Toms shoes stakeholders

Top executives at TOMS Shoes, having heard of your growing prowess in strategic thinking and analysis, have decided to recruit you as a consultant to assess the company’s social responsibility strategy platform and its use and effectiveness in fulfilling TOMS’ corporate strategy and objectives. They have asked you to prepare a 4 page report, together with a maximum of two pages of exhibits, for the senior executives.

CASE 30 TOMS Shoes: A Dedication to Social Responsibility Margaret A. Peteraf Sean Zhang Tuck School of Business, Dartmouth College Dartmouth College, Research Assistant Meghan L. Cooney Dartmouth College, Research Assistant W hile traveling in Argentina in 2006, Blake Mycoskie witnessed the hardships that children without shoes experienced and he became committed to making a difference. Rather than focusing on charity work, Mycoskie sought to build an organization capable of sustainable, repeated giving, where children would be guaranteed shoes throughout their childhood. He established Shoes for a Better Tomorrow, better known as TOMS, as a for-profit company based on the premise of the “One for One” pledge. For every pair of shoes TOMS sold, TOMS would donate a pair to a child in need. By year-end 2013, TOMS had given away over 10 million pairs of shoes in more than 40 different countries.1 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. Exhibit 1 illustrates how quickly TOMS expanded in its first 8 years of business. COMPANY BACKGROUND While attending Southern Methodist University, Blake Mycoskie founded the first of his six startups, a laundry service company that encompassed seven colleges and staffed over 40 employees.2 Four startups and a short stint on The Amazing Race later, Mycoskie found himself vacationing in Argentina, where he not only learned about the Alpargata shoe originally used by local peasants in the 14th century but also witnessed the extreme poverty in rural Argentina. Determined to make a difference, Mycoskie believed that providing shoes could more directly impact the children in these rural communities than delivering medicine or food. Aside from protecting children’s feet from infections, parasites, and diseases, shoes were often required for a complete school uniform. In addition, research had shown that shoes were found to significantly increase children’s self-confidence, help them develop into more active community members, and lead them to stay in school. Thus, by ensuring access to shoes, Mycoskie could effectively increase children’s access to education and foster community activism, raising the overall standard of living for people living in poor Argentinian rural areas. Copyright © 2014 by M. Peteraf. All rights reserved. C-424 EXHIBIT 1 PART 2 Cases in Crafting and Executing Strategy TOMS’s Growth in Sales and Employees, 2006–2013 Year Total Employees 2006 2007 2008 2009 2010 2011 2012 2013 4 19 33 46 72 250 320 400 Pairs of Shoes Sold 10,000 50,000 110,000 230,000 700,000 1,200,000 2,500,000 6,000,000 Source: PrivCo, “Private Company Financial Report: TOMS Shoes, Inc.,” May 30, 2014. Dedicated to his mission, Mycoskie purchased 250 pairs of Alpargatas and returned home to Los Angeles, where he subsequently founded TOMS Shoes. He built the company on the promise of “One for One,” donating a pair of shoes for every pair sold. With an initial investment of $300,000, Mycoskie’s business concept of social entrepreneurship was simple: Sell both the shoe and the story behind it. Building on a simple slogan that effectively communicated his goal, Mycoskie championed his personal experiences passionately and established deep and lasting relationships with customers.