Harvard Case - BRAC and Aarong Commercial Brands
"BRAC and Aarong Commercial Brands" Harvard business case study is written by John A. Quelch, Nathalie Laidler. It deals with the challenges in the field of Social Enterprise. The case study is 22 page(s) long and it was first published on : Aug 1, 2003
At Fern Fort University, we recommend BRAC to continue its strategic expansion of Aarong, focusing on leveraging its existing strengths in social entrepreneurship and sustainable business models to achieve greater social impact and financial sustainability. This strategy should involve:
- Scaling Aarong's operations: Expanding into new markets, both within Bangladesh and internationally, while maintaining a focus on quality and ethical sourcing.
- Developing innovative product lines: Investing in research and development to create new products that cater to evolving consumer needs and contribute to sustainable development.
- Strengthening Aarong's social impact: Integrating social impact measurement into all aspects of the business and actively promoting its commitment to fair trade and community development.
- Building strategic partnerships: Collaborating with other social enterprises, NGOs, and government agencies to create a more robust ecosystem for sustainable development.
2. Background
This case study focuses on BRAC, a leading international development organization, and its social enterprise, Aarong. Aarong, established in 1978, is a successful commercial brand that sells high-quality handcrafted products made by rural artisans in Bangladesh. The case study explores BRAC's efforts to expand Aarong's operations and its impact on poverty alleviation and economic development in Bangladesh.
The main protagonists of the case study are:
- BRAC: A non-profit organization with a mission to empower people and communities in developing countries.
- Aarong: A social enterprise owned by BRAC, which provides a market for rural artisans and promotes sustainable development.
- Muhammad Yunus: The founder of BRAC and a pioneer in microfinance and social entrepreneurship.
3. Analysis of the Case Study
This case study can be analyzed through the lens of social entrepreneurship, focusing on the triple bottom line of economic, social, and environmental impact.
Strengths:
- Social Impact: Aarong has a strong track record of creating positive social impact by providing employment opportunities, fair wages, and access to markets for rural artisans.
- Financial Sustainability: Aarong is a profitable business, demonstrating the viability of social enterprises as a sustainable model for development.
- Brand Recognition: Aarong has established a strong brand reputation for quality and ethical sourcing, which gives it a competitive advantage in the market.
- Leadership: BRAC's leadership team has a deep understanding of social entrepreneurship and a commitment to sustainable development.
Challenges:
- Scaling Operations: Expanding Aarong's operations while maintaining quality and ethical standards is a significant challenge.
- Competition: Aarong faces competition from both traditional and online retailers, which requires it to innovate and adapt to changing market conditions.
- Market Segmentation: Identifying and targeting specific customer segments is crucial for maximizing Aarong's impact and profitability.
- Social Impact Measurement: Developing robust metrics to measure Aarong's social impact is essential for demonstrating its value and attracting investors.
4. Recommendations
BRAC should implement the following recommendations to ensure Aarong's continued growth and social impact:
1. Scale Operations Strategically:
- Expand into new markets: Target both urban and rural areas in Bangladesh, and consider expanding into other developing countries with similar market opportunities.
- Develop new product lines: Invest in research and development to create innovative products that cater to evolving consumer needs and contribute to sustainable development.
- Optimize supply chain: Improve efficiency and transparency in the supply chain to ensure fair wages and ethical sourcing practices.
2. Enhance Social Impact:
- Integrate impact measurement: Develop a comprehensive framework for measuring Aarong's social impact, including its contribution to poverty alleviation, economic empowerment, and environmental sustainability.
- Promote fair trade and community development: Actively communicate Aarong's commitment to fair trade and community development to customers and stakeholders.
- Invest in capacity building: Provide training and support to artisans to improve their skills and entrepreneurial capabilities.
3. Build Strategic Partnerships:
- Collaborate with other social enterprises: Partner with other social enterprises to create a more robust ecosystem for sustainable development.
- Engage with NGOs and government agencies: Work with NGOs and government agencies to leverage their expertise and resources to expand Aarong's reach and impact.
- Explore impact investing opportunities: Attract impact investors who are interested in supporting social enterprises with a strong track record of social impact.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with BRAC's core competencies in social entrepreneurship and its mission to empower people and communities.
- External customers and internal clients: The recommendations address the needs of both external customers who seek ethical and sustainable products and internal clients, including artisans and employees.
- Competitors: The recommendations consider the competitive landscape and emphasize innovation and differentiation as key strategies for success.
- Attractiveness: The recommendations are attractive to impact investors who are seeking to invest in businesses with a strong track record of social impact and financial sustainability.
6. Conclusion
By implementing these recommendations, BRAC can ensure that Aarong continues to be a successful social enterprise that generates both social and financial returns. Aarong's growth and success can serve as a model for other social enterprises in developing countries, demonstrating the power of social entrepreneurship to create a more equitable and sustainable world.
7. Discussion
Alternatives:
- Focusing solely on financial growth: This approach could lead to a loss of focus on social impact and potentially undermine Aarong's brand reputation.
- Partnering with large corporations: While this could provide access to resources and markets, it could also compromise Aarong's independence and commitment to ethical sourcing.
Risks:
- Scaling challenges: Rapid expansion could lead to quality control issues and undermine Aarong's brand reputation.
- Competition: Aarong may face increasing competition from both traditional and online retailers.
- Economic downturns: Economic downturns could impact consumer spending and reduce demand for Aarong's products.
Key Assumptions:
- Continued demand for ethical and sustainable products: The recommendations assume that there will be continued demand for ethical and sustainable products.
- Availability of skilled artisans: The recommendations assume that there will be a sufficient supply of skilled artisans to meet the demands of expansion.
- Government support for social enterprises: The recommendations assume that the government will continue to support social enterprises through policies and programs.
8. Next Steps
- Develop a comprehensive strategic plan: This plan should outline Aarong's growth strategy, social impact goals, and financial projections.
- Conduct market research: Identify new market opportunities and assess the potential for expanding into new regions.
- Develop new product lines: Invest in research and development to create innovative products that meet the needs of evolving consumer markets.
- Strengthen partnerships: Build strategic alliances with other social enterprises, NGOs, and government agencies.
- Implement impact measurement framework: Develop and implement a robust framework for measuring Aarong's social impact.
By taking these steps, BRAC can ensure that Aarong continues to be a successful social enterprise that creates both social and financial value.
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Case Description
BRAC is the world's largest NGO and has recently initiated a number of successful profit-making commercial enterprises, ranging from dairy processing to vegetable exports, as well as a university. Explores the tensions and benefits of a major nonprofit entering the commercial arena and the consequences for the organization.
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