A social business is a new type of businesses designed by Professor Muhammad Yunus to serve social purposes. Yunus was a former economics professor at Dhaka University, and the founder and managing director of Grameen Bank (lenders of microcredits to world’s poorest) who won the 2006 Nobel Peace Prize. A social business is an alternative against poverty and its objective is to make the poor participate in the process that helps them get out of that situation of slavery- poverty- by causing them to become micro entrepreneurs who increase their income in order to become independent people. The process will eventually change their living conditions and living standards.
In Yunus’ words there are two kinds of social businesses. The first category is one that is a non-loss, Non-dividend Company whose main purpose is basically a social goal. The second category is a profit making company possessed by poor people devoted to a well-defined social cause. Besides, social businesses must be self-sustaining and its owners have to be dedicated to never take any dividend beyond the return of the original amount they put in the business, Yunus. Above all, his book is very amazing as Yunus proposes a new model to solve the problems of poverty, not with more charities but with the creation of social businesses. Charities on the contrary encourage dependence and have not resolved the issue of poverty until now.
In that perspective, Yunus (2010) sustains that for years governments have been incapable of solving the problems of poverty. Conversely, the number of poor people has increased over the years. This clearly illustrates that solving the issue of poverty is not only to be a governmental solution as governments have proved to be incompetent in this respect. Another solution was to be found, it is the one he proposes in his book. In fact, social businesses have become so successful that traditional capitalism is thinking somewhat how to shift the way things have been handled on their part so far. As an illustration, Yunus (2010) thinks that social business is a new type of capitalism that will help humankind to overcome poverty and have a better life.
Table of Contents
- I. Introduction
- II. The Backgrounds of Social Business
- III. Defining Social Business
- IV. The Grameen Experience
- V. The Limits of Social Business
- VI. Conclusion
Objectives and Key Themes
The objective of this essay is to analyze Professor Muhammad Yunus' concept of social business as a solution to poverty, examining its origins, definition, practical application (through the Grameen Bank), and limitations. The essay critiques Yunus' assertion that social business is a perfect solution.
- Origins of Social Business and the Grameen Bank
- Definition and characteristics of Social Business
- The Grameen Experience: successes and challenges
- Limitations of the Social Business Model
- Alternative approaches to poverty reduction
Chapter Summaries
I. Introduction: This introductory chapter establishes the context of the essay by presenting Professor Muhammad Yunus' concept of social business as a novel approach to poverty alleviation. It distinguishes social businesses from traditional charitable models, highlighting the emphasis on self-sufficiency and micro-entrepreneurship. The chapter introduces Yunus' two categories of social business: non-profit and profit-making entities with a social mission. It argues that social business offers a more sustainable solution to poverty than traditional charity, which is deemed to perpetuate dependence. The introduction lays the groundwork for subsequent chapters by outlining the specific areas of inquiry: the origins of social business, its definition, the Grameen experience, and an analysis of its limitations. The introductory chapter also states the author's intention to challenge Yunus's view that social business is a perfect system.
II. The Backgrounds of Social Business: This chapter delves into the genesis of social business, tracing its roots to Professor Yunus's frustration with traditional banking practices in Bangladesh. It narrates the story of Sufiya Begum, a woman struggling under the exploitative practices of local moneylenders, illustrating the immediate need for accessible microcredit. Yunus's personal intervention in lending money to Sufiya and other villagers, and the subsequent reluctance of conventional banks to address this need, are presented as pivotal events that led to the creation of the Grameen Bank. The chapter establishes that the core impetus for social business arose from the failures of existing systems to effectively alleviate poverty among the impoverished population. It highlights that the conventional banking system failed to provide credit due to a lack of credit history and collateral, underscoring the systemic barriers faced by the poor. This foundational narrative underscores the necessity for alternative financial models tailored to the unique needs of the poor.
III. Defining Social Business: This chapter provides a comprehensive definition of social business as conceived by Professor Yunus, focusing on its core principles. It explains the two models presented by Yunus, differentiating between non-profit and for-profit social enterprises. It details the commitment to social objectives, the expectation of self-sustainability, and the constraint on dividend payouts beyond the recovery of initial investments. The chapter also explores the core philosophy underlying social businesses as instruments for sustainable poverty reduction, contrasting them with the limitations of traditional charity. The discussion likely elaborates on the specific ways that social business aims to empower impoverished individuals through micro-enterprise development, emphasizing its innovative approach to economic development and poverty eradication.
IV. The Grameen Experience: This section analyzes the Grameen Bank, a pioneering example of a social business, showcasing its operational model, successes, and challenges. It likely examines the bank's microcredit lending practices, their impact on the lives of borrowers, and the broader economic and social implications. The analysis will explore whether the Grameen Bank’s success is replicable elsewhere and will most likely address various challenges faced in its operation and scalability. The chapter will evaluate the success and impact of the Grameen Bank's approach in addressing poverty, analyzing the model's strengths and weaknesses in achieving its social goals.
V. The Limits of Social Business: This chapter critically evaluates the limitations of the social business model, challenging Yunus's claim that it is a perfect solution to poverty. It might address the challenges of attracting investors who prioritize financial returns over social impact, the limitations on scalability, and the potential for social businesses to become co-opted by larger corporations. The chapter also explores the author's proposed alternative approach to poverty reduction, which focuses on education as a more fundamental and long-term solution, highlighting a potential limitation of Yunus’s emphasis on solely micro-enterprise development. The analysis likely contrasts the approach of social business with alternative strategies for poverty reduction, such as government intervention, social programs, and long-term investments in human capital.
Keywords
Social business, microcredit, Grameen Bank, Muhammad Yunus, poverty alleviation, micro-entrepreneurship, sustainable development, economic empowerment, development economics, limitations of social business, education as poverty solution.
Frequently Asked Questions: A Comprehensive Analysis of Social Business
What is the main topic of this text?
This text provides a comprehensive analysis of Professor Muhammad Yunus's concept of social business as a solution to poverty. It examines the origins, definition, practical application (through the Grameen Bank), and limitations of this model. The text critically evaluates Yunus's assertion that social business is a perfect solution, offering alternative perspectives.
What are the key themes explored in this text?
The key themes include the origins of social business and the Grameen Bank; the definition and characteristics of social business; the successes and challenges of the Grameen experience; limitations of the social business model; and alternative approaches to poverty reduction.
What is the objective of this essay?
The objective is to analyze Professor Muhammad Yunus' concept of social business as a solution to poverty, examining its origins, definition, practical application (through the Grameen Bank), and limitations. The essay critiques Yunus' assertion that social business is a perfect solution.
What are the different chapters and their respective focuses?
Chapter I (Introduction): Introduces the concept of social business and its distinction from traditional charity, outlining the essay's scope. Chapter II (Backgrounds of Social Business): Traces the origins of social business, focusing on the Grameen Bank's creation. Chapter III (Defining Social Business): Provides a comprehensive definition of social business, outlining its principles and contrasting it with traditional charity. Chapter IV (The Grameen Experience): Analyzes the Grameen Bank's operational model, successes, and challenges. Chapter V (Limits of Social Business): Critically evaluates the limitations of the social business model and proposes alternative approaches to poverty reduction.
What are the limitations of the social business model discussed in the text?
The text discusses challenges such as attracting investors prioritizing financial returns over social impact, limitations on scalability, potential co-option by larger corporations, and the potential inadequacy of focusing solely on micro-enterprise development without addressing other fundamental issues like education.
What alternative approaches to poverty reduction are mentioned?
The text suggests that education could be a more fundamental and long-term solution to poverty than solely focusing on micro-enterprise development through social business.
What is the Grameen Bank's role in this analysis?
The Grameen Bank serves as a prime example of a social business, illustrating its operational model, successes, and challenges. Its analysis helps evaluate the efficacy and replicability of the social business model.
Who is Muhammad Yunus, and what is his relevance to this text?
Professor Muhammad Yunus is the founder of the Grameen Bank and the originator of the social business concept. His ideas and the performance of the Grameen Bank are central to the analysis presented in the text.
What are the key words associated with this analysis?
Key words include social business, microcredit, Grameen Bank, Muhammad Yunus, poverty alleviation, micro-entrepreneurship, sustainable development, economic empowerment, development economics, limitations of social business, and education as a poverty solution.
- Quote paper
- Dr. Jean Cédric Obame Emane (Author), 2016, Building Social Business by Professor Muhammad YUNUS. Analyzing the Advantages and the Limits of Microcredits, Munich, GRIN Verlag, https://www.grin.com/document/437226
