Society (k) is a social enterprise that trades to support a community’s environmental, economic, and social welfare. This kind of organization declares the following items: and the environmental mission to benefit the public; has to declare a substantial level of income reserved to the work of charity; the company has to reinvest most of the profit to fulfill the organization objective. Social enterprises have private ownership to enable independent authority and can wind up operations after attainment of objective. The duties of a social enterprise go beyond the observance of corporate social responsibility since it is an integral mission objective. This organization primarily benefits the public to qualify in the social enterprise network. Social enterprises can potentially withstand global economic challenges. This calls for them to build resilient economies to provide employment opportunities to ethnic communities instead of relying on the government donations and grants. Social enterprises derive income from trading, retirement plans, pension funds, and attracting investment from other organization. Social enterprises have the ability to sell goods and services and make in the face of constrains from the government. Social enterprises must strategize in the area of operation to identify most pressing needs of the community and supporting the government by diversifying their objectives.
Mission and Value Proposition of the company
Social (K) is an example of enterprise with an economic and cultural mission to benefit the community. This social enterprise headquartered in Springfield, Massachusetts provides members with a low cost paperless retirement platform for different plans such as the 401(k) and 403(b) plans (Bailey 330). This social enterprise adopts an open architecture platform where the community can use the fund family with no coercion. The mission and goals of this enterprise resembles with that of a B corporation. The goal of Social (k) entails the offering of a variety of mutual fund for the firms to benefit from a wide selection. This company has already provided many accessible funds for many companies such as the traditional fund, index funds, Judeo Christian funds, and Socially Responsible funds. Social (k) works with other companies to affect the global communities in a positive way.
The mission of Social (k) is to ensure that businesses run in a sustainable manner as well as observing the work ethics. This company provides profit and nonprofit mission options for retirement to match an organization culture (Bailey et al 330). This corporation works jointly with other businesses that are sustainable allowing flexibility to the employees. This corporation has collaborated with many fund companies, several portfolio, environmental, and community management firms. This company makes a change in the global world of business by donating some monies to charity after the calculation of the pre-tax profit.
Social (K) offers different types of investing platforms such as value investing green investing, and sustainable investing. This firm embraces the issue of cultural diversity rather than detracting like other investment firms in the traditional era such as Goldman Sachs (Burke 12). This company provides accessible funds to positive screens that contribute positively due to their campaign on labor and human rights issues. It also extends its fund products to the negative screens. Some of these companies are involved in environmental degradation, manufacture of weapons, and manufacture of alcohol. Social (k) uses this screen to eliminate the likelihood of companies shifting focus.
Describe the industry sector that the company operates in
This corporation operates in the code 52 Financial and Insurance of the NAICS (Hancock 2). Specifically Society (k) offers retirement fund products to the customers. In 2012, 401(k) total contributions are valued over $145 billion and exceed the defined benefit of the employer contribution. This firm host many workers and has a vast amount of assets (Burke 12). The change of the amount of the contribution has seen many people being responsible in their size of contribution.
The recent debacle of the global financial crisis has seen many people exercise responsibility and this has led to the growth of the retirement industrial sector. The aged citizens in America have the concern of financial security in the nation This has translates in high profile retirement plans by government officials, sponsoring companies, participants and administrators. To highlight the change in this industry of retirement plans one can observe the effect of salaries on workers retirement choices.
A recent study depicts a non-economic influence in the behavior of 401(k) (Gale et al 5). Social (k) continues to provide mission driven organization at low cost to many people. Employees continue to subscribe to many options of plans to broaden the corporate social responsibility initiatives. Social (k) industrial sector experiences stiff competition on the retirement plans from other organization. This has led to Social (k) adopting smaller plans to start ups in the country that look ESG screened funds in the company retirement plan.
According to Eastwood and Patrick (47), this trend will continue in the future. Some of the non-profit organization adopts the simple plans as necessitated by striving for market share in the industry. Additionally, Society (k) has increased the selection of funds such as Azzad Funds and other portfolios. These funds have translated in an increase of the overall retirement market. The slackening of the economy is sustainable has not withered the Socially Responsible Investing (SRI) since the country’s assets continue to grow at a fast pace than all investments in the world.
Opportunities and Threats in the control of the organization
Social (k) offers more than 500 ESG investment options that are subject to screen. This evaluates a company’s role as a positive or negative role in the society. This company in addition offers over 1000 traditional investment funds (Gale et al 7). This company has open opportunities for employees in search of a wide variety of retirement plans. Society (k) unlike other vendors offering the same products in the market aligns itself with the clients’ philosophies and cultures. The passing of the legislation by congress to steer growth and impact investing for social entrepreneurs has given this corporation a boost to continue with its steering performance. The passing of Benefit Corporation legislation has seen this firm climb in ranks since it is the best rank due to accountability and transparency.
The current financial crisis illustrates many flaws in the retirement system. Since the crisis emerged some of the employee, 401(k) accounts have misappropriation (Hancock 3). Millions of employee suffers anguish as their retirement money vanishes. This has led to employees reconsidering before venturing in the idea of saving for their retirement. Some postpone the retirement or choose to rejoin the workforce after retirement. The retired people who lost colossal wealth in their 401(k) have trouble meeting their health costs as well as basic needs due to a devastating loss of income.
Congress has to take laudable strides in the creation better retirement systems with no loopholes for money laundry to cater for the future generations (Hancock 5). It is up to the cushion the workers of any risk in the face of a future financial crisis. This calls for political willingness since there are no any administrative and economic obstacles to hinder the realization of the safe retirement system. The country needs an organized retirement savings. The decline of Social Security coupled with the fragile 401(k) plans can hinder the future retirees from living off their savings.
The company as a Benefit Corporation
Society (k) as a benefit corporation creates a positive measurable impact while providing accountability and transparency to the community. The Benefit Corporation is a new class of corporation with a corporate mandate that stands to benefit the community in the area of operation coupled with a fiduciary duty that remains transparent in the industry. Society (k) operates to benefit the public to affect the environment and the society. This company publishes an independent third party that acts as an assessment tool to enable the creation of material benefit (Burke 12). This creates value to the shareholders, suppliers, environment, employees, and the public.
As a Benefit Corporation Society (k) works in a structure that demand high level of accountability and transparency. In every fiscal year after a period of 120 days of operation the Benefit Corporation, publish a Benefit Report (Upshaw 14). This report states a transparent performance on a social and environmental axis.
In the United States, Benefit Corporations have dual roles this includes to create the benefit of the community and to create profit for the shareholders. The benefit corporations do not face lawsuits from the shareholders due to the issue of maximizing their wealth as it happens to the limited liability companies. The third party assessors must come to evaluate the social and economic performance of Society (k).
Describe the role of key partners in the value chain
Most benefit corporations work in unison to create a value chain in the society. This enables them to improve their services to the workers and the community (Bailey et al 327). A value chain approach enables the reduction of poverty levels that leads to economic development. Society (k) works alongside other vendors in the same industry to develop the livelihoods of people. The social enterprise addresses the major constrains and opportunities faced by the employees as they try to locate affordable retirement plans that can meet their personal needs.
The social enterprise has to provide affordable products to strengthen the delivery of financial services to facilitate an improved market access in a bid to ensure value-added products (Eastwood and Patrick 45). The value chain concept requires an innovative approach. Successful innovation needs quality research work and a supportive policy that is in tandem with the environment of Society (k). Benefit corporations must work in a value chain to enable them leverage in the global environment to enable them enjoy low operational cost since they work in unison.
A value chain model can enable social enterprises to attain revenue generation and pursue their strategic aims provided by technological advancements. This can make markets more convenient and profitable since they pursue source production and growth. Any international operation achieves high levels of revenue by working in a value chain. This operation of value chain will translate in the beneficial corporations by attaining economies of scale by expanding horizontally in new markets.
Legal and capital structures of the organization
The constitution for America provides various statues in form of legal structures for the social enterprises such as charitable trust boards, limited liability, co-operative companies, limited partnership, and other incorporated societies. The company observes in its memorandum of association that it has an intention to maximize profit that is in lieu with the welfare of the community (Eastwood and Patrick 45).
This company attracts investments by paying of dividends to enable the realization of growth in the capital structure. Society (k) falls under Benefit Corporation legal structure. This company endeavors to create public benefit and return the profit to the shareholders. This structure assists in branding the company and fosters social enterprise development.
Some states offer the same legal framework for profit and non-profit ventures. A B Corporation is an example of a hybrid structure that gets low profit. Gale et al (2) believes that the legal structure can provide better opportunities to this Society (k) that will attract large-scale operations and investments. Society (k) has chosen for-profit organization since it has a broad range of activities to generate profits and is liable to remix tax like other corporations. Society (k) achieves the social mission by generating profit through profit related activities prescribed in the CRA. It is a social enterprise with a registered charity legal structure.
In light of this, most of the staff working in this social enterprise is volunteers who do not get any remuneration. The capital structure for the organization was less than $10000 with little number of employees (Gale et al 5). Currently social entrepreneurs create companies that seek profit in tandem the devotion to the social purpose to ensure a long-term sustainable value. Eastwood and Patrick (47) believe that Society (k) will effectively address challenges of the mission driven companies such as TOMS Shoes, Better World Books, and D-Light Design. This social enterprise is mission-driven and for profit organization.
What are the four major strengths and four weaknesses of the company?
Society (k) is a fast paperless online process that is easy to set up and install. This process caters for different levels of social class since it has inexpensive administrative fees. All the processing and communication between the company and the employee is automated. For instance, payroll processing of contributions, accessing various retirement products on offer, accesses loan during approval and disbursement, and enrollment (Bailey et al 328). An employee has full access to interact and affect the 401(k) accounts everyday with no restriction. Social (k) operates in an era of transparency and accountability as a benefit corporation. This firm establishes a positive role that gives confidence to the employees that they can access their savings in future with no fear of misappropriations. The constitution does not put restrictive measures on profit as it does for the limited liability companies.
Social (k) encounters the hurdle of expanding and benefit from economies of scale due to stiff competition in the market. The legal structure limits this firm from providing pecuniary gain to the employees. This limits the ability of the company raising the capital to enable expansion. This corporation faces the challenge of getting a steady stream of revenue to enable it manage the operating costs effectively. The desire for a fast growth, uncertainty, and higher future costs of operations hamper development of Society (k). The corporation’s management team often lacks the expertise of managing the financial aspect of the firm. In times of liquidation, directors cannot benefit from the non-financial asset as it happens in the liquidation of limited companies (Bailey et al 329). Society (k) operates as a benefit corporation offers benefit to the investors in unlimited proportion while it cannot get tax deductions from the government.
A trade publication that acts as a potential reference
The legal structure stipulates that every beneficial corporation must publish an annual benefit report. This report does include a third party standard that informs the social and environmental performance (VanDerhei 11). This is a transparent requirement to benefit both the internal and external factors such as shareholders, directors, and the community. This information will help to determine whether the corporation has met the statutory objective that deals with positive role in the society and the environment (Smith et al 408).
The third party standard performs assessment on the company’s environment and social performance to establish whether it meets the threshold. The government cannot interfere with the third party standard in the identification of positive impact in the society (Patel 137). The legislation does not bind the benefit corporation to adopt a certain third party standard as they prepare the annual report. The benefit corporation directors, directors and the shareholders verify the third party standard as to whether it fits in the statutory. B Lab takes a neutral stand in the verification of a standard.
What is the competitive landscape for this company?
This corporation evaluates and selects investments from the blue-chip companies that have undervalued stocks. Society (k) experiences problem of competition by having a weak balance sheet that works against in the industry (Patel 139). The company faces fierce competition from magnates such as Glyston Bakery renown for the open-hiring policies and other innovative products that support the community. This organization provides high quality care to the elderly in America and people having physical disabilities. Society (k) demonstrates that business can work to improve the quality of life in communities by attracting the best talent by turning customers to become evangelists (Smith et al 412).
The company uses Environmental, Social, and Governance (ESG) to evaluate investment methodologies to ensure sustainable factors that assess risk and return. ESG ranges from investment carbon footprint to potential resource and energy shortages (VanDehei 13). Additionally ESG considers investment chain alignment, asset ownership, and transparency to ensure competitive advantage. Society (k) works to beat the market by focusing on delivering returns by using less risk. The company delivers low beta to beat other competitors in the industry. One must consider the Employee Retirement Income Security Act (ERISA) that informs on the handling of Employee Benefits Security Administration (EBSA).The non-economic factor work as a tiebreaker in the fiduciary retirement plan when considering investment choices (Smith et al 415). In some instances, participants consider ethics during the investment process. Some of the material factors in long-term investment to affect the retirement plan investors include energy pricing, climate risk, and the allocation of scarce resources.
Is the B Certification a competitive advantage? Why or why not?
The award of Benefit Certification for the communities honors firms that earn an overall score and has a positive impact towards the public welfare. The B impact assessment is a comprehensive evaluation to measure a business impact to the workers and the community. This includes assessing the social and economic opportunities that the company benefits the community (Upshaw 7). This includes checking the company’s contribution to health care, education opportunities, workers diversity volunteering, charity giving, and other social and economic issues. The certification of ‘best for the World’ will provide a positive image for Society (k) and will lead it attracting many customers towards more success in the future (Upshaw 10). This certification will enable this benefit corporation to grow in large scale to enable the increase of dividends to the shareholders. This company has a good position to attract investment since the legal structure does not limit its operations.
According to Hancock (4), Social (k) was feted for its positive role that affects employees and the community in the area of operation. This corporation tops the list of all Benefit Corporations released in 2013. This is the fourth installment as the best ‘B Corp in the World’ among other Benefit Corporation category. Social (k) certification works towards its advantage since it is among many high impact companies across industries worldwide. This company gets an award for improving the quality of life and its role in public welfare. Burke (12) note that Social (k) supports the community as well as vendors who operate in the same region. This company collaborates with other businesses in the national level by allowing membership such as Social Venture Network, BALLE, Green America, 1 percent Planet, and other investments forums to support the public. This company has made a laudable stride to support many organizations in working out retirement plans across the nation.
Works Cited
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Eastwood Jr., Robert B., and G. Patrick Byrnes. "Maximizing Retirement Plan Benefits." Journal Of Accountancy 184.5 (1997): 45-50.
Gale, William G., et al. "Increasing Annuitization In 401(K) Plans With Automatic Trial Income." Hamilton Project: Discussion Papers 2 (2008): 1-28.
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Smith, Wendy K., Michael Gonin, and Marya L. Besharov. "Managing Social-Business Tensions: A Review And Research Agenda For Social Enterprise." Business Ethics Quarterly 23.3 (2013): 407-442.
Upshaw, Kala E. Strengthening The Retirement System Beyond Social Security. New York: Nova Science Publishers, 2010
VanDerhei, Jack. "Retirement Readiness Ratings And Retirement Savings Shortfalls For Gen Xers: The Impact Of Eligibility For Participation In A 401(K) Plan." EBRI Notes 33.6 (2012): 9-21.
