Chapter 6 Case Study

docx

School

East Carolina University *

*We aren’t endorsed by this school

Course

4342

Subject

Management

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by bnlampe02

Chapter 6 Case Study Bradley Lampe February 13, 2024 MGMT 4842 As the Founder and Chief Shoe Giver of TOMS, Blake Mycoskie aims to solidify the brand's presence among the 18-34 age group by addressing market challenges through extensive research. TOMS plans to set new objectives aligned with market trends, employing promotional strategies to connect with the target audience and convey a lifestyle message. The "One For One" movement, providing a pair of shoes to a child in need with every purchase, serves as TOMS' competitive advantage, offering both tangible and intangible value. Despite not targeting a specific niche, TOMS attracts socially conscious consumers through quality, lower prices, and a sense of social responsibility. Customers perceive the value as justifying the cost, contributing to TOMS' success. Apart from its primary goal of providing shoes to underprivileged children, Toms is dedicated to aligning its operations with its positive public image. Corporate responsibility at Toms encompasses environmental and social considerations, responsible giving, and employee well-being. The company produces its goods in Argentina, China, and Ethiopia, regions known for potential child and forced labor issues. To ensure compliance with laws and social standards, Toms conducts regular third-party factory audits and established a Supplier Code of Conduct. This code enforces standards such as minimum work age and nondiscrimination, protecting workers from various forms of harassment. Violations may result in the termination of supplier contracts. Toms also educates its employees on human trafficking and slavery prevention to enhance ethical practices. Toms is committed to environmental sustainability by offering shoes made from sustainable and vegan materials, such as natural hemp, organic cotton, and recycled polyester. The company uses shoe boxes crafted from 80% recycled post-consumer waste, printed with soy ink. Additionally, Toms supports various environmental organizations in its pursuit of sustainability. As Toms' primary edge was its portrayal as a philanthropic enterprise aiming to assist those in need, it was crucial for the company to uphold and cultivate this perception. To achieve this, Toms needed to demonstrate that its operations aligned with its altruistic mission,

going beyond merely leveraging the term "charity" for profit. Embracing corporate social responsibility played a pivotal role in achieving this objective for Toms shoes. It demonstrated the company's dedication to meeting ethical societal standards, leading to heightened public affirmation of its brand value and recognition. Toms possesses several strengths, such as being a global leader in the one-to-one business model, with the "One for One" campaign effectively generating revenue and showcasing social responsibility. The brand's shoes carry a compelling narrative and enjoy widespread recognition. However, weaknesses include the susceptibility of Toms' shoes to substitution, a lack of formal advertising, and a heavy reliance on the do-good trend among consumers. Despite these challenges, there are opportunities for Toms, as the trend of businesses with social responsibilities is growing, offering potential for future development and prosperity. Moreover, the increasing awareness of social responsibility among future generations of employees presents another avenue for growth. Nevertheless, Toms faces threats, including heightened criticism due to negative impacts on local economies, competitors adopting the one- for-one model, and consumer skepticism regarding how Toms utilizes its funds. Toms' effective strategy, initially driven by its mission to aid underprivileged children, has resulted in the distribution of over 50 million free pairs of shoes across 70 countries by mid- 2016. The company focuses on building brand recognition by appealing to socially conscious consumers who want to contribute to charitable causes. Unlike competitors emphasizing product features, Toms highlights its charitable contributions and founder's story, creating a competitive edge with its one-for-one business model. Toms relies on social media and word of mouth instead of mainstream advertising, surpassing industry leaders like Nike and Adidas in online engagement. With over 3.5 million Facebook likes and 2 million Twitter followers, Toms excels in follower and like ratios per dollar of revenue. This approach enhances the likelihood of repeat purchases and word-of-mouth referrals, fueling the brand's success. Toms' model and strategy also cultivate relationships with charity organizations. Financially, Toms achieves consistent growth, with an impressive average revenue growth rate of 145 percent per year, reaching over $200 million annually within seven years of its initial $300,000 investment in 2006. This growth continues, even during the post-2008 recession when the shoe industry experienced a 4.5 percent decline in revenue.

TOMS shoes' strategy faces a significant social issue. While providing shoes to impoverished communities seems helpful, it merely addresses a small aspect of the larger problem – the pervasive poverty in these societies. Giving free shoes acts as a temporary fix rather than creating lasting change. Some argue that providing free shoes, while a good gesture, may inadvertently foster dependency and undermine self-sufficiency, disrupting local economies. TOMS has established criteria for giving partners, aiming to mitigate these social challenges. However, I believe direct involvement in various charity initiatives beyond giving partners would be more effective. The second issue lies in the internal weakness of TOMS' strategy. Its competitive advantage relies on the intangible value of making customers feel good rather than the inherent value of the products. This advantage is unpredictable and potentially unsustainable, as consumer commitment based on nonfunctional attributes can be fleeting. Externally, TOMS faces criticisms for its one-for-one model, with concerns about its impact on local economies and increasing competitive pressure from companies adopting a similar approach. To address these challenges, I recommend that TOMS diversify by developing new brands and product lines appealing to a broader customer base beyond the socially conscious. Additionally, expanding charity efforts beyond providing shoes to encompass healthcare, education, and long-term solutions, with direct involvement, can enhance TOMS' reputation and create a more positive image among consumers.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

References CNBC Television. (2019, December 30). Toms Shoes creditors to take over company . YouTube. https://www.youtube.com/watch?v=CdYK2nNoHd0Links+to+an+external+site. Business Insider. (2020a, May 9). The rise and fall of Toms . YouTube. https://www.youtube.com/watch?v=gbWj33Ej3rALinks+to+an+external+site.

Chapter 6 Case Study

Related Documents