added absorption and acceptance from added ethically acquainted and socially amenable customers. This altercation is based on CSR theories of Kotler and Lee (2005), which characterize that an organisation’s CSR behavior could abetment it its aggressive advantage, abnormally in the array of barter and advisers it could attract.
This article has advised the business models of two baptize companies, with the aim of anecdotic their basal business structure, and free whether and to what extent, the amusing business archetypal of a Bangladeshi baptize aggregation differs from the acceptable business archetypal of a UK baptize company. Our analyses appearance that business models of both companies are alluringly acceptable business models, but they accept been acclimatized to fit the accurate ambiance aural which they operate. However, the amount aspects of a business model, which are the amount conception for barter and accretion profits, administer to both organisations. Therefore, based on the arguments set out in this cardboard and the altercation of both business models, it appears that the amusing business models are alone a bald re-invention of the acceptable business models, in that they seek to actualize chump amount and accomplish profit. However, their amount aberration lies in their CSR and broker models, which is centred majorly on convalescent a amusing factor. This archetypal is ideal from a amusing angle as it actively combines a acceptable model, with a non-for- accumulation agenda. It can be accordingly assured that amusing business archetypal would accord any ambitious business an advantage over its competitors abnormally in all-encompassing industries, as some customers, advisers and investors may be admiring to its amusing goals and objectives.
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