The case describes the efforts of GNFC, a large publicly held chemicals and fertilizers company, in establishing a business of manufacturing and selling products made from neem-oil, which was instrumental in creating livelihood opportunities for more than 450,000 individuals from the economically underprivileged segment.
GNFC was a government owned commercial enterprise that was listed in the Indian stock market. Like all commercial enterprises, their goal was maximizing shareholders wealth through their primary activities – manufacturing and sales of fertilizers and chemicals. GNFC’s Neem project started with the intention of preventing diversion of subsidized fertilizer to the undeserved, involved landless labourers and marginal farmers in collection of neem seeds, which was used to extract neem oil for coating urea and to create products such as soaps and shampoos. Since neem-oil based products could be sold in the market to earn revenues, the entire neem project had the potential to be financially sustainable. Compared to GNFC’s fertilizer and chemical business, the revenue generated by the neem project was insignificant. However, the neem project was creating a positive impact on the lives of the economically underprivileged, while being financially sustainable itself and GNFC had the ambition of scaling the project across India. The case ends by highlighting some of the potential challenges that GNFC would face in their efforts in scaling as well as encouraging other similar organizations to adopt their model.
The case should enable students to understand how a social business could be created by a for -profit enterprise as corporate entrepreneurship, what are its challenges and what are its key drivers for success. Social businesses have a social mission such as eradication of poverty, even while they are financially sustainable.
Social businesses can be created by social entrepreneurs as a standalone enterprise, or they may be an initiative by an existing for-profit commercial enterprise. While there are several examples of standalone social businesses, examples of those created by for-profit commercial enterprises are not many. Therefore, this case can contribute to students’ learning through lively debates about the feasibility and sustainability of creating social businesses by enterprises whose primary aim is maximization of shareholders’ profitability.