Building Social Businesses Essay Example

to 856 taka, which translates into 27 dollars American. Yunus decided he would free these individuals from their poverty and took the money out of his own pocket to pay their loans.

This led Yunus to become a guarantor for loans, and he then took his idea and went big and opened a bank for the poor, and created microcredit that lifted countless numbers of families out of poverty. Yunus mainly worked with the poor to help them out of poverty, and through the years he has combined his idea of social business with companies such as Adidas, Danone, Veolia water, and many more. Countless social businesses have been created and poverty is decreasing, slowly, but surely. The types of inequality Yunus mainly dealt with economic inequality, as well as gender inequality.

Economic inequality is on more of a global scale, the gender inequality he dealt with took place in the village and the reason he loaned money to mostly women, because all other conventional banks refused to lend money to women, and this way their children would benefit from the money directly. In his book he tries to answer the seemingly impossible, how to end poverty. Yunus’ ideas began first and foremost on his own selflessness. His internal need to help others was the motivation for the beginning of his social businesses. Yunus, along with Hans Reitz created the Seven Principles of social businesses.

The Seven Principles of social businesses are as follows: 1. The business objective it to overcome poverty, or one or more problems (such as education, health, technology access, and environment) that threaten people and society—not to maximize profit. 2. The company will attain

financial and economic sustainability. 3. Investors get back only the invested amount. No dividend is given beyond the return of the original investment. 4. When the investment amount is paid back, profit stays with the company for expansion and improvement. . The company will be environmentally conscious. 6. The workforce gets market wage with better-than-standard working conditions. 7. Do it with joy!!! (Yunus, 2010). These principles are what Yunus believes to be the core of social businesses. When he meets with new investors or possible business partners to discuss social business they enlighten them about the seven principles as well. These seven ideas define the true values behind social businesses and are what make social business unique from all other types of businesses.

Yunus believes that poverty is not created by poor people themselves. He discusses when he met mothers and their children. He noticed that the mother was often illiterate, whereas their child was well educated and had a well paying job. This led him to believe that the mother could have had just as good of a job as their child, but society never gave her the opportunity to become something. Yunus believes that poverty is created by the institutions our society has built. A big reason that poverty is such a problem is our financial institutions.

Banks refuse people for loans every day, two-thirds of the world’s population is denied financial services, when in most cases those who are denied are those most in need. By opening Grameen Bank, Yunus proved just how possible lending money to the less fortunate is, and that it can even generate a profit. All individuals that are brought

into the world are capable of taking care of themselves, and they are also able to make the world a better place in some way. Because of poverty we have lost countless individuals who, given the opportunity could have made large contributions to the world.

He also believes that capitalism is too narrowly defined. “The biggest flaw in our existing theory of capitalism lies in its misinterpretation of human nature. In the present interpretation of capitalism, human beings engaged in business are portrayed as one-dimensional beings whose only mission is to maximize profit” (Yunus, 2010). Yunus believes we are multidimensional beings and there are more things that make us happy, rather than money. Capitalism however, only takes our money making needs into consideration and makes the economy all about profit.

Organizations are way too concerned with making a profit that other important things are overlooked. So many businesses could be helping others, but to have money in society is to have power, therefore the majority of organizations are so concerned with making money that they cannot put their sights on a different matter. Yunus social business eliminates this as the main concern. The main concern for social businesses is to solve social problems. Yunus proposes a business where it has social benefits as well as profit maximizing benefits. There are two different kinds of social business.

Type I social business is “a non-loss, non-dividend company devoted to solving a social problem and owned by investors who reinvest all profits in expanding and improving the business. Type II social business is a profit making company owned by poor people, either directly or through a trust that is dedicated to

a predefined social cause” (Yunus, 2010). Yunus is a Marxist. In regards to capitalism, Marx believes that the device of exploitation built into the capitalist economic system is the reason for social antagonisms that will eventually lead to the destruction of capitalism. While writing in England, Marx was able to view firsthand the workings of the world’s most advanced industrial economy. Scenes of textile laborers in industrial Manchester living in abject squalor and barely clinging to life, the poet William Blake’s evocative and disturbing images of “dark satanic mills,” all impressed on many the downside of growing production and prosperity that had become evident in England and throughout much of Europe. Marx tried to show that such poverty was a permanent feature of capitalism and in fact would grow worse as capitalism advanced” (Sparknotes, 2012).

This view on capitalism is similar to Yunus’ view. He believes that capitalism created poverty as well. He says that “human beings engaged in business are portrayed as one-dimensional automatons whose only mission is to maximize profit. This is an extremely distorted picture of a human being” (Yunus, 2012). Yunus believes that humans are multidimensional and they should be used for more than just making a profit. Capitalism needs to set aside their main concern of making money, and realize that the people who work for them are more than just devices used to make money.

They are human beings that are capable of much more. Yunus is not opposed to the current system; he just believes that many changes could be made to it to make it better. He proposes that we begin to use social businesses, and this way we

will be looking out for the well being of others, and try to make poverty go away, instead of making it worse. Yunus was given a Nobel Peace Prize in 2006 for his work, and was seen as an innovator who was on the way to curing poverty. However, in 2011, this all changed.

In Bangladesh, many borrowers had taken out several loans from several different locations and were unable to pay the lump sum they owed. They became so overwhelmed with debt, that they saw no way out but to end their own lives. “Roughly 80 clients were reported to have taken their own lives last year – an alarming figure, although tiny relative to the 26. 7 million borrowers from PMFIs in India” (Tharoor, 2011). Microfinance was once a tool used to help the poor, and today it is now being used to maximize profit, the exact opposite it was originally created for.

People now use the idea of microfinance first for an investment opportunity, and they have reduced poverty to a less important goal (Paulson, 2011). “The field of microfinance has fallen into a crisis due to allegations of excessive profit-seeking, political manipulation and a general shift from its image as a noble experiment aimed at helping the poor to a scheme aimed at exploiting the poor. Yunus has been one of the loudest critics of those organizations that he believes have gotten greedy and lost their way” (Paulson, 2011). However, despite Yunus’ comments on this matter, there were lso similar allegations made against him. “Bangladesh's prime minister, Sheikh Hasina Wajed has accused him of "sucking blood from the poor", and others have alleged corruption

despite official government inquiries clearing him last month of any wrongdoing. In the end, the only charge that has stuck is that at a sprightly 70, he is too old to be managing director of the Grameen Bank. A charge made, incidentally, by the 77-year-old finance minister” (Bunting, 2011). Despite all of the crisis surrounding Yunus and microfinance, he has not given up.

On January 12th, 2012, a three-year program to promote Social Business in Pistoia has been established. This program will support research, training, technical assistance for students, citizens, entrepreneurs and local authorities which want to invest in a "new economy". The program "Pistoia, first Social Business City in Italy" fits in the strategy brought forward by his foundation which promotes different projects for an increasing social economy. They give different individuals a chance to be the person who is a main actor of their life and their future.

This foundation believes that social business will have a big part in solving some of the problems of our society (Yunus, 2012). “The program, for which the two foundations have committed more than 300. 000 euro (for its implementation and to support setting up of 3 Social Businesses), will focus on a series of activities which will give them an opportunity to citizens, entrepreneurs and local administrators to acquire specific competencies on Social Business and to get in touch with similar experiences worldwide” (Yunus, 2012).

This is the first social business ever in Italy. This demonstrates that regardless of past problems with microfinance and Yunus, his ideas are still respected and people are still being inspired to use social business to help those in need I love the

ideas presented in Yunus’ book. I think that the world is too selfish and we all need to remember how difficult life is for others all around the world. We should all being doing as much as we can to create equality in the world. Our system we have now in society is not sympathetic to those who are less fortunate.

Individuals who have no money have just as much potential as anyone else, if they were given the funding to get them started. An individual living in the United States has just as much brains as someone who is living in somewhere like Bangladesh, the only difference here is money. The individual in the United States with all that money will go to college and do great things with their life, whereas that individual in Bangladesh, regardless of their intelligence will never get the chance to prove themselves because they are unable to afford proper education. We should all be given equal opportunity to strive in the world.

One thing I did not like about the book was the sections where he discussed how to start your own social business. I found these sections dry, and very hard to finish reading. Learning about his numerous social businesses is very interesting and inspiring, but the middle of the book was too dry for me. I feel this book is more suited for business students versus sociology students. In conclusion Yunus is on the road to making society a better place. Recently the idea of social business may not seem like such a good idea, but I believe Yunus is on the right track, and is in the

right mindset that the whole world should have.

The most important thing society needs to remember is that we need to work together to make our society a better place. We need to put aside making money and look at the bigger picture. Instead of us cumulating as much money as we possibly can, maybe we should be working on ensuring all those who are less fortunate are given a real chance at life, and are given the same opportunities as everyone else. With the innovative ideas and selflessness we see in individuals such as Yunus, and the growing number of social businesses in society, social equality is definitely possible.