TOMS

With every pair you purchase TOMS will give a pair of new shoes to a child in need. One for One

Sunday 5 June 2011, by Catharina Spruit, Filip Olsson, Grace Van Den Berg, Sebastian Wiese

185 inspired

Study
Discussion

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

TOMS was founded in 2006 by Blake Mycoskie, after a trip to Argentina where he witnessed extreme living conditions and poverty, and how children were running around barefoot. TOMS main product is shoes, which are sold through retailers and flagship stores all over the world. The business core lies in its slogan ?One for One?, which means that for every pair of shoes they sell, one pair will be given to a child in need. TOMS works closely with their Giving Partners, which are charity organizations that work on a non-profit basis. With the Giving Partners, they assess different situations in the world, so that they can contribute as much as possible. They do the following: Identify communities that need shoes, get the proper shoes to children, give children shoes as they grow and lastly improve through feedback. The process, from the sale of a shoe, to hand-placing them on a child in need, is estimated to take 4-6 months.

b) The ethical challenges this company is addressing.

TOMS base their business on giving away one pair of shoes to a child in need, when a pair of shoes has been purchased. TOMS is a ?for profit? business. By this TOMS refers that their business model aims for making profits, but that their core value is to give away shoes to children in need. First of all the product, shoes, addresses TOMS main ethical challenge. According to Mycoskie shoes are a fundamental resource for protecting children?s health and providing them with opportunity. Giving TOMS to a child in need will result in the fact that children won?t have to walk miles on barefoot anymore to important places such as school, clean water and medical help. In addition, shoes protect children?s feet from infection and soil-transmitted diseases. At last, educated and healthy children are more likely to be successful and are better to improve the future for themselves and other people. It is important to mention that TOMS controls the complete process from the production of shoes to the personal delivery of shoes to children in need. Even though they work together with other companies and organizations, they are strongly involved in the process and take responsibility of all the direct consequences of their activities. For example TOMS shoes requires factories to operate under sound labor conditions, pay fair wages and follow the International Labor Standards set by the International Labor Organization. A code of conduct is signed by all factories. Besides, another ethical issue which TOMS is aware of is that there cannot be any adverse socioeconomic effects. TOMS has to avoid that local businesses suffer from the actions of TOMS and has to carefully chose the locations for ?Shoe-drops?.

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

To our point of view TOMS can be trusted for several reasons. First, a code of conduct is signed by all factories that produce for TOMS. The production staff regularly visits these factories to make sure they are maintaining these working standards. TOMS also has third parties auditing the factories at least once a year to ensure they adhere to proper labor regulations. Second, we agree upon the fact that the view of TOMS regarding doing good business or ethics, go beyond what other companies do. TOMS operates ethical on the basis of a ?buy-one-give-one-away model? instead of using a charity model. They do not donate money for so called ?social responsible? activities or donate to charity organizations, but they directly help people by personally dropping shoes. Due to this straightforward business model, we think it is easy for the public to monitor the activities of
TOMS. In addition TOMS regularly update the website and social media about their actions in order to inform people and increase their transparency.
Besides, their ability to make profit relies heavily on their ethical values. If TOMS looses any trust, they would lose profits as well. So in order to gain long-term sustainability TOMS cannot afford to act unethical. Finally, within a year after their existence TOMS received recognition for their work. In 2007, TOMS was honored with the prestigious People?s Design Award from the Cooper-Hewitt National Design Museum, Smithsonian Institution. Two years later, Mycoskie and TOMS received the 2009 ACE award by Secretary of State Hillary Clinton, which recognizes companies? commitment to corporate social responsibility, innovation, exemplary practices, and democratic values worldwide.

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

TOMS main challenge is to make sure that people keep buying TOMS shoes. Due to the great competition in the shoe market, TOMS has to develop their shoes continuously and eventually extend their line of products. The past years it has been proven that the concept of TOMS holds. It is a self-feeding loop that has the viability to continue over years. Furthermore it will be relevant for TOMS to closely monitor the developments in the industry in order to sustain their business position. If TOMS not responds to the fast changing environment it will be harder to reach their ethical goals as well.

Bibliography

http://www.toms.com , May 25, 2011
https://www.facebook.com/toms?sk=app_7146470109, May 28, 2011
http://en.wikipedia.org/wiki/TOMS_Shoes, June 1, 2011
http://www.businessweek.com/smallbiz/content/jan2009/sb20090123_264702.htm, June 3, 2011
http://toms1m.wordpress.com/, June 3, 2011

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5 Discussions / 5 Messages

# TOMS 4 June 2012 at 15:22 , by rudnik

I think that the company has successfully managed to combine benevolent social activity with a profitable business model. I think that part of the reason (if not most) for people buying TOMS shoes is that this way they can contribute to the charity activity supported by the company. Since the awareness of poverty and inclination to help has been increasing in the last years in the more developed countries, benevolent actions emphasized by companies such as TOMS lead to improved attitudes of customers, positive PR, and, most importantly, number of people willing to buy to product. I believe that people buy the shoes for 3 reasons: for the qualities of the product itself, to support the charity activities, and finally, as a gesture of ´gratitude´for the general attitude of the company. This makes the company ethical, profitable and sustainable.

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# Why the concept of One for One makes sense 4 October 2012 at 15:02 , by huajingcheng

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.

Reply to this message
# Why the concept of One for One makes sense 8 October 2012 at 11:07 , by huajingcheng

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.

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# Shoes for TOMorrow 7 March 2013 at 02:11 , by Francisco J Román Roig

What strikes me the most about TOMs shoes is the fact that this business idea erupted from the notion that people can’t afford to have simple things that others take for granted. It isn’t about the profits, it is about making a sustainable project that goes beyond you and your customers. TOMs does not rely on donation, they just need to sale shoes in order to help others.

The One-for-One movement has become a hit in the US. They even promoted an annual barefoot day, thus encouraging people’s awareness over the condition many people endured. Besides, they do not just deliver shoes to kids and then abandon them, they provide shoes to every child that had been given a pair of shoes for their entire childhood.

During the "shoe drops", the company gather volunteers and its employees and then make trips to poor communities, where they distribute shoes to every kid. Aside from distributing shoes, they provide the opportunity to let people see for themselves the precarious situation others live in.

It really is a motivation to see these companies grow. They are saying: "start something that matters".

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# TOMS 13 May 2013 at 12:21 , by Esen

I think Tom’s one-for-one business is a successful entrepreneurship which address a very specific issue in poor countries. Although the sustainability and price concerns are still controversial, the main idea behind the business deserves attention.

In the philanthrophic venture world, Tom can be counted as a pioneer. The founder of Tom’s shoes, Blake Mycoskie has seen a problem and he established a company which contribute to a social cause. Tom’s shoes are highly regarded by the young customers and the purchase intention is also driven by the fact that when you buy one product, you actually help a one kid to get a new pair of shoes. The shoes are important for children to prevent diseases, cuts and infections and also enables them to safely go to school.In this sense, providing a pair of shoes actually contribute to their lives positively.

The company is also very transparent and support public movement with different campaigns. Many entrepreneurs focused on philanthropy followed Tom’s after their initial start. I think the company is also a good example to combine a profitable business and successful donations which actually helps solving a cause.

From the sustainability point of view, It can be said that providing a pair of shoes to the children in need is a very short term help and creating a dependency on the actual sales but I believe every company can contribute to social causes even with small amounts of help. In Tom’s case, the company is actually creating awareness to a social cause and people who would like to contribute to this cause, can easily participate and add a meaning to their purchases.

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