1. TOMS shoes: Combining Social Consciousness and profit
Case 7.2
TOMS shoes: Combining Social Consciousness and profit
MA0N0203 Stan
MA0N0226 Lyndon

2. Index Introduction Creating a business
Challenge of mixing philanthropy and profit
Question and discussion

3. Introduction Blake Mycoskie Visiting Argentina Children without shoes
How to help them? Charity? Asking family or friends?

4. 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

5. Picture from website

6. 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

7. Elephantiasis

8. Creating a business Shoes factory in USA Humanitarian mission
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

9. Creating a business Customers and volunteers TOMS activity
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 Oe

10. 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

11. 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

12. 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?

13. Answer 1 Patent Humanitarian mission
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
What are fair trade practices? Fair trade boils down to promoting sustainable, fair price trading at all levels of business. Most efforts focus on individual or small group producers in third world countries. The practices of fair trade involve promoting living wages for workers in their local communities. In agricultural communities, food prices must meet a minimum regardless of what the rest of the world pays. The minimum insures that local farmers have the ability to make a decent living. Practices also look at the type of labour. Forced labour is not allowed and neither is exploitive child labour

14. 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

15. 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?

16. 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

17. 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

18. 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?

19. Answer AQ 1 Two steps for communication
Showing accounting data to stakeholders
Break even point
Sustaining the original idea
Philanthropy and profit

20. 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?

21. 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

22. Thank you