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Eight19 is a technology-based start-up company based on Cambridge Science Park. The company is developing a new (and very low cost) solar-panel technology aimed primarily at domestic use in developing countries. The case describes the issues faced by eight19 as it develops a business model for the new technology – in particular balancing competing needs: to generate sufficient revenue to fund operations (and not run out of cash), to generate a sufficient return for investors, to ensure widespread adoption of the system by users by users who cannot afford the up-front costs, to incentivise distributors, to guard against opportunistic behaviour by users, to create loyal users and to build and maintain a positive brand. The case illustrates the importance of the business model (rather than the product per se) and the imperative to build and maintain the ‘social legitimacy’ of a venture in order to assure profitability in the long term.
- Illustrate the differences and the commonalities between charities, social enterprises (SEs) and for-profits.
- Understand pricing policies and the extent to which the ‘purpose’ of a business impacts pricing in a free market.
- Highlight that, whereas the purpose of a for-profit is to extract maximum value from all players in the value chain and maximise shareholder return, SEs make conscious choices to share value up and down the value chain.
- Highlight that being an SE does not automatically translate into lowering prices.
- Understand that, to expand in order to impact more people, an SE must generate profits that will enable it to scale.
|Publication Date:||February 2013|
|LBS Case Code:||CS-13-003|
|Subjects:||Business models, Pricing, Social enterprise, Technological innovation|
|Industry:||Renewable energy industry|
|Geography:||Kenya, United Kingdom|