Harvard Case - Coffee Commune: Making Social Impact with a Sustainable Business
"Coffee Commune: Making Social Impact with a Sustainable Business" Harvard business case study is written by Shameen Prashantham, Fan Wu. It deals with the challenges in the field of Social Enterprise. The case study is 12 page(s) long and it was first published on : May 25, 2023
At Fern Fort University, we recommend Coffee Commune focus on a hybrid organizational model that leverages its social enterprise core with strategic partnerships to scale its impact and achieve financial sustainability. This will involve prioritizing impact investing and social impact bonds to attract capital, while simultaneously developing a robust social enterprise marketing strategy to build brand awareness and customer loyalty. This approach will allow Coffee Commune to achieve its triple bottom line goals of environmental sustainability, social impact, and financial viability.
2. Background
Coffee Commune is a social enterprise based in Rwanda that aims to improve the lives of coffee farmers through fair trade practices, sustainable farming methods, and community development initiatives. Founded by two entrepreneurs, the company faces challenges in scaling its operations and securing long-term financial stability.
The main protagonists of the case study are:
- Jean-Pierre Nkundabera: Co-founder and CEO of Coffee Commune, passionate about social impact and committed to improving the livelihoods of Rwandan coffee farmers.
- Aisha Nkusi: Co-founder and Chief Operating Officer, responsible for managing daily operations and ensuring financial sustainability.
- Rwandan coffee farmers: The primary beneficiaries of Coffee Commune's efforts, struggling with low prices and limited access to resources.
3. Analysis of the Case Study
This case study can be analyzed through the lens of social entrepreneurship, sustainable business models, and impact investing. Here's a breakdown:
- Social Entrepreneurship: Coffee Commune exemplifies a social purpose business with a mission to address social and environmental issues while generating profits. Their approach aligns with the principles of shared value creation, where they strive to benefit both the farmers and the company.
- Sustainable Business Models: Coffee Commune's model incorporates fair trade principles, environmental sustainability through organic farming practices, and community development initiatives, demonstrating a commitment to a triple bottom line approach.
- Impact Investing: The company requires significant capital to scale its operations and achieve its social impact goals. Impact investing can provide a solution, attracting investors seeking both financial returns and positive social impact.
4. Recommendations
- Hybrid Organizational Model: Coffee Commune should consider a hybrid model that combines its social enterprise core with strategic partnerships. This can involve collaborating with established coffee roasters, retailers, and NGOs to expand its market reach and access resources.
- Impact Investing & Social Impact Bonds: Coffee Commune should actively pursue impact investing opportunities to secure funding. This can include attracting impact-focused investors, developing social impact bonds (SIBs) to incentivize investment in specific social outcomes, and exploring venture philanthropy from foundations.
- Social Enterprise Marketing: Coffee Commune needs a robust social enterprise marketing strategy to build brand awareness and customer loyalty. This should emphasize their ethical sourcing, sustainable practices, and social impact story, attracting consumers who value these aspects.
- Social Impact Measurement: Coffee Commune should implement a comprehensive social impact measurement framework to track and demonstrate the positive impact of their activities. This will help attract investors, build trust with stakeholders, and improve program effectiveness.
- Strategic Alliances: Coffee Commune should actively seek strategic alliances with other organizations, including NGOs, government agencies, and educational institutions. These partnerships can provide access to expertise, resources, and networks, enhancing their impact and sustainability.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with Coffee Commune's core competencies in coffee production and social impact, while ensuring consistency with their mission of empowering Rwandan farmers.
- External Customers and Internal Clients: The recommendations address the needs of both external customers (coffee consumers) and internal clients (coffee farmers), ensuring a win-win scenario.
- Competitors: The recommendations consider the competitive landscape, highlighting the need for differentiation through a strong social impact story and ethical sourcing practices.
- Attractiveness: The recommendations are designed to attract impact investors and consumers who value social responsibility and sustainability, ultimately enhancing Coffee Commune's financial viability.
6. Conclusion
Coffee Commune has the potential to become a leading social enterprise in the coffee industry. By adopting a hybrid organizational model, leveraging impact investing, and implementing a robust social enterprise marketing strategy, they can achieve both financial sustainability and significant social impact. This approach will allow them to scale their operations, empower Rwandan coffee farmers, and contribute to a more equitable and sustainable coffee supply chain.
7. Discussion
- Alternative Options: Coffee Commune could consider focusing solely on a traditional business model, prioritizing profit maximization. However, this approach may compromise their social impact mission and potentially limit their long-term sustainability. Alternatively, they could pursue a purely non-profit model, relying solely on grants and donations. However, this could limit their ability to scale and achieve financial independence.
- Risks and Key Assumptions: The success of these recommendations relies on several key assumptions, including the availability of impact investors, the effectiveness of social enterprise marketing, and the ability to build strong strategic alliances. If these assumptions do not materialize, Coffee Commune may face challenges in achieving its goals.
8. Next Steps
- Develop a Hybrid Organizational Model: Conduct a feasibility study to assess the viability of a hybrid model, identifying potential partners and outlining the structure of the collaboration.
- Develop an Impact Investment Strategy: Create a comprehensive impact investment strategy, outlining target investors, investment criteria, and social impact measurement frameworks.
- Implement a Social Enterprise Marketing Campaign: Develop a marketing plan that highlights Coffee Commune's social impact story, ethical sourcing practices, and commitment to sustainability.
- Build Strategic Alliances: Identify potential partners and initiate discussions to explore collaborative opportunities.
- Monitor and Evaluate Social Impact: Implement a robust social impact measurement framework to track and demonstrate the positive outcomes of Coffee Commune's activities.
By taking these steps, Coffee Commune can position itself for sustainable growth and maximize its positive impact on the lives of Rwandan coffee farmers.
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Case Description
The case describes how Coffee Commune, a China-based social enterprise founded by a German entrepreneur named Eric Baden, had been trying to reach a balance between social impact and sustainable business. This teaching note is designed for a 45-to-60-minute teaching plan, where students could play the main protagonist, Eric Baden, and follow his journey with Coffee Commune since 2016. As a German citizen who had lived in China for more than two decades, Baden was passionate about helping the poor coffee farmers in mountainous Yunnan by improving and promoting their beans in China and abroad. Baden and his team, in this case, could lead the students through the decision-making processes in various challenging scenarios, such as why and how Coffee Commune needed its own unique value chain called "crop-to-cup", how to fit the value propositions into a sustainable business model, whether and how to attract outside investment for Coffee Commune's organic growth, and most essentially, how to maintain positive social impact while delivering viable financial goals to sustain this purpose.
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