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TOMS Shoes

Business 690
by

Kelly Ruspil

on 5 December 2012

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Transcript of TOMS Shoes

Bodasy Sorn. Leo Mikulich. Kelly Ruspil. Adam Brogan "Giving is what fuels us.
Giving is our future." -Founder, Blake Mycoskie MISSION STATEMENT: BUSINESS CONCEPT: For every pair of TOMS sold in the United States, a pair would be donated to a child in need. This is known famously as TOMS’
“One for One” program FOUNDED: Founded in 2006
by entrepreneur Blake Mycoskie INSPIRATION: Blake visited Argentina and saw children that couldn't even afford new shoes STYLE: In an effort to help the young children, Blake sought out to reinvent a popular shoe in Argentina called an "alpargata". PRODUCTS PORTFOLIO: CHAPTER 3 RECAP: External Analysis: Competitive Forces P:
E:
S:
T:
E:
L: Political Factors
Economic Factors
Sociocultural Factors
Technological Factors
Ecological Factors
Legal Factors P E S T E L Political environment can put a lot of pressure on TOMS shoe company

Economic issues can impact TOMS shoe dramatically

Sociocultural Factors:

Technological improvements enable TOMS

Ecological Factors

Legal Factors *high corporation tax *high unemployment rate *people are more socially
conscious *online shopping *social media *recessions CHAPTER 4 RECAP: Internal Analysis: the VRIO framework THE FIRM: STRATEGIC GROUP: INDUSTRY: TOMS shoes is a for-profit business with a philanthropic component. socially responsible companies offering
to give a product when a product is purchased footwear & eyewear V:
R:
I:
O: Valuable
Rare
costly to Imitate
Organized to capture value *resources that follow this framework are key to superior firm performance V R I O customers value TOMS shoes more than just a shoe company TOMS shoes was the first company to start the One for One giving model Organized to Capture Value by exploiting their competitive potential cost of imitation is low *TOMS is a lifestyle *help children around
the world in need of shoes *brand recognition *danger of counterfeit shoes *imitation of business model is free
(i.e. BOBS by Skechers) *expand to increase diversification of their products line; (i.e. different patterns, styles, etc.) CHAPTER 6 RECAP: Generic Business Strategies CHAPTER 7 RECAP: Business Strategy: Innovation CHAPTER 8 RECAP: Corporate Strategy In Chapter 6, we learned the difference between how businesses choose to compete in the marketplace. The goal is to create a large value gap between perceived value and costs. This can be done in one of three ways: differentiation
integration (hybrid)
cost leadership "How do you think a company like TOMS competes?" More specifically, TOMS uses a "focused differentiation strategy" which targets a small market segment: designer shoe consumers who care about philanthropic causes. PRODUCT DIFFERENTIATION: Argentinian alpargata BUSINESS MODEL DIFFERENTIATION: unique "One for One" model and
"philanthropic capitalism." In Chapter 7, we learned about how innovation is the way that a business can either disrupt a current marketplace
or how it can lead to a sustained competitive advantage. The definition of innovation is:
the commercialization of a new product, process, or idea. "Do you think TOMS is an innovator?" TOMS strategy - Differentiation TOMS is an innovator TOMS is an interesting case in that they innovated the "One for One" business model. social entrepreneurs such as TOMS usually pick non-profit but this relies on donations. Not sustainable or predictable! Some for-profits try to add philanthropic programs but consumers often fail to see how their purchase impacted the philanthropic cause. TOMS innovated and found a way to use the for-profit model to help to continually and sustainably finance his non-profit ambitions.
As long as shoes were being bought, he could continue donating shoes. VERTICAL INTEGRATION: DIVERSIFICATION: RELATED-LINKED STRATEGY: The firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs *Fully vertically integrated vs. more or less vertically disintegrated
*what stage of the value chain to participate THINGS TO CONSIDER: Increasing the variety of products or markets in which to compete Businesses can pool and share resources as well as leverage competencies across different business lines. "Does TOMS control all aspects of their value chain?" TOMS does not control all aspects of the value chain More or less vertically disintegrated Diversification: Related-Linked: TOMS shoes and eye-wear share the same HR department, business strategy (one-for-one), and suppliers -Do not share the same raw materials or distributors or after sale support 4&5 1 3 2 *Stage 4&5 of value chain: Marketing and Sales/After Sales service -rely on their customers to do their marketing
- Other companies to sells their shoes and eye-wear *Stage 1&2 of value chain: Raw Materials/ Components
- do not farm for cotton used for making textiles or any materials *Stage 3 of value chain: Final Assembly/ Manufacturing
- shoes are made in China, Argentina, Ethiopia ANALYSIS WEAKNESSES/CRITICISM: *lack of marketing - "word of mouth" & social media only *TOMS does not manufacture locally *differentiation & innovators - known as pioneers of "One for One" STRENGTHS/COMPETITIVE ADVANTAGES: *brand recognition & loyalty OPPORTUNITIES: *strategic alliances + product diversification *vertical integration up the supply chain *established global network (i.e. AT&T, Element & Ralph Lauren) THE FUTURE FOR OVERVIEW: INTRODUCTION: SUSTAINABILITY: TOMS sustainability comes from more than the materials it uses. TOMS sustainability lies in its ability to further grow the concept & philosophy of “One for One”. Regardless of competitors & imitators of the "One for One" model, they have come to be known as one of the leaders in cause-based business * * ONLY ONE MORE QUESTION TO ANSWER.... "what's next?!"
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