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TOMS Shoes

March 21, 2012

Rachel Febert and I have spent the past two semesters working together on class projects and currently, an internship with a local no-kill shelter.

Tomorrow, we present on TOMS Shoes to our Business Strategy and Policy Senior Seminar class. I am very interested in this business model, the founder, and his mission in life. So, I figured I would include here, a synopsis of our presentation and my thoughts on what we have learned during our research.

TOMS Shoes

This company was founded in June of 2006 by Blake Mycoskie. The young entrepreneur’s SIXTH business is constructed in a unique way:  it is a for profit company that operates on a nonprofit mission statement and is therefore self-sustainable based on its One for One donation concept. For each pair of shoes TOMS sells, they donate another pair to children in developing and underprivileged countries.

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TOMS is actually an abbreviation of “Shoes for a Better Tomorrow”. The word ‘tomorrow’ was shortened and pluralized because the original campaign would not fit on the back of a shoe:

This concept was inspired by the founder’s trip to Argentina and, later that year the company was able to donate 10,000 pairs of shoes back to the children that caused Blake’s actions! The children targeted by Blake’s mission statement are at risk for health problems as well as educational problems because some schools require shoes as part of their dress code.

He began with shoes and has expanded to eyewear, t-shirts, and even more lines of shoes. He has gone so far as to create shoes specifically for prom purposes! In 2008, college students organized the first Day Without Shoes campaign to raise awareness of children who do not have shoes to wear. It has become a global initiative and in April of 2012 over a quarter-million people participated worldwide on that day in April.

Mycoskie does not accept or seek out funding or support from outside sources. He used his own capital from previous ventures to found TOMS and has not formalized the company since. He is the sole owner, has created no business plan, and employes friends, family, and outside individuals to run the company. TOMS thrives on volunteers to help raise awareness and perform shoe drops several times a year. He spends minimally on marketing and advertising, relying on word of mouth marketing and social acceptance.

Blake believes that TOMS success is due to one key factor: the new generations’ have a desire for global involvement and support. So, the new generations are supporting the movement and it will continue to grow until the society determines something else is more acceptable. Surprisingly, TOMS was even profitable through the recession, despite raising their prices! Talk about best-case scenario. This company is similar in structure to other shoe companies, prices are higher, AND they were profitable through the recession when many companies declared bankruptcy. Argentina, One for One, TOMS, TOMS shoes, Blake Mycoskie

Mycoskie holds a few advantages that make his company untouchable and indestructible. He has the first mover’s advantage, as well as a unique competitive advantage. Unless and until Mycoskie terminates the company, no other company will ever be able to enter the market and take his market share from him in the shoe industry. Also, because of his unique thinking process, his business model is self-sustaining because the sales to the company drive the donations in the mission statement. It is a symbiotic relationship in which TOMS feeds off of the society by selling shoes to the community, but it also supports the society by donating shoes to children who cannot afford them.

Rachel and I have determined the obvious, that running a business like this is admirable; but, without a business plan, this is a disaster waiting to happen. The purpose of our academic presentation is to recommend how to fix the primary problem. Our clear solution is to install a formalized business plan, which will include a succession plan, and to construct a board of directors so that the company may grow and expand wisely.


2. Strategic Management and Business Policy by Wheelen and Hunger
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