Otto & Grameen JV to set up 'Factory of the Future' in Dhaka
16 Nov '09
4 min read
Background to the social business concept: A type I social business generates additional social value by the manufacture of very inexpensive, but high-quality products or the supply of services such as food, housing space, health provision or education. It isn't necessary to make a profit, only the costs arising have to be covered. The poor are helped by having access to these products. In a type II social business, on the other hand, a profit-oriented, new company is launched. The profit is not paid out as a dividend to investors, but serves to improve the living conditions of the employees, their families and their communities. Grameen Otto is the first type II social business worldwide and a beacon for socially and ecologically sustainable economic activity.
The company management of a social business has a traditional pattern. The business activity is in no way based on voluntary employees, in fact the focus is on appropriate payment of the workforce. A social business is sustainably oriented in all areas – in its direct effect on the environment, in its effect on the value-added chain and in terms of its financial independence. The social business should pay for itself, so that it can use its independence to achieve in the long-term an improvement in the living conditions of the poorest people.