Harvard Case - Arbusta: Youth Integration into a Competitive Labor Market
"Arbusta: Youth Integration into a Competitive Labor Market" Harvard business case study is written by Roberto Gutierrez, Gabriel Berger. It deals with the challenges in the field of Social Enterprise. The case study is 24 page(s) long and it was first published on : Mar 3, 2021
At Fern Fort University, we recommend Arbusta adopt a hybrid social enterprise model to effectively address the challenge of youth integration into the competitive labor market while ensuring the sustainability of its operations. This model will leverage Arbusta's existing strengths in training and mentorship, while incorporating elements of social innovation and impact investing to create a self-sustaining system that benefits both youth and the organization.
2. Background
Arbusta is a non-profit organization (NGO) in Morocco dedicated to empowering young people through vocational training and entrepreneurship development. Facing a competitive labor market and limited funding, Arbusta seeks to develop a sustainable model to scale its impact.
The case study focuses on the challenges faced by Arbusta, including:
- Limited funding: Relying heavily on grants and donations, Arbusta struggles to sustain its operations and expand its reach.
- High youth unemployment: Morocco faces a significant youth unemployment problem, particularly in rural areas.
- Lack of relevant skills: Many young people lack the skills and experience required by the modern workforce.
- Limited access to resources: Youth often face barriers to accessing resources such as financing, technology, and networks.
The main protagonists are:
- Arbusta's leadership: Seeking a sustainable model to scale their impact and address the challenges of youth unemployment.
- The youth: Beneficiaries of Arbusta's programs, needing access to training, mentorship, and opportunities to enter the workforce.
3. Analysis of the Case Study
To analyze Arbusta's situation, we can utilize the Social Impact Framework which considers the following aspects:
- Mission and Values: Arbusta's mission is to empower youth and contribute to a more inclusive society. This aligns with the values of social responsibility and community development.
- Target Beneficiaries: Arbusta's target beneficiaries are young people facing unemployment and limited opportunities. This aligns with the Base of the Pyramid (BoP) market approach, focusing on underserved populations.
- Social Impact: Arbusta's programs aim to reduce youth unemployment, increase employability, and promote entrepreneurship. This aligns with the Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth).
- Financial Sustainability: Arbusta relies heavily on grants and donations, making it vulnerable to funding fluctuations. This highlights the need for a more sustainable business model.
- Governance and Management: Arbusta operates as a non-profit organization, requiring a strong governance structure and transparent management practices.
4. Recommendations
1. Develop a Hybrid Social Enterprise Model:
- Social Mission: Continue to prioritize the social mission of empowering youth and promoting inclusive economic development.
- Market-Driven Approach: Offer training and mentorship programs that are aligned with the needs of the local job market.
- Revenue Generation: Develop revenue-generating activities that align with the social mission, such as:
- Social Franchising: Partner with local businesses to provide vocational training and mentorship in exchange for a fee.
- Social Impact Bonds: Partner with investors to fund programs with the promise of a return on investment based on social impact metrics.
- Inclusive Business Models: Create products or services that benefit both the youth and the organization, such as providing training in sustainable agriculture and selling the produce.
2. Implement a Social Innovation Strategy:
- Innovation Labs: Establish innovation labs to develop new training programs and entrepreneurial ventures that address the specific needs of the local market.
- Cross-Sector Partnerships: Collaborate with government agencies, businesses, and other NGOs to leverage resources, expertise, and networks.
- Social Impact Measurement: Develop a robust system to measure the social impact of programs and track progress towards achieving goals.
3. Foster a Culture of Entrepreneurship:
- Entrepreneurship Training: Offer comprehensive entrepreneurship training programs that equip youth with the skills and knowledge needed to start and manage successful businesses.
- Incubation and Acceleration Programs: Provide incubation and acceleration programs to support youth entrepreneurs in developing their businesses and accessing funding.
- Mentorship and Networking: Connect youth entrepreneurs with experienced mentors and investors to provide guidance and support.
5. Basis of Recommendations
This recommendation aligns with Arbusta's core competencies in training and mentorship, while incorporating external market needs and a sustainable business model. The hybrid social enterprise model addresses the need for both social impact and financial sustainability, allowing Arbusta to scale its operations and reach more youth.
The recommendations are based on the following assumptions:
- Market Demand: There is a demand for skilled labor and entrepreneurial talent in the local market.
- Government Support: The government is willing to support social enterprises through policies and funding opportunities.
- Investor Interest: Investors are interested in supporting social enterprises with a strong track record of social impact.
6. Conclusion
By adopting a hybrid social enterprise model, implementing a social innovation strategy, and fostering a culture of entrepreneurship, Arbusta can effectively address the challenge of youth integration into the competitive labor market while ensuring the sustainability of its operations. This approach will enable Arbusta to create a lasting impact on the lives of young people and contribute to a more inclusive and prosperous society.
7. Discussion
Alternative approaches to consider include:
- Traditional Non-Profit Model: Continue relying on grants and donations, but this approach limits scalability and sustainability.
- Purely For-Profit Model: Focus solely on revenue generation, potentially compromising the social mission.
Key risks and assumptions include:
- Market Volatility: Changes in the job market could affect the demand for Arbusta's training programs.
- Funding Availability: Securing funding for social impact bonds and other revenue-generating activities may be challenging.
- Competition: Other organizations may offer similar training and mentorship programs, requiring Arbusta to differentiate its offerings.
8. Next Steps
- Develop a detailed business plan: Outline the specific activities, partnerships, and financial projections for the hybrid social enterprise model.
- Pilot the model: Implement the model on a small scale to test its effectiveness and gather data.
- Seek funding: Secure funding from investors, government agencies, and foundations to support the expansion of the model.
- Build partnerships: Develop strategic alliances with businesses, NGOs, and government agencies to leverage resources and expertise.
By taking these steps, Arbusta can effectively address the challenges of youth unemployment and create a sustainable model that empowers young people and contributes to a more inclusive society.
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Case Description
Arbusta was a social enterprise in the ICT sector, recognized for both the quality of its services and for employing disadvantaged youth. It had more than 300 employees at its headquarters in Buenos Aires and in its offices in Rosario, Montevideo and Medellín. By 2020, after six years of building Arbusta, each of its three founders was focusing on an important issue for the organization: i.e., close attention to customer relations, develop the talent of each person at Arbusta, and find better ways to structure Arbusta as a space where social and economic aspects coexisted. Through their testimonies and others from collaborators and clients, the case describes the evolution of this social enterprise. The dilemma faced by the three founders of Arbusta was about how to grow: should Arbusta specialize in a basic service such as testing or should it expand its range of services to include the development of the company's human talent?
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