Harvard Case - Procter & Gamble: Children's Safe Drinking Water (A)
"Procter & Gamble: Children's Safe Drinking Water (A)" Harvard business case study is written by Jenny Mead, Laura Pincus Hartman, Justin Sheehan. It deals with the challenges in the field of Social Enterprise. The case study is 5 page(s) long and it was first published on : Mar 24, 2008
At Fern Fort University, we recommend Procter & Gamble (P&G) pursue a hybrid organizational model that combines its core business strengths with a dedicated social enterprise focused on providing safe drinking water solutions to children in developing countries. This approach leverages P&G's existing resources and expertise while establishing a distinct entity to address the specific needs and challenges of this critical social issue.
2. Background
This case study focuses on P&G's efforts to address the global challenge of providing safe drinking water to children in developing countries. P&G's Purifier of Water (P&G) is a revolutionary, low-cost, and highly effective water purification packet that can transform contaminated water into safe drinking water. The case explores the company's initial efforts to distribute P&G through non-profit organizations (NGOs), highlighting the challenges and opportunities associated with this approach.
The main protagonists in this case are:
- P&G: A multinational consumer goods corporation with a strong commitment to corporate social responsibility (CSR) and a desire to leverage its resources to address global challenges.
- NGOs: Non-profit organizations dedicated to providing humanitarian aid and improving the lives of people in developing countries.
- Children in developing countries: The primary beneficiaries of P&G's efforts, facing significant health risks due to unsafe drinking water.
3. Analysis of the Case Study
This case study presents a compelling example of a company attempting to leverage its core competencies for social good. P&G's P&G product is a powerful tool for improving health outcomes in developing countries. However, the case highlights several challenges:
- Scaling Distribution: P&G's initial reliance on NGOs for distribution proved inefficient and limited in scale. NGOs often lacked the resources and infrastructure to reach the vast populations in need.
- Sustainability and Cost: While P&G is a cost-effective solution, long-term sustainability requires a reliable and affordable distribution model.
- Lack of Ownership: NGOs, while well-intentioned, often lacked the business acumen and market understanding to effectively scale the distribution of P&G.
- Impact Measurement: P&G's initial efforts lacked a robust system for measuring the impact of their interventions, making it difficult to assess the effectiveness of their programs.
Frameworks for Analysis:
- Social Entrepreneurship Framework: This framework emphasizes the creation of sustainable business models that address social problems while generating financial returns. P&G's efforts can be analyzed through this lens, considering the need to develop a self-sustaining model for distributing P&G.
- Stakeholder Theory: This framework emphasizes considering the interests of all stakeholders involved, including P&G, NGOs, beneficiaries, and potential investors.
- Triple Bottom Line: This framework emphasizes the importance of considering social, environmental, and economic impacts in decision-making. P&G's approach should be evaluated based on its ability to achieve a positive impact on all three dimensions.
4. Recommendations
Recommendation 1: Establish a Dedicated Social Enterprise:
P&G should establish a separate social enterprise dedicated to providing safe drinking water solutions to children in developing countries. This entity should be structured as a benefit corporation or a B Corporation, legally obligated to consider social and environmental impact alongside financial returns.
Recommendation 2: Develop a Sustainable Business Model:
The social enterprise should develop a sustainable business model that leverages P&G's existing resources and expertise while incorporating the following elements:
- Microfinance and Impact Investing: Partner with microfinance institutions and impact investors to provide affordable access to P&G for low-income communities.
- Social Franchising: Develop a social franchising model that empowers local entrepreneurs to distribute P&G in their communities.
- Public-Private Partnerships: Collaborate with governments and NGOs to leverage their expertise and resources for distribution and outreach.
- Community Engagement: Involve local communities in the design and implementation of distribution programs to ensure cultural sensitivity and ownership.
Recommendation 3: Implement Robust Impact Measurement:
The social enterprise should develop a robust impact measurement system to track the following:
- Health Outcomes: Monitor the impact of P&G on reducing waterborne illnesses and improving child health.
- Access to Safe Water: Track the number of people accessing safe drinking water through the social enterprise's programs.
- Economic Impact: Assess the economic benefits generated by the social enterprise, including job creation and community development.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: P&G's core competencies in product development, manufacturing, and distribution align with the social enterprise's mission to provide safe drinking water.
- External Customers and Internal Clients: The social enterprise serves the needs of children in developing countries while aligning with P&G's commitment to CSR and its internal stakeholders.
- Competitors: The social enterprise will face competition from other organizations providing water purification solutions, but P&G's brand recognition and existing infrastructure provide a competitive advantage.
- Attractiveness: The social enterprise has the potential to generate significant social impact and financial returns, creating a compelling investment opportunity for impact investors and socially conscious consumers.
6. Conclusion
P&G's commitment to providing safe drinking water to children in developing countries is commendable. By establishing a dedicated social enterprise with a sustainable business model and robust impact measurement system, P&G can leverage its resources and expertise to create a lasting and impactful solution to this critical global challenge.
7. Discussion
Alternatives:
- Continuing with the NGO model: This approach would be less effective in scaling distribution and achieving long-term sustainability.
- Selling P&G directly to consumers: This approach could be challenging in developing countries due to limited access to markets and purchasing power.
Risks and Key Assumptions:
- Market acceptance: The social enterprise's success depends on the acceptance of P&G by target communities.
- Financial sustainability: The social enterprise must achieve financial sustainability to operate effectively.
- Government regulations: The social enterprise must comply with local regulations and obtain necessary permits.
8. Next Steps
- Establish a dedicated social enterprise: P&G should create a separate legal entity for the social enterprise within the next 12 months.
- Develop a sustainable business model: The social enterprise should develop a detailed business plan within 18 months, including strategies for financing, distribution, and impact measurement.
- Pilot programs: The social enterprise should launch pilot programs in select countries to test the business model and measure impact within 24 months.
- Scale operations: Based on the success of pilot programs, the social enterprise should scale operations to reach a larger population within 36 months.
By taking these steps, P&G can leverage its resources and expertise to create a lasting and impactful solution to the global challenge of providing safe drinking water to children in developing countries.
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Case Description
In 1995, Procter & Gamble (P&G) scientists began researching methods of water treatment for use in communities facing water crises. P&G, one of the world's largest consumer products companies, was interested in bringing industrial-quality water treatment to remote areas worldwide, because the lack of clean water, primarily in developing countries, was alarming. In the latter half of the 1990s, approximately 1.1 billion (out of a worldwide population of around 5.6 billion) people lacked access to clean drinking water or sanitation facilities. An estimated 6 million children died annually from diseases, including diarrhea, hookworm, and trachoma, brought about by contaminated water. Many of these deaths were preventable if a water sanitation product was paired with effective education and distribution. With a long history of scientific research and innovation in health, hygiene, and nutrition, P&G considered ways it could address the safe drinking-water crisis as the new millennium approached. Although the company had a vast array of successful products, P&G did not offer anything that involved water purification, either domestically or in developing countries where poverty, lack of infrastructure, and inaccessibility of remote communities made the prospect of cleaning up the water more difficult.
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