1. Social Entrepreneurship and the Global Environment for Entrepreneurship
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2. Learning Objectives To introduce the social entrepreneurship movement
To examine who would be a social entrepreneur
To delve into the concept of shared value
To discuss the challenges of social enterprise
To introduce the global opportunities and challenges for social entrepreneurs
To present the newest developments that have expanded the global marketplace
To examine methods of entering the international arena
To set forth the key steps for entrepreneurs seeking global markets
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3. The Social Entrepreneurship Movement
Entrepreneurship that is a form that exhibits characteristics of non-profits, governments, and businesses.
Combination of private-sector focus on innovation, risk-taking, and large-scale transformation with social problem solving.
The Social Entrepreneurship Process
Recognition of a perceived social opportunity translated into an enterprise concept.
Resources are acquired to execute the enterprise’s goals.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

4. Defining the Social Entrepreneur
Social Entrepreneurs
A person or small group of individuals who founds and/or leads an organization or initiative engaged in social entrepreneurship.
Also referred to as “public entrepreneurs,” “civic entrepreneurs,” or “social innovators.”
Creative thinkers continuously striving for innovation in technologies, supply sources, distribution outlets, or methods of production.
Change agents who create large-scale change using pattern-breaking ideas to address the root causes of social problems.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

5. Defining the Social Enterprise
Driven by social goals
Challenges are presented regarding the boundaries of what is and what isn’t a social enterprise.
Social causes can be based on personal goals.
General agreement that there is the desire to benefit society in some way.
Arguments can begin over the location of the social goals and with the purposes of the social goals.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

6. Social Enterprise and Sustainability
Sustainable Entrepreneurship
Focus on the preservation of nature, life support, and community.
Pursuing opportunities to bring into existence future products, processes, and services for gain, including economic and noneconomic gains to individuals, the economy, and society.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7. Table 4.1 Examples of Social Enterprise Obligations
Environment
Pollution control
Restoration or protection of environment
Conservation of natural resources
Recycling efforts
Energy
Conservation of energy in production and marketing operations
Efforts to increase the energy efficiency of products
Other energy-saving programs (e.g., company-sponsored car pools)
Fair Business Practices
Employment and advancement of women and minorities
Employment and advancement of disadvantaged individuals (disabled, Vietnam veterans, ex-offenders, former drug addicts, mentally retarded, and hardcore unemployed)
Support for minority-owned businesses
Human Resources
Promotion of employee health and safety
Employee training and development
Remedial education programs for disadvantaged employees; alcohol and drug counseling programs
Career counseling
Child day-care facilities for working parents
Employee physical fitness and stress management programs
Community Involvement
Donations of cash, products, services, or employee time
Sponsorship of public health projects
Support of education and the arts
Support of community recreation programs
Cooperation in community projects (recycling centers, disaster assistance, and urban renewal)
Products
Enhancement of product safety
Sponsorship of product safety education programs
Reduction of polluting potential of products
Improvement in nutritional value of products
Improvement in packaging and labeling
Source: Richard M. Hodgetts and Donald F. Kuratko, Management, 3rd ed. (San Diego, CA: Harcourt Brace Jovanovich, 1991), 670
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8. Forms of Sustainable Entrepreneurship
Ecopreneurship
Social Entrepreneurship
Corporate Social Responsibility
Environmental entrepreneurship with entrepreneurial actions contributing to preserving the natural environment, including the Earth, biodiversity, and ecosystems.
Activities and processes undertaken to discover, define, and exploit opportunities in order to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner
Actions that appear to further some social good, beyond the interests of the firm and that which is required by law and often denotes societal engagement of organizations
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

9. Ecopreneurship Ecovision Environmental Movement
A leadership style that encourages open and flexible structures that encompass the employees, the organization, and the environment, with attention to evolving social demands.
Environmental Movement
Initiated primarily by values rather than by design.
Developed by a plan to create sustainable future.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

10. Ecopreneurship (cont’d)
Key Steps in an Environmental Strategy
Eliminate the concept of waste.
Restore accountability.
Make prices reflect costs.
Promote diversity.
Make conservation profitable.
Insist on accountability of nations.
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11. Shared Value and the Triple Bottom Line
An approach to creating economic value that also creates value for society by addressing its needs and challenges.
Transforms business thinking by addressing issues through innovation and methods.
Triple Bottom Line (TBL)
An accounting framework that goes beyond the traditional measures of profit, return on investment, and shareholder value to include environmental and social dimensions.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

12. Triple Bottom Line Measures
Economic Performance
Environmental Performance
Social Performance
Personal income
Cost of underemployment
Establishment sizes
Job growth
Employment distribution by sector
Percentage of firms in each sector
Revenue by sector contributing to gross state product.
Hazardous chemical concentrations
Selected priority pollutants
Electricity consumption
Fossil fuel consumption
Solid waste management
Hazardous waste management
Change in land use/land cover
Unemployment rate
Median household income
Relative poverty
Percentage of population with a post-secondary degree or certificate
Average commute time
Violent crimes per capita
Health-adjusted life expectancy
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

13. Promoting Sustainable Enterprises
Benefit Corporation
Purpose: To create a material positive impact on society and the environment.
Accountability: To have a fiduciary duty to consider the interests of workers, the community, and the environment.
Transparency: To report annually to the public on overall social and environmental performance with a credible and transparent third-party standard.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

14. The Global Marketplace
Global Entrepreneurs
Opportunity-minded and open-minded global thinkers able to see different points of view and weld them into a unified focus.
Rise above nationalistic differences to see the big picture of global competition without abdicating their own nationalities.
Have a core language plus working knowledge of others.
Confront the learning difficulties of language barriers head-on, recognizing the barriers such ignorance can generate.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

15. The Global Marketplace (cont’d)
Global Thinking
Entrepreneurs who expand into foreign markets think about how to design and adopt strategies for different countries.
Diaspora Networks
Global networks of relationships among ethnic groups that share cultural and social norms.
Advantages of Diaspora Networks
They speed the flow of information across borders.
They create a bond of trust.
They create connections that help entrepreneurs collaborate within a country and across ethnicities.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

16. The Global Marketplace (cont’d)
Global Organizations and Agreements
Organizations, unifications, and trade agreements are some of the vehicles that have developed.
World Trade Organization (WTO)
Umbrella organization that overseas and administers WTO trade agreements
Handles trade negotiations or trade disputes
Monitors national trade policies
Provides technical assistance and training for developing countries
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

17. The Global Marketplace (cont’d)
The North American Free Trade Agreement (NAFTA)
International agreement among Canada, Mexico, and the United States that eliminates trade barriers among the three nations.
Created the world’s largest free trade area, linking 444 million people and producing $17 trillion in goods and services annually.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

18. Table 4.2 Top Ten Countries with Which the U.S. Trades
The largest U.S. partners with their total trade (sum of imports and exports) in billions of U.S. dollars as of 2015:
Rank
Country
Exports
Imports
Total Trade 1
Canada
261.8
290.6
552.5 2
China
99.6
384.0
483.6 3
Mexico
201.7
246.1
447.8 4
Japan
56.1
111.9
168.0 5
Germany
41.7
102.5
144.2 6
Korea, South
37.2
57.3
94.5 7
United Kingdom
45.0
44.9
89.9 8
France
26.4
39.2
65.6 9
Brazil
36.1
25.1
61.2 10
Taiwan
22.3
34.2
56.4
Source: U.S. Census Bureau, Washington DC, 2015.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

19. The Global Marketplace (cont’d)
The European Union (EU)
European Economic Community including 27 member states which are located primarily in Europe.
Objectives of the EU
Elimination of custom duties among member states.
Free flow of goods and services among all members.
Creation of common trade policies toward all countries outside the EU.
Free movement of capital and personnel within the EU.
Encouragement of economic development in the EU.
Monetary and fiscal coordination among all members.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

20. The Global Marketplace (cont’d)
Venturing Abroad
Opportunities to expand internationally.
Gradual Internationalization
Step-by-step progress toward internationalization as risk and commitment increase and entrepreneurs acquire more knowledge through experience.
Learning Curve Concept
Increased sales from exports will lead to greater efficiencies along the firm’s cost curve, which in turn will lead to increased overall profits as the firm expands into overseas markets.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

21. The Competitive Advantage of Nations
Resource-Rich Countries
Have extractive assets
The OPEC nations and many parts of Africa
Labor-Rich Countries
Have vast pools of available labor
Brazil, India, the Philippines, and select countries in South and Central America
Market-Rich Countries
Have large purchasing power
Europe, Brazil, Mexico, India, China, and the United States
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22. International at Inception
Characteristics of “Born Global” Firms
Global vision from inception
Internationally experienced management
Strong international business network
Preemptive technology or marketing
Unique intangible asset
Linked product or service
Tight organizational coordination worldwide
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23. Methods of Going International
Importing
Buying and shipping foreign-produced goods for domestic consumption.
Exporting
The shipping of a domestically produced good to a foreign destination for consumption.
International Alliances
Agreements between companies from two or more countries; not legally binding.
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24. Table 4.3 Types of International Alliances
Alliance Type
Degree of Involvement
Ease of Dissolution
Legal Entity
Informal international cooperative alliance
Limited in scope and time
Easy and convenient for either side
None
Formal international
cooperative alliance
Deeper involvement; exchange of proprietary knowledge
More difficult to dissolve due to legal obligations and commitment
Internal joint venture
Deep involvement; requires exchange of financial information, proprietary knowledge, and resources
Most difficult to dissolve due to the significant investment of both
companies and the existence of a legal entity
Separate company
Source: Adapted from John B. Cullen and K. Praveen Parboteeah, Multinational Management: A Strategic Approach, 5th ed. (Mason, OH: Cengage/South-Western, 2011), p. 352.
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25. Joint Ventures Advantages Disadvantages
Immediate intimate knowledge of the local conditions and government
Use of the resources of the other firms involved in the venture
Initial capital outlay and overall risk are lower
Disadvantages
Fragmented management control of the venture’s operations
Differences of opinion that reflect different nationalities
Unanticipated withdrawal of a participating firm
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26. Direct Foreign Investment
Is a domestically controlled foreign production facility that results from a foreign firm:
Acquiring an interest in an ongoing foreign operation.
Obtaining a majority interest in a foreign company.
Purchasing part of the assets of a foreign concern in order to establish a direct investment.
Building a facility in a foreign country.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

27. Direct Foreign Investment (cont’d)
Licensing
A business arrangement in which a manufacturer of a product (or a firm with proprietary rights over certain technology or trademarks) grants permission to some other group or individual to manufacture that product in return for specified royalties or other payments.
Types of Licensing
Patents
Trademarks
Technical Know-How
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28. Entering the International Marketplace
Draw up and implement the plan
File the proper documents
Secure adequate financing
Prepare a feasibility study
Conduct research
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29. Researching Foreign Markets
Government regulations
Political climate
Infrastructure
Distribution channels
Competition
Market size
Local customs and culture
Market Research Parameters
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30. Researching Foreign Markets (cont’d)
Foreign Market Dangers:
Ignorance and uncertainty
Lack of experience
Lack of information
Imposed restrictions (demands and red tape)
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31. International Threats and Risks
Political Risks
Economic Risks
Social Risks
Unstable governments, disruptions caused by territorial conflicts, wars, regionalism, illegal occupation, and political ideological differences
Changes in tax laws, rapid rises in costs, strikes, sudden increases in raw materials, and cyclical/ dramatic shifts in GNP.
Antagonism among classes, religious conflict, unequal income distribution, union militancy, civil war, and riots.
Financial Risks
Fluctuating exchange rates, repatriation of profits and capital, and seasonal cash flows
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32. Key Questions and Resources
Why is the company interested in going international?
What does the foreign-market assessment reveal about the nature and functioning of the markets under investigation?
What specific market strategy is needed to tap the potential of this market?
Internationalization Strategic Decisions
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

33. Key Terms and Concepts B corporation benefit corporation
diaspora networks
ecopreneurship
ecovision
European Union (EU)
exporting
global entrepreneurs
importing
international alliances
joint venture
learning curve concept
licensing
market-rich countries
North American Free Trade Agreement (NAFTA)
political risks
resource-rich countries
shared value
social entrepreneurship
Social impact investing
social value
sustainable entrepreneurship
triple bottom line (TBL)
World Trade Organization (WTO)
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.