Case Study: TOMS Shoes Company

Presented to Sir Mark Angelo Q. Paraiso of

Dr. Filemon C. Aguilar Memorial College of Las Piñas

In Partial Fulfillment of the Requirements in International Business & Trade,

Academic Year 2021-2022

by
Casten, Christcia Ivory Mae M. (Leader)
Bares, Patrick Joseph B.
Campos, Allyka J.
Elbo, Ericka Anne V.
Gajasan, Jeric M.
Galdiano, Myla B.
Son, Francis Jay C.
A. Background of the Study

TOMS Shoes Company, an American footwear company based in Santa Monica,

California, was founded by Blake Mycoskie with the goal of donating one pair of shoes to
a child in need for every pair of shoes sold. This revolutionary concept was known as the
"One for One" business model, which came about after Mycoskie went on a vacation in
Argentina in 2006 where he saw children without shoes, lacking protection from long
walks to acquire food and water as well as to attend school. Mycoskie also discovered
that going barefoot can cause major health issues. Because of that, he made sure that
poor children in various parts of the world benefited from his business and received
shoes every year.

Mycoskie decided to create this type of for-profit business model to achieve a

charitable purpose. He believed that this form of social entrepreneurship would be more
economically sustainable than a charity because sales would go toward the company's
mission. He also believed that this is self-sustaining since TOMS could produce and sell
shoes at a comparative price but with lower costs.

TOMS Shoes are produced in Argentina, China, and Ethiopia under sound labor
conditions, fair wages, and following local labor standards. The company has minimal
marketing and promotion activities, which is primarily composed of Mycoskie’s
presentations, fan word-of-mouth, campaigns, and promotional events that they
sponsored. Numerous celebrities and famous personalities loved the brand and what it
stood for; even Ralph Lauren had a collaboration for the first time. The company
depended upon many volunteers to promote the company and to distribute its shoes to
needy children. For instance, a network of college representatives at 200 schools was
formed.

Mycoskie, TOMS Shoes’ Chief Executive Officer, believes that a key to success
for his company was his generation’s desire to become involved in the world. His goal is
to inspire the next generation of entrepreneurs and company leaders to think differently
about how they incorporate giving into their business models. As stated by Mycoskie,
“This generation is one that thrives off of action. We don’t dream about change, we make
it happen. We don’t imagine a way to incorporate giving into our daily lives—we do it.
TOMS has so many young supporters who are passionate about the One for One
movement, and who share the story and inspire others every day they wear their TOMS.
Seeing them support this business model is proof that this generation is ready and able
to create a better tomorrow.”
B. Competitive Strategy

TOMS Shoes Company have already set their competitive advantage at their
early start by differentiating themselves and their product over their competitors. They
are a company that is a for-profit business yet its mission is more like a non-for-profit
organization. As stated in the case study, “The firm’s reason for existence was to donate
to children in need one new pair of shoes for every pair of shoes sold. Blake Mycoskie
referred to it as the company’s “One for One” business model.” They sell their products
at a lower price than competitors while offering good quality, trendy shoes wherein it also
satisfies their customer needs because they are able to buy affordable, good quality
shoes and also take part in the “one-for-one” pledge by helping a child in another
country get a new pair of shoes.

Their company’s mission is to get their customers to buy their products and make
a difference in the world, which differs them from other top shoe brands such as Adidas
and Nike who use athletes in their promotion. On the contrary, TOMS does not promote
their business, instead, they sell the story behind their shoes and how they are making a
difference in many countries with help from their customers. According to Mycoskie, his
goal is to inspire the next generation of entrepreneurs and company leaders to think
differently about how they incorporate giving into their business models.

Instead of spending top dollar for advertising on big platforms, TOMS focuses on
social media advertising and tells stories behind the shoes they were donating. They
continue to expand their brand by focusing on their online shop, as he admits, “Selling
online (www.toms.com) has allowed us to grow pretty rapidly, but we’re not going to
make as much as another shoe company and the margins are definitely lower. But what
we do helps us to get publicity. Lots of companies give a percentage of their revenue to
charity, but we can’t find anyone who matches one for one.” This allows them to serve
customers in every geographical area and it has also saved them money.
C. SWOT Analysis
STRENGTHS
● Unique “One for One” business model
and campaign, as well as the story
behind it
● Established brand identity
● Many supporters including celebrities
and famous personalities
OPPORTUNITIES
● Price reduction
● Help in a wider range of regions and
other categories of the poor
● Use of environmental-friendly and
sustainable materials
WEAKNESSES
● Price of shoe products and limited
product line
● Lack of promotion, especially
commercial advertising
● False positivity: while the idea of help
seems good, people from poor
regions become dependent on charity
providers and do not learn how to
improve their lives
THREATS
● High competition
● Bias allegations; ex. favoritism &
being religiously biased
● Fluctuating business economic
conditions and unfavorable political
conditions
D. Roles of Directional, Marketing, Operations, and Human Resource Strategies in
the Overall Wellbeing of TOMS

Directional Strategy

TOMS follows the One for One business model, an innovative for-profit business
model built by Mycoskie to achieve a charitable purpose since a not-for-profit
organization would be heavily reliant on sponsors and continual fundraising. The
concept for this type of model was inspired by Mycoskie’s trip to Argentina in 2006,
where he saw children without shoes struggling–from lacking basic protection to being
unable to attend school. Mycoskie believes that the company’s mission, “for every pair of
TOMS shoes purchased online or at retail, the company will provide a pair to a child in
need. One for One,” would be achieved using its sales through this model. He also
claims that this model is more economically sustainable and self-sustaining because the
company could produce and sell shoes at a similar price to other firms while minimizing
costs. Ultimately, he saw this as a type of social entrepreneurship in which a new
business enterprise worked to improve society through product donations while also
profiting from society.

TOMS’ business model is quite unique and very commendable since it uses
cause-integration, whereby positive societal change is tied to product motive; which
should be the goal of every company, not only because it garners the support of
customers but also because it benefits the society. Acting as a role model, the company
proves to uphold its vision statement, “to take the responsibility of providing for the
comfort of children in impoverished regions worldwide” as well as its core values, “a
caring heart, kind, honest and consistent.” It has partnered with numerous organizations
including UNICEF, Save the Children, Partners in Health, The Red Cross, Everytown,
Faith in Action, and March for Our Lives, among others. The One for One model greatly
contributed to the company’s success and growth into a global movement, while
addressing vital needs and changing the lives of many.

Marketing Strategy

Study says that 91% of millennials tend to choose to patronize businesses that
have a social cause to serve. TOMS Shoes Company is one of the firms who
successfully pursued a cause marketing strategy as its main tactic and they take it to the
next level. Cause Marketing is when a business connects its for-profit business side with
a non-profit charitable cause. The one-for-one business model that was mentioned
above effectively boosts the sales and prestige of TOMS shoes with the help of the
consumers who were inspired with the idea—through Mycoskie's great storytelling, and
share the same mission and vision as the company which then leaves a positive
impression on the business.
 In other words, TOMS shoes' marketing campaigns aim to promote the value of
the company and its policies are designed to develop the company's image on the
market and attract large donors, firms, and even personalities to the social enterprise
campaign.

Operations Strategy

TOMS, as a whole, is committed to ethically conducting its business. They are

strict on ensuring safe working conditions and environmental responsibility. Since TOMS
shoes are manufactured in Argentina, China, and Ethiopia, the corporation mandated
that the factories operate under safe working conditions, pay fair salaries, and adhere to
local labor rules. All factories are required to sign a code of conduct for the safety of all
their workers. Furthermore, the company also maintains routine visits done by highly
trained production staff to check if the factories are following good working standards.

Apart from being well known by their shoes, TOMS has further diversified both its
product line and its contribution to social change. Together with their signature Alpargata
design, many more products were added to the category of shoes like children's shoes,
leather shoes, cordoned youth shoes, botas, and wedges. The brand also teamed up
with a brand called “Element Skateboards” in January 2019 to produce a collection of
shoes, skateboard decks, and longboards. In terms of TOMS’ additional contribution in
social changes, they have also introduced new concepts such as TOMS sunglasses,
where they provide a person in a developing world with an eye exam and vision care for
every purchase, and TOMS Coffee, where they offer clean water to those in need for a
week for every purchase–which helps encourage people to buy their products knowing
that they are contributing to those who are in need.

In terms of operational strategies, TOMS, as a brand, understands that it must

continue to listen and adapt to the evolving discourse on customer relations as it
develops and changes in response to its consumers' desires. One method used by
TOMS to accomplish this is by providing incentives to encourage its customer-service
representatives to spend more time on the phone with consumers. Another approach
that they have implemented is to encourage innovation within the team whereby a
strategy known as "TTF" — try, test, and fast — has been devised. This innovation
culture is crucial since TOMS must continually experiment with new goods and services
to cope with the rapidly changing business of fashion.

To sum it all up, the culture and global standards that TOMS, as a company, have
maintained throughout all these years have solidified the mark they have made in the
industry. Their efforts in creating social change has brought the company to its peak and
is further providing the world shoes that are worn with a purpose, a clarity within its
existence–which is to provide a pair of shoes for a child in need.
Human Resource Strategy

Mycoskie is concerned not only about helping those in need, but also with the
well-being of his employees at TOMS. The movement that he started 15 years ago has
resulted in the company’s rapid expansion but it negatively affected him as well, as his
health suffered and was diagnosed with mild depression. Because of that, he made
efforts to ensure that his employees won't have the same experience. He partnered with
researchers in creating a project and a self-help toolkit based on the belief that “we are
all made for more” and “to help people live their best lives.” Aside from that, Mycoskie
also introduced various practices and programs such as flexible work schedules,
no-meeting Mondays, paid paternity leave, once a month “Happy Helping Hour”, and
Tomorrows Project. Currently, due to the pandemic, TOMS’ employees are virtually
working from the safety of their own homes using equipment provided by the company
while enjoying virtual wellness classes they can attend anytime.

As Mycoskie stated, giving employees an opportunity to serve their communities

and give back creates an incredible bond; and when people serve together, they stop
thinking about petty office politics and all that stuff." Overall, what Mycoskie does for
TOMS, especially for his employees, is amazing and inspiring. He shows that he cares
for them. In fact, he takes it seriously that he wants to end all kinds of forced labor
because he believes that his business must be conducted ethically, ensuring safe
working conditions and environmental responsibility. Effective management of
employees is critical for every company because doing so will result in higher
productivity and will lead to better performance, thus, making a positive impact on the
company itself. It is very important because without employees, no matter how few or
many, a business will be nothing and will not survive.
E. Recommendations

Continuous global expansion. Because TOMS is a rapidly growing firm, there are
numerous opportunities to take advantage of. Gaining access to new markets,
expanding teams, and generating revenue are all examples of these goals. TOMS will
have access to a whole new set of clients who have never seen their goods as a result
of their worldwide expansion.

Partnerships and investors. TOMS can pull a partnership with different companies that
can promote their brands and they can instantly earn the trust of the existing audience,
making it easier for TOMS to grow their own base of prospects and customers. This
could be an easy way for the brand to introduce their company to investors because they
are becoming popular and a lot of celebrities have used their product.

Awareness of small local businesses. While the TOMS Shoes are giving away free
shoes to those developing nations, they should be more aware that they might be taking
away business from local stores in those developing nations. If they are giving away free
shoes, then no one will need to buy a pair of shoes from those small local businesses
wherein those small businesses have been relying on locals to buy their merchandise. In
which, it could lead to an increased rate of poverty since if those small local businesses
would shut down, it may also lead to an increase of children being affected by poverty.

Innovation of TOMS’ business model. TOMS should be aware that poverty is more than
just a lack of shoes for children. Instead of bandaging the problem, they should find a
remedy, such as providing work for the parents' children.
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