Co-oppundit 2011

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Enterprise models

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Enterprise models compared

Everyone involved needs to understand the model of enterprise

If the members, staff and executives of CMEs do not properly understand the true nature of the organisation with which they are involved then there can be little chance that they can ever help the enterprise to achieve its purpose.

When describing a CME we must surely start by stating the reason for its existence, the stakeholder group from which the members are drawn and the benefits it aims to provide to members. By answering the following questions can discover the most essential features of a CME:

WHY does it exist?
WHO is it intended to serve?
WHAT benefits does it provide and for whom?

There are also other critical distinguishing features, which are outlined in the table below showing comparisons with those of investor-owned companies and social enterprises. Whilst there is an undeniable role for social enterprises within the economy it can cause considerable confusion to group CMEs within this classification. The following table clearly illustrates the differences, which are truly significant.

Models of enterprise


CHARACTERISTICS OF CORPORATE ENTERPRISE MODELS
Investor-owned Company	Social Enterprise	Co-operative and Mutual
Purpose:
Create wealth for shareholders	Achieve a social purpose	Improve the quality of life for members
Ownership:
Shareholders	A community, charity or quasi-governmental body	Members having a common bond
Control:
Dominant shareholders	Trustees or equivalent group that may or may not be democratically elected	Democratically elected member representatives - on the basis of one member one vote
Trading in the marketplace:
Yes	Yes	Yes – but the aim is market intervention in the best interest of members
Motivational driver:
Personal wealth creation	Altruism or public policy	Self help and mutual aid
*Main Beneficiaries:
Shareholders	Target social group	Members
Distributing earnings:
Yes in form of dividend related to shareholding	Not to individuals, usually reinvested in the enterprise	Mainly reinvested in the enterprise but part in the form of member loyalty bonus and community benefits
Distributing assets on winding-up:
Yes	No	Should only be to another CME or a social enterprise but in practice devices are used to circumvent this
Basis of organisation:
Ownership of wealth	Patronage	Co-operation
* In all models, in practice another group often becomes the main beneficiary for example the senior executives.

The importance of induction

Executives and the staff who do not fully understand the CME model need to be provided with re-training.
All senior executives should not be allowed to take up any post without receiving conversion training.

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