978-0077720599 Case 30 Toms Shoes

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TEACHING NOTE

CASE 30

TOMS Shoes

Overview

TOMS Shoes was founded on the premise of the “One for One” Pledge, a promise to donate a pair of shoes

to a child in need for every pair sold in an effort to promote greater social equality. As a relatively new and

privately held company, TOMS experienced consistent and rapid growth despite the global recession that

began in 2007. In 2013, TOMS had matured into an organization with nearly 400 employees and $210 million

in revenues. TOMS shoes could be found in several major retail stores, such as Nordstrom, Bloomingdale’s, and

Urban Outfitters. In addition to providing shoes for underprivileged children, TOMS also expanded its mission

to include restoring vision to those with curable sight-related illnesses by developing a new line of eyewear

products.

This case challenges students to focus on evaluating the TOMS corporate social responsibility (CSR) strategy

analytically and understand how this strategy contributes to TOMS’ financial success.

Suggestions for Using the Case

The TOMS case is a case that is certain to capture the interest of your students and provide for a lively discussion

of the company’s commitment to operating in a socially responsible manner. The case was developed to illustrate

such Chapter 9 concepts as corporate philanthropy, corporate social l responsibility, and triple bottom line

performance. The case will allow the instructor to introduce the business case for socially responsible behavior

and explore the different dimensions in developing a comprehensive corporate social responsibility strategy.

Students will likely express admiration for the company and commend it on its social mission and its triple

bottom line performance.

Making Use of Assignment Questions. It is really very difficult to have an insightful and constructive class

discussion of an assigned case unless students have not only read the case but also conscientiously worked their

way through a set of well-conceived assignment or study questions before they come to class. In our classes, we

expect students to bring their notes to assigned study questions to use/refer to in responding to the questions that

we pose. Moreover, students often find having a set of assignment or study questions useful in helping prepare

oral team presentations and written case assignments—in addition to whatever directive questions you supply

for these assignments.

: A Dedication

to Social Responsibility

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Utilizing the Guide to Case Analysis. If this is your first assigned case, you may find it beneficial to have

class members read the Guide to Case Analysis that immediately follows Case 31 in the text. The content of this

Guide should be particularly helpful to students if your course is their first experience with cases and they are

unsure about the mechanics of how to prepare a case for class discussion, oral presentation, or written analysis.

Suggested Assignment Questions for an Oral Team Presentation or Written Case Analysis.

You will find that the TOMS Shoes case is quite suitable for written assignments and/or oral team presentations.

Three good assignment questions are:

n Top executives at TOMS Shoes, having heard of your growing prowess in strategic thinking and strategic

analysis, have employed you as a consultant and asked you to assess the company’s social responsibility

strategy and recommend a set of actions to help ensure that the company continues to achieve attractive

growth and profitability. Please prepare a 4-5 page report to the senior executives at TOMS Shoes that

includes

• an identification of the key elements of the company’s corporate responsibility strategy,

• an assessment of TOMS Shoes’ competitive strength in the footwear industry, and

• a set of action recommendations to deal with strategic issues and strengthen its social responsibility

strategy.

n (Short written case assignment) What are the pros and cons of TOMS Shoes’ corporate responsibility

strategy? What evidence indicates that the strategy has produced positive benefits in the marketplace for

TOMS Shoes? What are your recommendations to strengthen the company’s commitment to corporate

social responsibility?

Assignment Questions

1. In what ways does TOMS exercise its commitment to corporate social responsibility?

2. How does TOMS’ dedication to corporate social responsibility contribute to its competitive advantage?

3. What issues do you forsee coming from TOMS’ critics or what improvements do you suggest can be made

on TOMS’ business model?

Teaching Outline and Analysis

1. In what ways does TOMS exercise its commitment to corporate social responsibility?

Students are likely to comment that much of TOMS’ CSR strategy centers on its “One for One” Pledge

where TOMS is committed to donating a pair of shoes to a child in need for every retail pair sold. Through

increasing access to shoes, TOMS seeks to remedy global poverty by improving underprivileged children’s

educational attendance, health, and self-confidence. In order to ensure that the company operates honorably

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profit Giving Partners, TOMS complements its shoe giving with Giving Partners’ specialties, such as

health and nutrition, to achieve more profound impacts. “Giving Trips,” trips where TOMS invites select

employees and customers to help distribute shoes to children in need, meanwhile increasing community

service activism at home where participants often choose to volunteer in their communities after these trips.

TOMS’ workforce consists of “agents of change” who work in an energetic and family-like atmosphere.

Not only are employees drawn to TOMS because of its feel-good social justice cause, but also because

Mycoskie has created a genuinely fun atmosphere where each worker is cared for and their individual worth

is highlighted. Mycoskie tends to write highly personal e-mails to his employees and pursue many team-

Diversity is also highly celebrated at TOMS where the company proactively blogs about the heritages and

traditions of its employees and has sought to recruit an increasingly diverse workforce as it seeks to expand

2. How does TOMS’ dedication to corporate social responsibility contribute to its ﬁnancial

success/competitive advantage?

One of the most important reasons TOMS has been so successful is because its customers realize that they

are buying into a cause, not just a product. As TOMS’ customers become vested in the TOMS cause, buyer

patronage increases as the number of repeat-buyers and general enthusiasm rises. TOMS then translates this

Furthermore, this emphasis on the TOMS cause rather than the TOMS products also improves TOMS’

corporate brand and image. As customers perceive TOMS as more of a grassroots company focused on the

greater good, critics of TOMS shoes tend to be less well-received by the general public than critics of larger

TOMS’ socially responsible actions also yield internal benefits that include increased employee morale and

dedication as well as the ability to partner up with “Giving Partners,” organizations which help distribute the

charity-shoes that TOMS gives. Through focusing on the broad goal of social justice that can be commonly

1Poulos, James. “TOMS Shoes: a Doomed Vanity Project?” Forbes. 3 June 2013. <http://www.forbes.com/sites/jamespoulos/2012/

04/11/toms-shoes-a-doomed-vanity-project>.

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At this point, the instructor can ask students what ways TOMS currently leverages and should leverage its

dedication to corporate social responsibility to further strengthen its financial status. Examples include:

expanding to other product lines with the same business model to tackle other social justice issues and

3. What issues do you forsee coming from TOMS’ critics or what improvements do you

suggest can be made on TOMS’ business model?

At this point, much praise has been given to TOMS shoes. Yet the instructor should also ask students to think

Although TOMS has received numerous accolades for its emphasis on Corporate Social Responsibility,

such as the 2009 Award for Corporate Excellence (ACE), TOMS has also faced considerable criticisms.

From a financial standpoint, some critics have argued that TOMS shoes have been overpriced relative to the

value of “social good” produced. While TOMS emphasizes its dedication to social responsibility, TOMS

also seems to be driven by the bottom line, similar to many other corporations. The price for the most basic

From a product standpoint, critics have also argued that TOMS produces relatively cheap products that are

of low-quality. With a canvas that is not waterproof and prone to holes, many customers of TOMS may be

Since TOMS is a privately held company, much of what goes on behind TOMS’ giving and production is

veiled. This has opened the door for critics to question the ethical behavior of TOMS’ suppliers in China.

Since all retail shoes are produced in China, many critics have been concerned about labor and working

Finally, critics have also argued that TOMS engages in social paternalism rather than actual problem-solving.

Rather than teaching the communities themselves to be sustainable, TOMS only helps these communities

through sustainable giving. This may hurt local business efforts and prolong poverty in these communities

in the long-run. Suggestions have been raised that TOMS should teach these communities how to produce

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The instructor may then move on to ask how TOMS should respond to each of these criticisms and whether

Epilogue

There was nothing to report related to TOMS Shoes social responsibility strategy at the time note went to press.