Final Group Project: A Virtual Collaboration Between Bank of Warmhearted & Nidas

The Two Sponsoring Companies

1. Nidas - A global sporting goods company
2. Bank of Warmheared - A Chinese retail bank with presence in China and Hong Kong Project objective

Our position is...

"Why not applying commercial practice in fundraising for non-profit charitable organization?"

High Fundraising Cost

Take Oxfam as an example. In the past year, it used $24.671 million in fundraising and marketing, it's approximately 11% of its income.

According to the research from Charity Navigator, the typical charity spends 75% of its budget on programs, 10% on fundraising and 15% on administrative.

Charitable organizations usually need to pay the fundraiser a fixed fee of a percentage of the money raised as return. For example, the MSF (Medicines Sans Frontieres) Doctors Without Borders paid 8% of the donation to the agency - Mission Support for organizing the street fundraising.

Fraud in Fundraising

Fraud may occur in fundraising activities. Criminals may posing as fake staff or fundraiser and committing fraud.

 

From the Perspective of Two Companies

Besides Corporate Social Responsibility

 

Promote Brand Image -> Facilitate Brand Differentiation 

-> Customer Engagement -> Gain Market Share & Increase Sales

The two project sponsoring companies aim to expand their business by promoting their brand image, obtaining brand recognition and gaining access to potential new customers via a charity event.

It targets to attract individuals who enjoy outdoor sport exercise and their friends who are interested in participating in a chartable event. If the event is successful, it will attract a group of individuals and corporations to participate this event on an on-going basis and forming a community. Eventually, it will become a signature national sport and charity event.

The Project destines for a win-win for the commercial companies, participants and charitable organisations. Through the project, those non-profit organisations can have a lower cost in fundraising and more funding for their programs.

 

Project Details

 

An annual charity fund raising, non-competitive long distance cycling event.  

The two commercial companies team up to launch a cycling event to raise fund for charitable organisations. The event will be 1st launched in Hong Kong which is one of the most strategically important location for brand promotion for the China market and Asia. The potential choice of the location of the event will be starting from the Tsing Ma Bridge, a famous landmark of Hong Kong, to the Lautau Island where the participants can enjoy cycling and scenery along the route. It can attract both locals and tourists since normally this route can only be assessed by car.

If take one more step, a “No-driving day” can be promoted for the event or the event can be held on a public holiday to mitigate the effect on the traffic. With the successful in Hong Kong, the event will be held in different major cities in China in subsequent years.

What does the sponsoring companies do?

The two sponsoring companies will launch the event portal together. The site name would be “XXX-YYY-Cycling-for-charity.com”.

The two sponsoring companies will need to line up the local sports related organizations and the local government to support and approve the event.

The global sporting goods company will cooperate with a local bicycle company to provide bicycles to the participants on a loan basis. The participants can custom made their bicycles and choose different parts for their bicycles through the website. Participants will need to pay the costs upfront online via a special launched credit card issued by the event sponsoring bank - Bank of Warmhearted. Then the bicycles will be sent to the participants before the event and so they can have time to adapt to their bicycles. After the event, the participants can keep the bicycles if the participants intend to or they can return the bicycles and get partial of the payment refund.

The global sporting goods company, Nidas, will donate the profits on the bicycles to the charities. The event work jointly with several charitable organizations. Each of them work for different causes. Through the portal, the participants can choose which charities they prefer their donation to be designated. 

The bank will launch a special visa card to the participants and sponsor for the participants for the event. The event portal will be linked to the bank's payment system to ensure the payment and refund process can be completed smoothly. The sponsors of the participants can also make their donations by the visa card. The visa card would be a dual currencies card which is applicable by both Hong Kong and mainland Chinese residents. It is expected that the event will attract both Hong Kong and mainland residents.

The bank will line up selected retailers providing health and sports related products and services in its network to come up with shopping offers for the participants and their sponsors. E.g. sports goods retailers, health clubs, healthy food and drinks and even travel agent service.

The two sponsoring companies will also invite their business partners to sponsor their companies' staff to form corporate team to participate the event.

Other stakeholders of events

1. Individual / Corporate participants (the cyclists)

2. Sponsors for the participants

3. Other supporting organizations

4. Local government

5. Retailer offering the shopping offers

6. The charities who will receive the donations.

ILLUSTRATION MAP

Collaboration Dimensions

The collaboration in this project can be breakdown into 2 levels:

1. Between the two sponsoring companies
2. Between commercial companies & non-profit organizations.

The Virtual Organization

1. Virtual Encounter (Customer Interaction)

Dynamic customization of product or service

Participants can customize their own bicycles through the web without actually seeing and touching the products. Customers are interacting with companies in a different way.

Customer communities

The event's web site and blogging site form an electronic customer communities. The participants, sponsors and charitable organisations are effectively linked.

The Blogging Site that created for this event serves as a membership program. The site would keep running even after the years’ event is completed. Participants can still update their latest status to their friend and the public.

According to the article “Trust and the Virtual Organization”:

“The concept of membership, when made real, would replace the sense of belonging to a place with a sense of belonging to a community.” 

 “A sense of belonging is something humans need if they are to commit themselves to more than simple selfishness.”

Therefore, the Blogging Site can help participants and sponsors establish a sense of belonging which turns out act as a motivating force for joining the event next year or even better recruiting their friends and family to take part in the event.

2. Virtual Sourcing (Asset Configuration)

Nidas outsourcing the build to order bicycles in the event to a local bicycle company, so the two companies can focus on their core competencies - Nidas on marketing and brand management while local bicycle company on manufacturing. As the event is planned to hold annually, a relationship will be developed among Nidas, local bicycle company (subcontractors) and participants (customers).

Why need to go virtual?

1. The project aims to attract individuals from both Hong Kong and Mainland.
2. The project targets to create a community who continue support and participate in the event.
3. Going virtual can Lower the transaction cost and be more convenience for participants. For example, the customization of bicycles is better served by an online system which can offer many different options and parts. If the participants need assistance, personal assistance can be provided via real-time chatting service. Online payment also solves many operational problems involving multiple parties to multiple parties’ payments.
4. It is intend to create a social media like platform which enables the participants, sponsors, the retailers and the charities to be connected each other.

How is the virtual collaboration enhancing performance of both communities?

Virtual Collaboration – Web Page, Blogging Site & Co-brand Credit Card


With reference to the “Real Strategies for Virtual Organizing”,

"Every company should assess how its products and services can be experienced virtually in the new marketing infrastructure. A Web site is essential. The question is how best to use the Web’s power to create superior linkages with customers.:"

Here, we have the Blogging Site & Co-brand Credit Card to connect the companies and the customers (participants/ donors).

From the angle of the Bank

1. The Blogging Site 

The project would create a web page and a blogging web site, encouraging participants to share information and interesting content regarding this fund raising cycling event to the public. This can: 

Building up relationship with the participants and users

A web page would be created and encourage participants to share information and interesting content regarding this fund raising cycling event to the public. This can build interest of the others, even those who have not taken part in the activities, and project the brand images of the sporting company and bank as an innovative and outstanding idea that encourages participants and users to interact and engage themselves with the activities as well as the brands. 

2. The Web Page

Applicants can submit their enrolment through the web page and the web page would update the latest news and promotion that both the sporting company and the bank offers regularly. Besides, it would also serve an online portal as a platform for participants and sponsors to donate and raise fund. Sponsors will make donations with the Co-brand Credit Card through the online platform. This can: 

Promote Brand image - Customer oriented

As people tend to support a cause that closes to them, therefore instead of picking several popular causes, the project let the donors to choose which charitable institution to support. Making good use of the bank’s payment system, the donations can be directly credited to the accounts of the user’s designated charitable institutions and initiatives without any deductions for administrative expenses. Users can change their charity designated any time through the web site. This provides a convenient means of payment and enrolment process to users. 

3. The Co-brand Credit Card

The bank and the sporting company would launch a special co-brand dual currencies credit card and issue the card to the participants and sponsors of the event. Year round discounts would be offered and 3% of purchases would be donated to designated charitable institutions. This can:

Increased Sales & Enlarged Client Basis 

Same as other credit cards, this co-brand credit card offers some exclusive privileges like providing year round discount at merchant outlets that sponsor the fundraising cycling event. This allows both companies utilize their network and sources in Hong Kong and China to recruit and invite other merchants to be the sponsors of the event. The issuance of credit card also enlarged the banks client basis. 

Moreover, when users purchase with the Co-brand Credit Card, 3% of purchases are donated to a charity of their choice. The sporting company and the bank would give the donation jointly which means the public can make donation even after the cycling event of the year is completed. These all make the user more willing to spend with the Co-brand Credit Card.

From the angle of the Sporting Companies

This project is a mutual beneficial program. Here we briefly list the Sporting Company’s benefits as follows:

1. Building Relationship with the participants and users through the Blogging Site 

The participants could share their experience of using the bicycle and the company can win a word of mouth. Also the sporting company can get feedback from end users in order to provide better services and products that meet market trends.

2. Explore a new sales channel & Boost up sales through the Web Page

Participants are requested to ride the designated brand of bicycle and they are allowed to customize their own bicycle with the parts they want. This gives a chance the public to learn the products and services of the sporting company and resulting in an increasing in sales.

3. Promote Brand image through the Blogging Site, Web Page & Credit Card

The corporate displays a sense of socially responsible and a focus on eco-issue. This can win favorable response from customers. If a customer likes the company, he or she will buy more products or services and will be less willing to change to another brand. 

How is the project benefit both communities?


1. Build Up Corporate Reputation

The project helps the public have a better understanding towards the products and services that the company and the bank provides through various promotional activities. It is a way for companies to benefit themselves while also benefiting the society and the participating companies can build up their corporate reputation by:

Raise Brand Awareness

It serves as a platform for both the sporting company and the bank to establish a positive brand by displaying advertising boards and banners at the venues, printing advertisements in program booklets, airing advertisements on TV, participating in promotional activities etc.

Promoting Care of Environment

Care of the environment is becoming a prominent issue for many decision makers, including consumers and businesses. This project promotes the idea of conserving earth's natural resources, avoid pollution and minimize global warming. Car emission. Companies can gain frame when seen as a pioneer in these areas.

2. Raise Awareness About Public Health

Not getting enough exercise is one of the top listed items of health concern. This project brings out the messages of adopting a healthier lifestyle and the importance of exercising. Encourage the public to do more exercise, checkups and health screenings. Both participating companies can use this project to engage with customers in new ways.

3. Enhance Employee engagement

New young recruits are looking for more than financial remuneration. Many want to be associated with organizations that are seen to be socially responsible. Employee would feel a sense of pride when they are talking about the company they work for. Consequently, this charity program can help in attracting, recruiting and retaining the best talent.

Something More.......

Interaction Between Charities & Donors

In this project, like the general practice, the decision on how to disburse the funds is left to the discretion of the charities but the public is now more concern how their donation helps. 

Normally, when people donate, they wants to know how their donations spent as well as the Financial Health, Accountability and Transparency of the charitable organizations. Since this project would work as a matchup for the donors and the charitable organizations, the charitable institutions would need to post their annual financial highlights together with some specific information like how many individual were served in the past year in the event’s web page and to individual donors through email as feedback. In this case, the donors can get the charities’ expenses break down and ensure the money they donate is helping in the way they intend rather than lining on fundraising and administration costs. This also gives the charitable organizations a message that the donors would determine which charities best deserve their money so to encourage financial integrity. 

Value propositions

1. Every participant in the event will gain. The two sponsoring companies will be able to improve their brand image and awareness, i.e. soft selling vs the traditional hard selling approach. More importantly, they will gain in-depth knowledge of some potential clients group. They will access to data such as demographics, shopping preferences and patterns. With this information, the company will better to tailor its products / services.
2. The participant will make donation to charities in exchange they will develop more awareness to the importance to health and sports.
3. The participants’ sponsors e.g. their colleagues and friends will have chance to make donations and supporting their friends. And they can have control over the designated charities.
4. The retailers will have chance to introduce their product/service to a new group of customers. More likely they will match their products/service targeting customers targeting segments. Lowering the transaction costs and the marketing costs.
5. The charities will have chance to showcase their service and their organizations to the potential sponsors.
6. For the local government, if the event is successful, it might also attract tourists from overseas to participate in the event which will generate tourism related income to the local cities.
7. The sponsoring companies will just utilize their existing skills and resources such as their business relationship, ability to market to clients and the payment system infrastructure. The commercial sector is best at raising fund, not directly serving the poor and the needed. The charities are best at serving the poor and the needed, not at raising fund. With this project, each party can focus on what they do best.

Why the Bank cannot be substituted?

Like the article “Trust and the Virtual Organization” suggests: “Trust is tough”, “Trust needs touch”. Trust is very important in a virtual organization. The public knows the two companies in this project. They may not be familiar with the sporting company but people normally do have a faith in the Banks. That is one of the reasons why this project could work.

Why Nidas cannot be substituted?

Nidas is a global sporting company with competencies in research, design and marketing. It has a network that links to sporting equipments manufacturers, mass media & sports lovers. 


Conclusion

A Win-Win Situation

• Sporting Goods Company – save promotion expenses and gain brand awareness


• NGO – gain for fund


• Bank – increase sales and profits


• Retailers – increase sales


• Participants – improve health and raising fund for charity

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Why choose CYCLING?

1. Benefits the particpants health

It is good to have more sports activity after work. It can help to reduce the stress and breathe more fresh air. The participants can spend time with their family and friends.

2. Cycling Information Centre (CIC)

Hong Kong Government is encouraged the public to have more exercises. They constructed some bicycle lanes in New Territories. Besides, they established a platform for the public where are the locations of existing cycling tracks,  parking sites and infomation on major on-going cycle projects and temporary closure of cycling tracks etc. So it is conventient for the cylclists to know the information before hand.

http://www.td.gov.hk/mini_site/cic/en/index.htm


3. Environmental friendly short distance travelling alternatives

Besides the cyclists to take more exercises, it can be friendly to the earth. We can try to cycle more in short distance travelling if it possibles. It can help to reduce the toxic substances exhausted air from the car and improve the air pollution.

4.  Raising fuel Cost

Due to the fluctration for the price of the fuel, the drive may have risk to pay high fuel cost for their car. So if you cycle to everywhere, it can save a lot from the fuel cost.

Link to our personal self-reflection blog

Samuel Sim
Miranda
Samantha
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Reference:

1. N. Venkatraman and John C. Henderson, (1998). Real Strategies for Virtual Organizing, Sloan Management Review., pp.33-48
2. Henry W. Chesbrough and David J. Teece, (2002). Organizing for Innovation: When Is Virtual Virtuous?. Harvard Business Review. , pp.127-135
3. Golnaz Sadri and John Condia, (2012). Managing the virtual world. Industrial Management., pp.21-25
4. Jeffrey F. Rayport and John J. Sviokla, (1995). Exploiting the Virtual Value Chain. Harvard Business Review. , pp.75-85
5. Charles Handy, (1995). Trust and the Virtual Organization. Harvard Business Review., pp. 40-50
6. 2011/2012 Oxfam Annual Report
7. http://www.cnbc.com/id/40592354
8. http://www.thefundraisingfunnel.com.au/fundraising/how-does-your-organisation-measure-up.htm
9. http://www.npengage.com/online-fundraising/19-proven-fundraising-ideas-from-nonprofit-experts/