National Kidney Foundation: Case Analysis

Topics: Corporate governance, Management, Governance Pages: 5 (1695 words) Published: August 6, 2013

NATIONAL KIDNEY FOUNDATION: CEO WITH A GOLDEN TAP|
ACCOUNTING THEORY ASSIGNMENT|
052030 Wachira Mumbi Maria|
Submitted to: Dr. David Wang’ombe|
13th June 2013|

NATIONAL KIDNEY FOUNDATION: CEO WITH A GOLDEN TAP
Q1. What is the business model or management style for a social enterprise? In the world today, social enterprises have emerged as innovative business models that are demonstrating how the private sector can contribute more substantively to addressing various social problems (Perfecto, 2013). Though some of the more successful nonprofit organizations grow to become large, a majority face similar problems of viability and sustainability such as access to financing and lucrative markets. Even more challenging is the fact that they must create strategies in pursuit of their social mission. Many times, this amounts to no less than a herculean task. Social enterprises tend to be privately owned and as their name suggests their main aim is centered on resolving social issues. A business model simply describes how an organization creates, delivers and captures value. According to Zott and Amit (2010), a generic business model must be able to specify the what, for whom and how of production. It must at its essential core identify content, structure and governance. In the case of the National Kidney Foundation, their business model can be described as follows:

Figure 1: Value proposition for National Kidney Foundation
As shown in the figure above, the main aim of the foundation was to offer affordable dialysis treatments to the needy, at least at the foundation’s inception. The customers served consisted of the patients who needed dialysis treatments, the families of the patients and also the donors. This is basically what separated the foundation from other similar health care programs. Durai engaged the families of patients and also created value for donors such as enabling donors to receive public exposure, promotions, etc. Additionally, by involving the family, a patient’s chance of recovery increased significantly. This worked especially well in Singapore because of the society’s strong family ties. The foundation also partnered with various international firms such as the American Society of Nephrology among others to gain global exposure. In summary, the foundation’s business model can be represented diagrammatically as follows:

Figure 2: Summary of the National Kidney Foundation’s business model Q2. What is governance? Why is it important for an organization like the National Kidney Foundation? In order to be effectively and ethically governed, businesses need not only good internal governance, but also must operate in a sound institutional environment. According to OECD, corporate governance refers to the procedures and processes according to which an organization is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization such as the board, managers, shareholders and other stakeholders. Corporate governance begins with the Board. They are the ones who literally set the tone for the rest of the company. Corporate governance dictates the shared philosophy, practices and culture of an organization and its employees. A corporate with poor corporate governance is regarded as a body without a soul or conscience. The board of a well governed nonprofit entity like the National Kidney Foundation functions to formulate key corporate policies and goals, overseeing matters critical to the health of the organization e.g. the viability of the firm’s business model, the integrity of the internal systems and controls and the accuracy of its financial statements. The Board can also aid in evaluating and managing risk as well as mentoring senior management to help facilitate operations. With the recent financial crisis, the need for proper governance has become essential for survival. It must...
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