Answers:
Background
Central Stakeholder in the Case
Melissa Power if the central stakeholder for the social enterprise known as For the Love of Laundry (FTLOL) found in the year August 2014 (fortheloveoflaundry.ca/pages/about 2018). She aimed at funding laundry events for her community by selling eco-friendly and homemade soaps online or through the local retailers.
Any Considerations of note
In the year, Melissa Power received around $20000 as entrepreneurship grants from one of the local universities (fortheloveoflaundry.ca/pages/social-impact 2018). The grant also brought forward an opportunity for attending specialized businesses classes for learning to grow business.
Key Problem or Opportunity
Melissa Power was unsure of the business model that would help FTLOL to grow financially and socially. She thought of business structure of non profit organization. Then there was the option of becoming a registered charity that would allow tax exemption. She also thought of becoming a for profit organization. However, the choice of the structure needed to be one that would help the business to grow profitably and socially.
1. What are FTLOL’s Goals?
The goals of FTLOL lies in building a healthier community by providing environment friendly and free laundry services to the lower income group of families do not have to make a choice between paid bills and cleaner clothes(Sims 2015).
2. FTLOL’s Competitive Advantage
FTLOL has two main competitive advantages that include positive social impact and products that are environment friendly(4). These are competitive advantage since Melissa Power believed that these criteria will help in raising the necessary capital and provide access to bigger branded stores.
3. Drafting Value Proposition for FTLOL
The value proposition of FTLOL product is as follows:
Step 1: The Benefits
- The soap of FTLOL has no harmful additives or chemicals and is a natural blend of the cleaning powders
- The soap has no harmful phosphates
- Enables customers to contribute to community growth and development by making a purchase.
Step 2: Linking the Benefits
- Chemicals present in the soap will not harm personal, public or environmental health
- Absence of harmful phosphates prevents eutrophication of the water bodies
- There is a feeling of contentment and pleasure when one’s purchase makes a contribution to the community
Step 3: Differentiating and Positing
Through offering chemical free products that helps maintain healthy community, FTLOL soap has an edge over its competitors thereby experiencing a preference amongst its consumers.
Option Analysis
4. Assessing Four Options of FTLOL’s Model
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Options
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Pros
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Cons
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For Profit Business
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1. Follow a defined growth practice
2. Have no legal restrictions in pursuing revenue, managing assets and utilizing profits.
3. Attracts conventional investors
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1. Have no tax exemptions
2. Cannot receive legal funding from foundations or charities
3. Interference of the equity investors
4. Cannot enforce social mission on the shareholders
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Non-Profit Organization
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1. Have income tax and property tax exemption
2. Qualifies for government aids
3. Receive capital from the impact investors
4. Have legal commitment for investing profits in social missions
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1. Strict regulation and government intervention on revenue generation
2. Non registered NPOs are tax deductable
3. Do not attract traditional investors
4. Requires a board of directors
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Registered Charity
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1.Property and income tax exemption
2. Issue tax receipts
3. Receive funding from other foundations and charities
4. Legal enforcement for executing charitable goals
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1. Requires satisfying disbursement quota of the government.
2. Strict government regulations
3. Do not attract conventional investors
4. Requires a board of directors
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Co-operative
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1. Depends on the voting system of members
2. Debt financing have tougher limits on interest repayment
3. Operates on the basis of cost recovery model
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1. Have a fixed percentage of revenue for loan repayment
2. Lack of dedicated members for making investment
3. No differential treatment to the founding members
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References:
fortheloveoflaundry.ca/pages/about 2018. [online] Available at: https://www.fortheloveoflaundry.ca/pages/about [Accessed 17 Feb. 2018].
fortheloveoflaundry.ca/pages/social-impact 2018. [online] Available at: https://www.fortheloveoflaundry.ca/pages/social-impact [Accessed 17 Feb. 2018].
Sims, J. 2015. Social enterprise founded by former single mom allows less fortunate individuals to do their laundry for free. [online] Available at: https://www.lfpress.com/2015/05/31/social-enterprise-founded-by-former-single-mom-allows-less-fortunate-individuals-to-do-their-laundry-for-free [Accessed 17 Feb. 2018].
