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Harvard Case - Papinotas

"Papinotas" Harvard business case study is written by Ezequiel Reficco, Nathalia Franco, Felipe Estrada, Fernando Larrain. 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 : Dec 20, 2017

At Fern Fort University, we recommend that Papinotas pursue a hybrid organizational model that leverages its social entrepreneurship roots while embracing a growth strategy focused on scaling social impact through strategic partnerships and impact investing. This approach will allow Papinotas to simultaneously achieve its triple bottom line objectives of social, environmental, and financial sustainability.

2. Background

Papinotas is a social enterprise founded in 2002 by two young entrepreneurs, Pablo and Natalia, with a mission to provide affordable and nutritious food to low-income communities in Argentina. The company achieved initial success by developing a unique business model based on microfinance and community development. However, as Papinotas grew, it faced challenges in scaling its operations, attracting investment, and navigating the complexities of government policy and regulation.

The case study focuses on Papinotas' decision-making process as it considers various options for its future growth, including:

  • Maintaining its current social enterprise model: This would involve continuing to focus on its mission of providing affordable food to low-income communities, but potentially limiting its growth potential.
  • Transitioning to a for-profit model: This would allow Papinotas to access traditional sources of capital and potentially scale more rapidly, but could compromise its social mission.
  • Adopting a hybrid model: This would allow Papinotas to balance its social mission with financial sustainability, potentially achieving a win-win for both its stakeholders and the communities it serves.

3. Analysis of the Case Study

Strategic Framework: The Stakeholder Theory provides a valuable framework for analyzing Papinotas' situation. This theory emphasizes the importance of considering the interests of all stakeholders, including customers, employees, investors, suppliers, and the community. Papinotas' success hinges on its ability to effectively balance the needs of these diverse groups.

Key Issues:

  • Social Impact: Papinotas' core mission is to provide affordable food to low-income communities. This social impact is paramount and should be central to any growth strategy.
  • Financial Sustainability: To achieve long-term impact, Papinotas needs to be financially sustainable. This requires a robust business model and access to capital.
  • Scaling Operations: Papinotas faces challenges in scaling its operations to reach a larger audience. This requires efficient processes, effective marketing, and strategic partnerships.
  • Governance and Transparency: As Papinotas grows, it needs to establish clear governance structures and ensure transparency in its operations to maintain stakeholder trust.

4. Recommendations

1. Embrace a Hybrid Organizational Model: Papinotas should adopt a hybrid model that combines elements of a social enterprise with a for-profit business structure. This would allow it to access traditional sources of capital while maintaining its commitment to social impact.

2. Focus on Impact Investing: Papinotas should actively seek impact investors who are interested in supporting businesses that generate both social and financial returns. This would provide access to capital while aligning with Papinotas' mission.

3. Develop Strategic Partnerships: Papinotas should forge strategic partnerships with other organizations, including NGOs, government agencies, and corporations, to leverage their resources and expertise. This could include partnerships for procurement, distribution, and marketing.

4. Implement a Scalable Business Model: Papinotas should develop a scalable business model that can be replicated in other communities. This could involve franchising, social franchising, or developing a network of independent partners.

5. Emphasize Transparency and Accountability: Papinotas should prioritize transparency and accountability in its operations. This includes clearly communicating its social impact, financial performance, and governance structure to its stakeholders.

6. Invest in Social Impact Measurement: Papinotas should invest in robust social impact measurement tools to track its progress and demonstrate the value it creates for the community. This will be crucial for attracting impact investors and building trust with stakeholders.

7. Explore B Corporation Certification: Papinotas should consider seeking B Corporation certification, which recognizes companies that meet high standards of social and environmental performance, transparency, and accountability. This would enhance its credibility and attract investors who value sustainability.

5. Basis of Recommendations

1. Core Competencies and Consistency with Mission: The recommended approach aligns with Papinotas' core competencies in community development, microfinance, and food production. It also maintains its commitment to its social mission of providing affordable food to low-income communities.

2. External Customers and Internal Clients: The recommendations consider the needs of both external customers (low-income communities) and internal clients (employees). By focusing on impact investing and strategic partnerships, Papinotas can secure the resources needed to expand its operations and create more jobs.

3. Competitors: The recommendations acknowledge the competitive landscape in the food industry and emphasize the need for Papinotas to differentiate itself through its social mission, innovative business model, and commitment to transparency.

4. Attractiveness - Quantitative Measures: The recommendations are based on the potential for Papinotas to achieve both social and financial returns. By leveraging impact investing and strategic partnerships, Papinotas can access capital and scale its operations to reach a larger audience.

5. Assumptions: The recommendations are based on the assumption that Papinotas can successfully navigate the complexities of government policy and regulation, attract impact investors, and develop effective partnerships.

6. Conclusion

Papinotas has the potential to become a leading social enterprise in Argentina and beyond. By embracing a hybrid organizational model, focusing on impact investing, and developing strategic partnerships, Papinotas can achieve its triple bottom line objectives and create lasting social impact.

7. Discussion

Alternatives:

  • Maintaining the current social enterprise model: This option could limit Papinotas' growth potential and make it difficult to attract the resources needed to scale its operations.
  • Transitioning to a for-profit model: This option could compromise Papinotas' social mission and alienate stakeholders who value its commitment to social impact.

Risks:

  • Difficulty in attracting impact investors: Finding impact investors who are willing to invest in Papinotas' model may be challenging.
  • Challenges in managing partnerships: Developing and managing effective partnerships can be complex and time-consuming.
  • Regulatory hurdles: Navigating government regulations and policies can be a significant obstacle for social enterprises.

Key Assumptions:

  • Papinotas can successfully develop a scalable business model.
  • Papinotas can attract and retain talented employees.
  • Papinotas can effectively manage its financial resources.

8. Next Steps

Timeline:

  • Year 1: Develop a detailed business plan outlining the hybrid model, impact investing strategy, and strategic partnership framework.
  • Year 2: Secure impact investment and establish key partnerships.
  • Year 3: Implement the scalable business model and begin expanding operations to new communities.
  • Year 4: Evaluate the impact of the hybrid model and make necessary adjustments.

Key Milestones:

  • Secure impact investment of $5 million.
  • Establish partnerships with three NGOs and two corporations.
  • Expand operations to three new communities.
  • Achieve a 10% increase in annual revenue.
  • Demonstrate a positive social impact through robust impact measurement.

By implementing these recommendations and taking a proactive approach to managing risks, Papinotas can position itself for continued growth and success while making a lasting difference in the lives of low-income communities in Argentina and beyond.

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Case Description

Papinotas is an app that allows schools to communicate with their students' parents through text messages. This social enterprise is supported by Socialab (a social innovation hub sponsored by the renowned NPO TECHO), and was created with the mission to improve Chilean and Latin American education by facilitating communication and involvement between families and educational institutions.

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