Case Writeup Essay Example | Topics and Well Written Essays - 1000 words

Case Writeup - Essay Example Kiva’s existing business model does not allow lenders to receive interest against the funds they loan however; Kiva’s field partners charge the interest from the entrepreneurs. Though this rate is lower however, it is considered as enough to meet the requirements of the Kiva’s field partners. One group which obviously be affected by this will be the poor entrepreneurs because if start paying the interest to its lenders, this cost will certainly be passed on to the actual borrowers. Secondly, by not paying the interest, Kiva’s lenders are being affected though most of its lenders lend the money to gain the emotional returns rather than the financial returns. The situation described above therefore indicate towards the adaptation of a business model which can effectively combine both the elements together in order to create value for each of the stakeholders in terms of financial rewards. A closer analysis of the facts would suggest that Kiva is facing two important problems i.e. strategic as well as of operational nature. It is Strategic in the sense that paying interest rates to the lenders may dilute its overall appeal and can significantly reduce its overall public image. Further, it also need to maintain its operational viability therefore in order to attract more funds, it may require paying interest to the lenders. Apart from this, a change in the business model of the firm would also force it to change its very character therefore may further require it to complete important legal requirements in order to comply with the existing legal requirements for the commercial organizations. Apart from this since the lenders of Kiva may not be directly into the business of lending therefore they may also be subject to the different regulatory requirements which can effectively discourage them to lend to Kiva owing to