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.
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