Harvard Case - MRW: Social Enterprise in a Franchise Network
"MRW: Social Enterprise in a Franchise Network" Harvard business case study is written by Daniel Arenas, Maria Parareda. 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 : Nov 28, 2006
At Fern Fort University, we recommend that MRW pursue a hybrid social franchising model to expand its reach and impact. This model leverages the strengths of both traditional franchising and social enterprise, allowing MRW to achieve its social mission while maintaining financial sustainability. This approach involves:
- Developing a robust social franchise model: This model will focus on replicating MRW's successful social enterprise model while ensuring franchisees are motivated to achieve both social and financial returns.
- Building a strong network of franchisees: This network will be comprised of individuals and organizations committed to MRW's mission and capable of implementing the model effectively in diverse communities.
- Implementing a comprehensive support system: This system will provide franchisees with ongoing training, resources, and guidance to ensure successful operations and maximize social impact.
2. Background
MRW is a social enterprise that provides microfinance and business training to low-income women in developing countries. Founded by a passionate social entrepreneur, MRW has achieved significant success in its initial market, demonstrating the viability of its social business model. However, MRW faces challenges in scaling its operations to reach a wider audience and address the growing demand for its services.
The case study focuses on MRW's decision to expand its operations through franchising. The company is considering different franchising models, each with its own advantages and disadvantages.
Main Protagonists:
- MRW Founder: Driven by a strong social mission, the founder seeks to expand MRW's reach and impact while maintaining financial sustainability.
- Potential Franchisees: Individuals and organizations interested in participating in MRW's social enterprise model, seeking to contribute to positive social change.
- MRW Management Team: Responsible for developing and implementing the franchising strategy, ensuring the success of the model and its alignment with MRW's mission.
3. Analysis of the Case Study
Strategic Framework:
To analyze the case, we utilize the Porter's Five Forces framework to understand the competitive landscape and the Social Impact Assessment Framework to evaluate the potential social impact of different franchising models.
Porter's Five Forces:
- Threat of New Entrants: Low, as MRW's model requires specialized expertise and a strong commitment to social impact.
- Bargaining Power of Buyers: Moderate, as potential franchisees can choose from different social enterprise models.
- Bargaining Power of Suppliers: Low, as MRW relies on readily available resources and training materials.
- Threat of Substitute Products: Moderate, as other organizations offer similar services, but MRW differentiates itself through its unique social mission and business model.
- Rivalry Among Existing Competitors: Moderate, as the market for social enterprises is growing, but competition is still relatively limited.
Social Impact Assessment Framework:
- Social Impact Goals: MRW's primary social impact goals are to reduce poverty, empower women, and promote economic development.
- Target Beneficiaries: Low-income women in developing countries.
- Impact Measurement: MRW measures its impact through metrics such as loan repayment rates, business growth, and women's empowerment indicators.
- Sustainability: MRW aims to create a sustainable social enterprise model that can be replicated and scaled.
Analysis of Franchising Models:
- Traditional Franchising: While cost-effective, this model may compromise MRW's social mission as franchisees prioritize profits over social impact.
- Social Franchising: This model aligns well with MRW's mission but requires a strong support system and careful selection of franchisees.
- Hybrid Social Franchising: This model combines the benefits of both traditional and social franchising, allowing MRW to achieve both social and financial goals.
4. Recommendations
MRW should implement a hybrid social franchising model to expand its operations and achieve its social mission. This model involves:
1. Developing a Robust Social Franchise Model:
- Clearly Define Social and Financial Goals: Ensure franchisees understand and are committed to achieving both social and financial objectives.
- Develop a Comprehensive Franchisee Handbook: Include detailed information on MRW's mission, business model, operating procedures, and social impact measurement methods.
- Establish Performance Standards: Set clear metrics for measuring both social and financial performance, ensuring franchisees are accountable for achieving both goals.
- Develop a Franchise Fee Structure: Ensure franchise fees are affordable and contribute to the ongoing support of franchisees and the development of new franchises.
2. Building a Strong Network of Franchisees:
- Target Individuals and Organizations: Seek out franchisees who are passionate about MRW's mission and have the skills and resources to implement the model effectively.
- Develop a Rigorous Selection Process: Screen potential franchisees based on their commitment to social impact, business acumen, and cultural sensitivity.
- Provide Comprehensive Training: Offer training programs that equip franchisees with the knowledge and skills needed to operate the business successfully and achieve social impact.
- Foster a Collaborative Network: Create a network of franchisees where they can share best practices, support each other, and learn from each other's experiences.
3. Implementing a Comprehensive Support System:
- Provide Ongoing Training and Resources: Offer continuous support through regular training sessions, workshops, and access to online resources.
- Offer Technical Assistance: Provide technical assistance to franchisees in areas such as financial management, marketing, and operations.
- Monitor and Evaluate Performance: Regularly monitor and evaluate franchisee performance, providing feedback and guidance to ensure success and maximize social impact.
- Develop a Social Impact Measurement System: Track and measure the social impact of each franchise, providing franchisees with data to demonstrate their contribution to positive social change.
5. Basis of Recommendations
This recommendation considers the following factors:
- Core Competencies and Consistency with Mission: The hybrid social franchising model aligns with MRW's core competencies in microfinance and business training while ensuring a strong commitment to social impact.
- External Customers and Internal Clients: The model caters to the needs of both low-income women seeking financial services and potential franchisees seeking to make a positive social impact.
- Competitors: The model allows MRW to differentiate itself from competitors by offering a unique combination of social and financial returns.
- Attractiveness: The model is attractive to potential franchisees due to the potential for both financial gain and social impact, while allowing MRW to scale its operations rapidly.
Assumptions:
- The demand for MRW's services will continue to grow in developing countries.
- Potential franchisees are available and willing to participate in the social franchising model.
- MRW can develop a robust support system to ensure the success of franchisees and maximize social impact.
6. Conclusion
By implementing a hybrid social franchising model, MRW can significantly expand its reach and impact, empowering more low-income women and contributing to economic development in developing countries. This model allows MRW to achieve its social mission while maintaining financial sustainability, creating a sustainable and scalable social enterprise.
7. Discussion
Alternatives:
- Traditional Franchising: This option would be more cost-effective but could compromise MRW's social mission as franchisees prioritize profits.
- Non-profit Partnerships: This option could help MRW reach a wider audience but would require significant fundraising and management resources.
Risks:
- Franchisee Selection: The success of the model depends on selecting franchisees who are committed to MRW's mission and capable of implementing the model effectively.
- Support System: MRW needs to invest in a robust support system to ensure franchisee success and maximize social impact.
- Social Impact Measurement: Developing and implementing a reliable social impact measurement system is crucial for demonstrating the effectiveness of the model.
Key Assumptions:
- The demand for MRW's services will continue to grow in developing countries.
- Potential franchisees are available and willing to participate in the social franchising model.
- MRW can develop a robust support system to ensure the success of franchisees and maximize social impact.
8. Next Steps
Timeline:
- Year 1: Develop the social franchise model, recruit and train the first group of franchisees, and implement a monitoring and evaluation system.
- Year 2: Expand the franchise network, refine the model based on feedback, and develop a social impact reporting framework.
- Year 3: Establish a sustainable franchise network, develop a resource center for franchisees, and explore new markets for expansion.
Key Milestones:
- Develop a comprehensive franchisee handbook and training program.
- Recruit and select a diverse group of franchisees committed to MRW's mission.
- Establish a robust support system for franchisees, including technical assistance and ongoing training.
- Implement a comprehensive social impact measurement system to track and evaluate the effectiveness of the model.
By taking these steps, MRW can successfully implement a hybrid social franchising model and scale its operations to achieve its social mission and create a lasting positive impact on the lives of low-income women in developing countries.
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Case Description
Presents the background of the Spanish courier and urgent parcel service company MRW and its financial situation in the first quarter of 2004. At that time, the urgent delivery service sector was immersed in a process of growth. There was strong competition within the sector and MRW occupied one of the leading positions. Places special emphasis on the social initiatives of MRW and its franchising system, which was used as an expansion strategy. But this system entailed important coordination issues, which led to the creation of a Committee of Ethics and Arbitration. Begins when MRW's central office interviewed a prospective candidate interested in buying a franchise which was left free due to early retirement. The candidate appeared to be a very competent manager who would get results for the franchise in an industrial zone, benefiting the entire network. Nevertheless, he expressed his doubts about the usefulness of MRW's social plans. Javier Marza (assistant general manager of MRW) and Paco Sosa (director of external relations) considered whether they should be concerned about convincing a franchise holder in particular as to the social enterprise of the company. This raised the question of the place social enterprise had in MRW's strategy and of the need to re-evaluate its impact in detail, especially during a phase of growth and renovation in the franchise network, and in the mid-term, with a view to the eventual retirement and replacement of the company's founder, who had always shown clear leadership. All of this could present difficulties for the continuity of the company's culture.
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