Reference no: EM131725113

Case Scenario: TOMS Shoes Expands One-to-One Model to Eyewear

Although many organizations try to incorporate cause-related marketing into their business operations. TOMS Shoes takes the concept of philanthropy one step further. TOMS blends a for-profit business with a philanthropic component in what it terms the one-to-one model. For every pair of shoes sold. another pair is provided to a child in need. Recently. TOMS has also expanded into eyewear. For every pair of sunglasses sold, a person with vision problems in developing countries receives surgery. prescription glasses. or medical treatment to help restore his or her sight Unlike many nonprofits, TOMS' for-profit business enables the company to support its philanthropic component. which keeps the company from having to solicit donations. The idea for TOMS Shoes occurred after founder Blake My cookie witnessed the immense poverty in Argentinean villages-poverty so bad that many families could not afford to purchase shoes for their children. Recognizing the importance of shoes to health and education. Mycosis decided to create a new business that would consist of two parts: TOMS Shoes, a for-profit business that would sell the shoes, and Friends of TOMS. the company's nonprofit subsidiary that would distribute shoes to those in need. For his original product. Mycosis decided to adopt the aspartate shoe worn in Argentina. The aspartate is a slip-on shoe made fem. canvas or fabric with rubber sits. After a Los Angeles Times article featured Mycosis's new business. demand for the shoes exploded. Unfortunately for Mycosis.

He did not have enough shoes to fill the orders. Mycosic was able to work out the product shortage. and today TOMS is a thriving business. After distributing its one-millionth pair of shoes in 2010. TOMS began to consider other products that could be used in the one-to-one model. "When I thought about launching another product with the TOMS model. vision seemed the most obvious choice." Blake Myscoskie explained. Because 80 percent of vision impairment in developing countries is preventable or curable. TOMS decided that for every pair of sunglasses it sold, the company would provide treatment or prescription glasses for those in need. TOMS chose Nepal as the first country to apply its one-to-one model. TOMS takes its obligations for social responsibility seriously. The company builds the cost of the extra pair of shoes and eye care into the price of the products it sells. TOMS also works closely with local humanitarian organizations. "With TOMS we always work with local nonprofits or NGOs to understand what the need is in a community before we just go in and start giving." said Liza De La Torre, VP of sales and marketing at TOMS.

Customers who do business with TOMS feel committed to the company because they know that their purchases are going toward a good cause. even if they might pay a bit more in the process. TOMS goes to great lengths to educate the public about the importance of its mission. Although it does not have a marketing budget, the company provides internship opportunities and engages brand ambassadors at universities to spread the TOMS message. Every year the company pro-motes the One Day Without Shoes campaign. in which participants spend one day without shoes to understand what children in developing countries must undergo daily. These events have been supported by celebrities such as Charlie Theron, Kris Ryan, and the Dallas Cowboys Cheerleaders. Despite TOMS' clear philanthropic component. risks for misconduct still exist. The company uses factories in China. Argentina, and Ethiopia for manufacturing, which creates complex supply-chain relationships that must be carefully managed. TOMS created a set of manufacturing standards based upon International Labor Organization compliance standards for its manufacturers_ The company regularly per-forms audits to check that the factories are complying with company standards. TOMS also seeks to create strong organizational relationships with its employees and volunteers. The company often allows employees to participate in Shoe Drops (distributing the shoes to children) so they can sec firsthand how their efforts are helping others. Despite its success, TOMS' mission is far from complete. As its expansion into eyewear demonstrates, the company is looking for new opportunities for applying its one-to-one model. TOMS demonstrates how an innovative concept and the ability to incorporate philanthropy into business operations can create a successful company that can make a di fence."

Questions for Discussion

1. Do you think TOMS is successful because of its unique products. or is it the firm's approach to social responsibility?

2. How does TOMS manage its supply chain in order to ensure ethical and socially responsible conduct?

3. How does TOMS' business model relate to the under-standing of stakeholders and strategic philanthropy?