paper 4

Question 1

name the nine elements of the BMC

Answer 1

1. key partner
2. key activities
3. key resources
4. value proposition
5. customer relationship
6. channels
7. customers
8. cost structure
9. revenue stream

Question 2

name the 14 elements of the SEMC, and point out whether they remained the same, have been refined, are new, compared to the BMC

Answer 2

the same: key resources, key activities, channels, cost structure

refined: value proposition => social value proposition; key partners => non-targeted stakeholders; customer segment => customers and beneficiaries; customer relationship => customers and beneficiaries engagement; revenue => income
new: mission values, objectives, impact measures, output measures, governance

Question 3

according to the article ‘the case for a socially oriented business model canvas’ what is the definition of a business model?

Answer 3

• simplifications of real systems that are used for explaining performance and competitive advantage (Zott, Amit, Massa)
• they are for rethinking and redesigning an organization’s strategy in order to benefit from innovations and other opportunities (Massa, Tucci, Afuah)

Question 4

what is the definition and a necessity for SSBM (strong sustainable business model) regarding the definition of value?
(IUpward and Jones)

Answer 4

• an enterprise that determines its appropriate inputs, resource flows, and value decisions and its role in ecosystems, whether natural, social or economic
• that an enterprise defines its own values based on a multidimensional set of units in economic, social and environmental dimensions.

Question 5

in order to adapt the basic BMC to an organization that has social goals, what two building blocks are added:
(this is not the same as the SEMC)

Answer 5

1. social and environmental cost

2. social and environmental benefits

Question 6

name the three challenges and one paradox for social enterprises:

Answer 6

1. the strategy challenge
2. the legitimacy challenge
3. the governance challenge

paradox: the mission measurement paradox

Question 7

strategy challenge: definition and 3 mechanisms to solve it

Answer 7

both social and economic goals are important for SEs. economic goals are best served by economic efficiency, which can be incompatible with social goals. pursuing both can be done by:

1. delivering goods to the BOP, ‘serving the poor profitably’
2. applying ‘pay what you want’ pricing
3. ‘external social enterprise’ -> keeping social and economic activities separate

Question 8

the legitimacy challenge: define and why is it important

Answer 8

• SEs need to be perceived as trustworthy and accountable. legitimacy transforms things considered true in some groups into knowledge taken for granted as true for everyone.
• it can be necessary to access donative forms of revenue, obtain a nonprofit status, or engage with particular business partners

Question 9

the governance challenge: define and give two main different stems

Answer 9

• governance defines systems and processes concerned with direction, control and accountability; it determines for what and to whom an organization is accountable.
  ways in which governance of SE is structure depends on:
  1. origin of main source of funding (philanthropic donations, government, or own revenue)
  2. the way in which the governing board is composed

Question 10

what is the relation between level of donations of individuals, performance on social capital role, and performance on political advocacy role

Answer 10

higher level of donations of individuals –> higher performance on social capital role –> lower performance on political advocacy role

if higher levels of revenue from government –> vice versa

Question 11

mission drift =

Answer 11

happens when an organization diverges from its original mission statement

Question 12

according to Lee and Nowel, what 7 dimensions are/shoul be considered by nonprofits?

Answer 12

1. inputs - ability to acquire and efficiently use resources
2. organizational capacity - concerns securing human and structural features, ability to offer programs and services
3. outputs - scale, scope, quality of product and service provided
4. outcome - behavioral and environmental changes
5. outcome - client and customer satisfaction
6. public value accomplishment
7. network / institutional legitimacy

Question 13

underlying the SEMC is the following definition of a business model for SEs:

Answer 13

the analysis of the rationale, infrastructure, capabilities, and use of resources that enable stakeholders to create value for themselves and for the organization

Question 14

two types of values:

Answer 14

• terminal values = desirable end-states of existence

- instrumental values = desirable modes of conduct and are the motivator to reach end-states of existence

Question 15

two types of goals and the values linked to it

Answer 15

1. official goals - terminal values (often desirable goals and formulated in mission statement) (= mission values)
2. operational goals - instrumental values

Question 16

SEMC is designed by taking into account these 4 factors:

Answer 16

• blending social and economic objectives
• effectively communicating the objectives and the strategy
• assessing its results in terms of output, outcomes, and impact
• adopting the best governance mechanisms that enable the pursuit of mission values

Question 17

how can the legitimacy challenge be managed?

Answer 17

justification; the act of providing clear and persuasive accounts of strategy and actions