TOMS shoes

One-for-one

Monday 10 October 2011

2 inspired

We have choosen this company because in contrast to the Business Dilemma the case of Nike we wanted to analyze if it is possible to successfully compete in the shoe industry by doing good, while doing well simultaneously. Our intention was to investigate, how ethical TOMS really is, and how they handle the ethical dilemma of producing in third world countries. For each pair of shoes TOMS sells,it gives one pair away to underprivileged children in over 20 countries.

a) The main facts about the activities of the company.

TOMS produces and sales shoes at a premium price, it uses some of the profits to finance and produce shoes for children in developing countries, who would otherwise not be able to afford them. TOMS is famous for its one-for-one program. Buy one shoe, donate one. TOMS organizes annual so-called shoe drop offs. Since its founding in 2006, TOMS has distributed over 1 million shoes to children in need. TOMS produces in China, Argentina, the United States and Ethopia.

b) The ethical challenges this company is addressing.

The main ethical challenges is to bridge the gap between charity and profits. When returning from holidays in Argentina, the founder of TOMS shoes realized the urgent need for the children he just saw is shoes. Walking bare feet for miles every day for food, water, shelter hurts the children?s feet and many are seriously wounded, which exposes them to dangerous diseases of soil-transmitted parasites. Moreover, children are often not allowed to enter school bare feet, so TOMS shoes indirectly also enables them to benefit from attending class and school education in general.The business model is based on customers from the developed world subsidizing the shoes of children in undeveloped countries. The idea behind TOMS shoes is to provide the most basic mean of transportation to children in third world countries, thus improving their life by donating shoes. The company wants to produce shoes for tomorrow, one for one. For each sold pair of shoes sold, TOMS will give out a pair of shoes for free to an child in need in an underprivileged country. TOMS employees distribute the shoes themselves directly to the children, thereby reaffirming their personal commitment to the good cause.

c) What makes you believe this company is really ethical and why you trust it

TOMS shoes pursues a simple structure, and guarantees that the shoes are sold one-for-one, which in turn triggers emotional reactions in people, making them not only feel good when they buy the shoes, but also every time they wear them. Also, because the type of shoes, a traditional Argentinian shoe, is not common in the Western market place, people wearing them immediately become walking commercials for the shoes and the idea of helping challenged children, preventing soil-transmitted diseases, and allowing children to go to school.
They are producing in China and Argentina, soon to be followed by Ethiopia as well as Brazil. Producing in China may raise the eyebrows of ethical shoppers, but TOMS reassures that the that they require factories to adhere to strict labor standards and pay fair wages, and each factory is also periodically audited by a third-party inspectors.
What makes us really believe that TOMS shoes follows through, is heaps of videos and pictures of TOMS representatives going to various underprivileged countries giving out the shoes to the children themselves. This really adds to the good feeling of the buyers, when they can look at their own pair of shoes and at a picture of a TOMS employee giving out a pair of shoes because of their very purchase.
However, on second sight TOMS image is too perfect too be true. Despite hours of research on the Internet, we were unable to find any negative press or blog entries about the company.
So we decided to challenge TOMS ethics publicly and posted challenging questions on it?s Facebook pinwall, namely the difference between its immense price markup while contributing little ?only one pair of shoes; as well as the fact, that they produce in third world countries like their competitors. Our entry was removed within three minutes, without any comment or answer. But no answer is also a form of answer.
Not embracing critical arugments sheds shaddows on TOMS image and its honesty. If TOMS would act genuinely ethically, it would embrace an open dialoge with its stakeholders. According to TOMS homepage, TOMS produces in accordance with strict, local labor standards. That is exactly as it is stated on NIKE?s homepage, which proofenly employed unethically procedures to increase producitvity, while reducing costs. TOMS fails to be transparent in its procedures and its cost and profit structure. Because TOMS is a privately held company, no records about financial performances are available.
In the end, one has to ask, what is worse: Being profit-driven, or being profit-driven while simultaneously pretending to be a saint and thereby taking advantage of the ignorance of the people, who believe in a better world?
Yet, it is not possible for us to determine and classify TOMS business as neither good or bad since the lack of information. However, TOMS public relations plus the fact that its owner lives on a boot in Venice, Italy, let?s us doubt TOMS altruistic, and social motivation.

d) The possible challenges facing the company in the future and how you think this company may improve.

Giving an outlook to the future it is obvious that unprivileged children are in need for more than just shoes. TOMS shoes at least partly fulfills ethical aspects, although the company stays at a really charity level. What they are actually doing are improving the situation on a short run. Relying on the next years it is obvious that not the quality of TOMS shoes itself, nor the ethical idea behind are able to establish a better world for the children at the long run. That is a challenge TOMS shoes should think about. Moreover they could improve the way they are partly trying already, more focusing on the development. This means to provide help to children in other sectors as access to schools or help for food cultivation, so that they are able throughout help to lead a better life which they can build upon what TOMS shoes provides. This could be for instance teaching the children how to cultivate food on their own or simply to sink wells in order to avoid the long walks for children.
In the long-run TOMS plans to expand its business model of one-for-one to other sectors like clothing and even housing. With a move into a one-for-one housing business TOMS has the potential to drastically increase its positive impact on the world and its poorest inhabitants. But this remains to be seen, if TOMS can live up to its mission and promises.

Bibliography

http://www.toms.com/
http://articles.cnn.com/2009-03-26/living/blake.mycoskie.toms.shoes_1_shoe-design-insoles-pair?_s=PM:LIVING
http://www.time.com/time/magazine/article/0,9171,1582305-2,00.html
http://www.cbsnews.com/8300-504464_162-504464.html?keyword=toms+shoes.story
http://ethicalstyle.com/issue-12/the-other-shoe-drops/

Start a new discussion

2 Discussions / 2 Messages

  • Are TOMS shoes really making a difference? 1 June 2012 at 19:32 , by C.F.

    Reading the article about Toms shoes company, unfortunately rather wakes me up than inspires me to dream.

    At the beginning of the article, I liked the simple concept Toms shoes is following by its one-to-one movement. The idea and its impact is clear and easy to understand. In addition it raises awareness in our developed countries that the problems in undeveloped countries are not always just hunger or diseases, but more simple and sometimes just a missing pair of shoes to be able to enter in a school in Ethiopia.

    Sadly, reading further and after some more research it becomes rather clear, that Toms shoes is not as ethical as one would think while just looking at the surface. From my point of view, a company cannot really want to help and act ethical when avoiding some critical questions by the society. It should rather try to answer uncomforting questions and give the insight, that there is still a lot to do and to achieve. Additionally a company who wants its movement to grow is not deleting a maybe fertile discussion that in the end would raise even more awareness for the movement and its idea.

    Taking a closer look at the website and the one-to-one movement, my suspicion about the willingness of Toms shoes to make a difference for the children increases. In how far and where the shoes are being distributed remains for the customer of Toms shoes unclear. The company and the movement would have much more credibility if the cooperation’s and organizations would be stated by names and overall if the manufacturing and distribution processes would be explained in detail. Furthermore, the same processes of Toms shoes for customers remains a secret. The company is producing in countries like China and Brazil, but does not give more insights, than that it is following strictly the local labor standards. One can find this statement also on the website of Nike or any other average shoe manufacturer looking for profit and growth.

    I am asking myself, if the company would not do a better job if they would pay higher wages to their employees in undeveloped countries than just meeting the local requirements, which are in nearly all the cases far away from being enough. Furthermore, it is vague in how far the shoes are able to add a sustainable added value for the kids, since I can imagine that the shoes are getting stolen from other kids or that the kids are even trading the shoes for something they need or want more.

    Furthermore, I think the contribution of the company could be a little bit higher than giving away a free pair of very basic and cheap produced shoes, if they are receiving 54$ for their cheapest classic pair sold.

    Summarized, Toms shoes is either a company that uses a shallow ethical approach in order to grow, or is lacking credibility, which makes the whole movement not trustable.

    As a last comment, I would like to give the feedback that I would have liked it, if the article would have been written more critical from the beginning. It was disappointing to read in the end, that Toms shoes was not really able to make the writers dream and to convince with their movement.

  • Why the concept of One for One makes sense 4 October 2012 at 15:10 , by Jingcheng Hua

    In my personal view, the One-for-One concept by TOMS really makes sense. It is a tricky move to advertise especially for FMCG products. Based on solid evidence by The Wall Street Journal, when having to make the choice between two similar products, up to 80% consumers will choose the product with a charity tag. Furthermore, about 19% consumers say they will choose the ethical company even the products are more expensive. In fact, TOMS’s shoes are much more expensive, nearly double price to those of other brand. Perhaps if TOMS really sell shoes in general prices, consumers are afraid of the quality and reluctant to buy. Consumers are willing to pay for the concept of TOMS and that is why TOMS gain the success in business and ethics.

    After analyze, I think that the One-for-One concept also has following highlights
    1. Easy to understand
    It is easy for consumers to accept One-for-One concept, mainly because consumers are easily imagine the situation of the concept describe. Unlike the traditional donation method, which usually says ”30% profit will be donated to charity”. But ordinary consumers hardly have clear understanding about how much is 30% and what is the specific number.
    2. Do not need detail
    One-for-One concept cleverly ignores detail about the specific operation, and saves time and energy for the company to convince consumers. Usually a company has to satisfied the need of consumers for making a deal. However, people like the idea of charity so they do not nitpick too much about the product.
    3. Meet donation regulations
    In many countries it is illegal for a company to informally launch a charity donation. Based on the One-for-One concept, not consumers but the TOMS who donate. Besides the TOMS just donate the products instead of cash. Those features allow TOMS evade too many requirements of donation and leave freedom for them to do charity and business at the same time.

Location: Santa Monica (United States of America)

Sector: shoe industry

Official website: http://www.toms.com

Key figures:

Since TOMS is a privately held enterprise, no financial data or reliable 3rd party information was available.

Nbr. visits: 3841

Nbr. inspires: 2