In the United States of America, over 45 million people that is 15 percent of the population are poor; a reliable data from the Census Bureau and the percentage is feared to increase every year. Japan and Europe are better as the level of poverty is lower. Businesses in the developed world are aware not all their consumers are rich. They have invested in the production of low-cost products and services targeting these people. For instance, automakers make low-budget cars such as The Model T Ford, the Volkswagen Beetle, the Mini Cooper, and Citroën 2CV all are low-cost models. Low-cost “hard-discounters” like Aldi and Lidl in Europe and U.S markets have emerged recently in the industry.
Despite the provision of low-cost products and services, some people are not able to purchase them without the help of the state. On transportation, some people will afford the old and extremely cheap motorcars. Large Corporation has started approaching this problem. Social business is a concept designed to help this less fortunate group. The concept seeks to alleviate social problems including all types of poverty. Social business offers value propositions in the industry to help the poor: customer exclusivity, high-quality products and services, and great designed solutions.
Social business models are exclusive. The companies determine up front how many consumers the program they will serve, and nobody else is eligible. For instance, the SFR and the French Charity Emmaus focus on the homeless, all the poor people that have mobile phones as eligible for the services provided by their project telephonie solidaire. However, the target may be narrow like poor consumers order than sixty years of age, low-income families with a six- to a twenty-four-month-old child, or a poor consumer who require a car to get or keep their job, Essilor, Danone, and Renault respectively. To ensure eligibility, social businesses work with nonprofits that depend in turn on local associations and public programs to determine potential beneficiaries.
In this low-cost business model, all the consumers whether poor or not, analyzes the trade-off between the standards of the company and the cheap offers. If they are much similar, the firms risk cannibalization of the standard offered. It downgrades the primary attributes in the cheaper offer to provide a distinct trade-off. The offer remains unchanged if economics allow in a social business model. This is vital because the objective of the social business is to give the poor access to the existing products or services whenever needed. Essilor, Danone, and Renault provide the poor consumers with goods and services similar to that the rich enjoy.
The Commitment to high-quality products and services means that the social businesses do not lower their costs by redesigning products and manufacturing processes. The companies focus on changing the economics of sales and distribution. Unlike the low-cost companies that are defined majorly regarding products and services, the social businesses often express their value proposition as the solution to the social problems affecting the customers. In the cause or Renault, the goal of the project is resolve transportation problems for the poor citizens. Mainly, it collaborates with non-governmental organizations to determine the cheapest mode of mobility for the less fortunate people whether it be metro, buses, or even bicycles.
Lastly, a social business in the developed world is trying to create a balance between the rich and the poor (Martin, and Sally, 123). It is focused on providing products and services to the less fortunate members of the society, similarly as the rich access them.
Wok cited
Martin, Roger L, and Sally R. Osberg. Getting Beyond Better: How Social Entrepreneurship Works. Boston, Massachusetts: Harvard Business Review Press, 2015. Print.
