Social Enterprise and Commercial Enterprise
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Published: Mon, 02 Oct 2017
Social enterprises are businesses driven by a social or environmental mission (social enterprise coalition). They are businesses primarily set out for social purpose. Whose principal objective is to reinvest their surpluses mainly for social purpose in the business or community rather than maximise profit for shareholders and owners (The Cabinet Office. Office of the third sector). Commercial enterprises are business organisations that are set up mainly for profit. Their main objective is to maximise profit for their shareholders and owners. It could be Mobil unlimited or publicly owned companies like commercial banks or limited liability companies. Social enterprise transcends traditional non-profit sector and applies to health, environment, education and social welfare. It also applies to economic development or job creation programmes (Virtue Ventures, 2007). An example is Southampton social council that is geared towards providing quality education for the children in its community. It is also involved in providing quality water for its citizens free from sodium, lead and impurities. It is also very proficient in its waste disposal by maintaining a clean environment. In order to achieve this, it organises a programme called “enviro_champs “where university staff and their students are involved. University of Southampton and Southampton Solent University are involved in this programme.
Differences and Similarities between Social Enterprise and Commercial Enterprise
Social enterprises are different from a standard charity because they use a businesslike approach to tackling social problems instead of relying on grants (Virtue Ventures, 2007). Social enterprise are designed to meet social needs and also to achieve commercial viability similar to the private sector (Virtue Ventures, 2007).Business plans and other research tools can be utilised to design social enterprise policy by analysing an organisation’s internal factors such as core competences, weaknesses and needs of its clients and external factors such as legal and regulatory environments, markets, demand and access to capital. Therefore social enterprise operational models are geared towards market realities, organisational capabilities and social needs (Virtue Ventures, 2007).
The Environment Centre (tCE) which is an arm of energy saving trust. Its aim is to encourage and educate people about the benefit of sustainable alternative energy. The objective of tCE is to educate the people about the havoc caused by using fossil fuel for generating energy, and the pollution caused by the emission of carbon dioxide and other toxic gases. This is achieved by helping people to apply for grant from government. In doing this people are encouraged to use solar energy, wind turbines, bio fuels and hydro energy to generate electricity for their homes. Grants are also given for home insulation. This is purely a social service and not for profit (The Environment Centre, 2008). tCE obtain funding from European Union. Social enterprises raise standards for ethical business and corporate social responsibilities (Social Enterprise East Midlands).
Social enterprise plays a larger role in delivering public services like provision of leisure services, recycling services health and social care for council(Cabinet Office: Office of the Third Sector) . Unlike social enterprise that are not for profit organisation. Commercial enterprises are not mainly into provision of public services; the few that are in these areas are very expensive, because they are principally for profit maximisation. Commercial enterprises raise their capital from individuals and stock markets while social enterprise raise their capital from non governmental organisations. Social enterprise can also benefit funds from the same sources as commercial enterprises. The only difference is in the range of finances available which may differ depending on the function and form of social enterprise. It could be in the form of grant, debt, equity, social venture capital or philanthropy capital (Anglia Ruskin University, 2009). Business enterprises and social enterprises read from different bottom line, one purely financial while the other takes into account the social benefits derived from the enterprises operation. With these differences, they also share some similarities as follows, they are both ambitious, they both have the ability to look for resources in most remote places, they are creative in their solution to problems, and they also build something out of nothing (School for Social Entrepreneurs). The enterprise act 2002 which relates to competition law and the legislation for the protection of consumers (Enterprise Act Publication, 2002). The fair trade act 2003 all are legal laws regulating both commercial enterprise and social enterprise. Both commercial and social enterprises need to be legally registered according to the law of United Kingdom or anywhere in the world where they operate before they can start operations officially and legally. Commercial enterprise compete in the market place in order to maximise profit and also for the share of the market which is geared towards growth while social enterprise only compete to make profit in order to improve their services for their environment and their community. Companies like Primark competes in the market place with organisations like Matalan, Georges, Marks and Spencer’s for the share of the market. Their main purpose is to maximise profit and for growth in order to be the market leader. They employ business tools and models to gain competitive advantage and to achieve sustainable leading edge. In recent time social enterprise is becoming an integral of commercial enterprise. Commercial enterprises are moving towards philanthropic activities (Porter and Kramer, 2002). They form sister companies which are basically not for profit organisations. These not for profit organisations aim is to give something back to the community where they operate. This is popularly known as corporate social responsibilities. It could be in the health sector by subsidising health bills of the people in the area where they operate. Some organisations focus on a particular area like heart diseases or cancer patients or leukaemia patients. While some are into recreation of the environment. An example is Primark which embarked on beautifying parks around Southampton (Primark Stores Ltd, 2009).Primark supports community projects across the UK and Ireland (Primark Stores Ltd, 2009). All these are in an attempt to gain competitive advantage.
Philanthropy is used as a form of public relations or advertising. It is sometimes used to promote companies image or brand, through rigorous marketing or high profile sponsorship (Porter and Kramer, 2002). True strategic giving addresses both social and economic goals simultaneously unlike cause related marketing. They target areas of competitive context, where the company and society both benefit this is because the firm brings unique asset and expertise (Porter and Kramer, 2002). Organisations uses their philanthropic posture to enhance competitive advantage by aligning social and economic goals thereby bringing improvement in a company’s long term business prospects. This gives rise to sustainable competitive advantage (Porter and Kramer, 2002). By addressing corporate social responsibility a company is not only giving back to the society but also leveraging its capabilities and relationship in support of charitable organisations. An example is Marks and Spencer start programme that gives opportunity for work experience to a range of people including the young unemployed, the disabled, the homeless. Parents returning to work. Also for students who are the first in their families are encouraged to aim for higher education (Marks and Spencer CSR). Companies do not operate in isolation from the society around them. Their ability to compete depends on the circumstances of the location where they exist. Improving education is seen as a social issue. The educational level of the local work force greatly affects a company’s potential competitiveness. The more a company is involved in corporate social responsibility the better it is positioned for economic benefits. Apple is a company that is positioned as an innovative organisation; therefore it develops its professionalism in its work place by developing and training its work force (Apple, 2009). Also by giving them sound health packages and housing benefits. This is because investment in the work force is paramount to productivity combined with finance and materials. This gives Apple a sustainable competitive advantage in the market against its competitors. Conclusion In conclusion the long run of social and economic goals are not conflicting, instead they are integrally connected. Competitiveness in recent time depends on how organisations can combine labour, capital and natural resources to produce high quality goods and services. Productivity depends on having workers who are educated, safe, healthy, decently housed and motivated by sense of opportunity (Porter and Kramer, 2002). My placement in Southampton city council as a volunteer has thought me a lot of important things I need to know about active community group. Basically what I have gained is not much because I’m still doing a research, on how to know what the community wants from the council, which I believe it will be completed soon. Also, I went for a Conference in Birmingham about community engagement, which was unbelievable, meeting up with different regions and met the Chief Executive,CDF. Nevertheless it was a tremendous meeting which they talk about several programms like Business case for community engagement, Working with the third sector and Take part etc.It was an excellent conference because everybody had to introduce themselves and their position in city council from different county.I would gain more idea from city council because I might stay with them till end of January 2010.
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