Case 7.2
TOMS shoes: Combining
Social Consciousness and
profit
MA0N0203 Stan
MA0N0226 Lyndon
Index
Introduction
Creating a business
Challenge of mixing philanthropy and
profit
Question and discussion
Introduction
Blake Mycoskie



Visiting Argentina
Children without shoes
How to help them? Charity? Asking family
or friends?
Introduction
TOMS shoes



Founder – Blake Mycoskie
Combining an entrepreneurial itch with a
social cause and making money doing it
Selling a pair, giving a pair to child in need
 One for one movement
Picture from website
Why Shoes?
Risk for children without shoes
• Soil-transmitted diseases, penetrating the
skin through bare feet
• Preventing feet from getting cuts and sores.
Not only injuries painful, but wounds
becoming infected.
• Can't attend school barefoot
shoes required part of their uniform
Elephantiasis
•
Creating a business
Shoes factory in USA

Made out of organic canvas and recycled
plastic
 Lightweight and environmentally friendly
Humanitarian mission

Strict fair-labor, fair trade practices
36 employees and 30 interns working in
its home office with TOMS concept

Falling in love with TOMS concept
Creating a business
Customers and volunteers

Involving TOMS activity
 Keeping message alive
TOMS activity

15 volunteers visiting different
countries/areas for Shoe Drop per 2 weeks
Co-operating with departments and
other retailers

Showing one for one movement
Challenge of mixing philanthropy and profit
Not reaching profitability in fall, 2008

Trouble in keeping up with a large retailer’s
demand
Tire of its shoes, no matter what concept
you have

Designing new style shoes(wrap boot for
woman), consistent with its mission
Challenge of mixing philanthropy and profit
Taking a toll on the bottom line

Buying TOMS’s shoes because of one for one
movement (philanthropy)
Mycoskie admits

TOMS will probably never be really profitable
question 1
Based on what you know about TOMS,
from the feature and company’s Web
site, what ethical and legal issues, other
than those that all firms grapple with,
should TOMS be particularly attentive
to? How can TOMS avoid ethical and /
or legal mishaps in this area?
Patent


Answer 1
Hiring folks from Nike, Asics, Tommy Bahama for
making good shoes
Avoiding patent of Nike, Asics and Tommy Bahama
Humanitarian mission

Strict fair-labor, fair trade practices
 Promoting living wage for worker
 No child labor
 Food price meet the minimum
Using recycled plastic – including hazardous
substance (ROHS in 2006)
Routine check to avoid possible ethical and legal
mishap

Checked by 3rd party
question 2
If TOMS initiated an ethics training
program, which issues do you think it
would focus on the most?
Answer

Humanitarian mission
 Strict fair-labor, fair trade practices



Promoting living wage for worker
No child labor
Protect environment
 No pollution to water, air and waste material
handling
question 3
Do you think customers are willing to
pay more for a product when they know
that a portion of their purchase price
will go to good cause? If so, how
important is this sentiment to TOMS?
How effectively does TOMS
communicate its mission and socially
conscious principle to its customers?
Answer 3
Yes
Spreading TOMS concept via mediums

Youtube, facebook, mySpace
Customers and volunteers


Involving TOMS activity
15 volunteers visiting different countries/areas for
Shoe Drop per 2 weeks
 Keeping message alive
Co-operating with departments and other
retailers

Showing one for one movement
question 4
What forms of business organization would
be appropriate for TOMS? Explain your
answer?
Answer


Setting up a non-profit organization connecting to
TOMS (for-profit)
TOMS donating money to support non-profit
organization
 Reducing total amount of tax payment to government
 Showing their concern to social responsibility as charity
Application question 1
How should TOMS handle it if at some
point becomes economically
unfeasibility to give away a pair of
shoes for every pair it sells? For
instance, if TOMS decided to shift to a
model of giving away one pair of shoes
for every two pairs that it sells, how
should it communicate that decision to
its stakeholders?
Answer AQ 1
Two steps for communication

Showing accounting data to stakeholders
 Break even point

Sustaining the original idea
 Philanthropy and profit
Application question 2
What can a business that wants to
operate in a socially conscious manner,
but doesn’t have the mission and
business model that emphasizes social
consciousness or philanthropy to the
extent that TOMS does, learn from
TOMS’s experiences?
Answer AQ 2
Air pollution industry

Oil refining, garbage furnace
 Offering job opportunity to local workers priority
 Offering 24 hrs hot water for free to local
community
Thank you