Presentation of the strategy and analysis of TOMS Shoes. It studies how they gain competitive advantage, how they sustain it and the need for corporate social responsibility

1. TOMS shoes
A presentation
By
Babafemi Ekundayo

2. Babafemi Ekundayo

3. Agenda
1. History of TOMS Shoes
2. Company Overview of TOMS Shoes
3. Answers to the Questions
4. Conclusion
5. Further Questions

4. History of TOMS Shoes

5. Blake Mycoskie
Founder of TOMS Shoes

6. 1. He is an entrepreneur
2. He worked on 6 other projects before TOMS shoes
3. One was a laundry service on campuses
4. He was successful before TOMS Shoes

7. While visiting Argentina in 2006,

8. He learns about Alpargata Shoes
These are shoes that were used during ancient times, he is fascinated by them

9. While in Argentina he sees Children without shoes
He takes compassion on them and is determined to make a difference by providing the children with shoes
In and effort to boost their confidence thereby encourage them to go school and protect their feet from harsh
weather

10. He returns to the US with 250 shoes he purchased

11. He starts TOMS shoes
He starts with a $300,000 investment

12. He develops the One for One business model for TOMS Shoes to help the children
This meant, for every TOMS shoe that is bought a child in need gets a TOMS shoes, thereby creating a
model for social entrepreneurship

13. He starts out with three interns hired off Craigslist
They sold shoes online and witnessed huge growth selling 10,000 shoes at the end of the year

14. At the end of the Year, Blake hand delivers the shoes in Argentina
TOMS Shoes lived up to its social pledge and this captured increased interest from investors and customers

15. Two arms of TOMS shoes
TOMS Shoes operated as the For-Profit arm of TOMS shoes
Friends of TOMS conducted the charity work and giving. This arm will be dissolved later on

16. Two arms of TOMS shoes
TOMS Shoes operated as the For-Profit arm of TOMS shoes
Friends of TOMS conducted the charity work and giving. This arm will be dissolved later
A Key Success Factor must be noted suggesting TOMS shoes was able to bifurcate its two essential
business allowing for greater autonomy in both vital sectors.
This separation will have allowed for better management of each side

17. Friends of TOMS is absorbed into TOMS in 2013

18. TOMS created partnerships with Giving Partners
The Giving Partners help facilitate the charity work for TOMS Shoes, they are
held to great requirements and are audited

19. 50% of TOMS Shoes is sold to Bain Capital
The trade contains a clause that states the 1 for 1 Business model is to be
held forever.

20. Background of TOMS Shoes

21. Industry
Fashion, Shoes

22. Shoes
SALES
forms the
largest
source of
Revenue for
TOMS Shoes

23. Industry Outlook

24. Supplier Cost

25. Labor Cost

26. Profit Margin

27. Supplier Cost Labor Cost Profit Margin
Risky Market

28. Success in this type of industry requires a
This is shown in TOMS unique advertising campaign and
Business Model

29. Cost of a Shoe
~$50

30. Employees
>700

31. They Sell shoes in

32. Product Catalogue

33. Supporting anti-bullying programs

34. Childcare incentive

35. Clean Water Programs

36. Eyesight Restoration Program

37. TOMS Shoes Competitors

40. 1.What are the key elements of TOMS shoes 'competitive strategy? Is the strategy best
described as low cost, differentiation, or best cost? Has the company focused on a niche
or chosen to pursue the broader footwear market? Explain.
2.In what ways does TOMS exercise its commitment to corporate social responsibility?
3.How does TOMS’ dedication to corporate social responsibility contribute to its
competitive advantage?
4.What is TOMS Shoes situation like? What are its internal strengths and weaknesses?
Its external opportunities and threats?
5.What evidence suggests whether TOMS shoes strategy is working? Does it have a
competitive advantage? Is its financial performance improving or declining?
6.What strategic issues should TOMS shoes management and investors be most
concerned with? Are there possible improvements to its competitive strategy? Are there
internal weaknesses or external threats to its well-being that must be addressed?

42. Key elements of
Toms Strategy

43. Key elements of
Toms Strategy
Innovative Advertising
TOMS Shoes uses innovative advertising, such as the giving vote campaign
vote campaign where the buyer with the most votes is given a trip to give out some shoes in
give out some shoes in order to get the votes the buyer will have to tell their friends and family
tell their friends and family to vote for them, that way the buyer is spreading information about
spreading information about TOMS shoes

45. As shown, the strategy is predominantly differentiation based
since they are using innovative methods foreign to the industry.
The strategy can also be described as best cost since they offer
lower cost than industry players and their shoes technically have
the value of 2.

46. In recent years, TOMS shoes have expanded its product line to
incorporate bags and glasses therefore extending its social
responsibility pledges to these items,
In terms of market, they have diversified away from shoes
Using the market scope as a guide,
One can assume they are not concentrating on a niche.
Additionally, their advertising campaign are not aimed at just one
narrow market segment as shown in the family and friend
campaign

48. TOMS Shoes
exercises its
commitment to
social
responsibility by
• TOMS shoes manufacture its shoes in China, Argentina
and Ethiopia, these are nations plagued by exploitative
laws and harsh work environment; TOMS shoes does
not leverage this system but instead uses manufacturers
with good track record, the manufacturers undergo an
extensive audit process alongside announced and
unannounced audits; Manufacturers are required to post
workplace guidelines and minimum wage posters in
visible locations in the factory just like in the US.
Complaints from workers are addressed quickly.
• TOMS shoes have begun using plastics in making their
shoes, thereby reducing pollution
• Diversity and Inclusion is emphasized at
TOMS Shoes, Culturally traditions such as
the Chinese lunar new year is celebrated publicly on
the company website
• TOMS Shoes supports various
environmental action agencies such as surfers against
sewage who exposed the excess sewage discharge in the
United Kingdom
• TOMS Shoes is a member to the
Textile Exchange.
• TOMS Shoes made vegan shoes

49. VEGAN SHOES

51. TOMS Shoes sets itself apart with its social responsibilities
leading more people to want to be associated with the brand
because it looks good on them and the shoes are brilliant.
The competitive advantage that TOMS shoes get is that many
other shoes companies cannot replicate that same business
model without going bankrupt and running into huge losses.
TOMS Shoes has a premier position, others will be referred to as
“Copycats”.

52. TOMS Shoes is not discriminatory to the poor like other fashion
brands rather TOMS shoes embrace the poor; notable fashion
brands have been known to destroy excess inventory to keep it
from getting to the hands of the poor thereby keeping prices high.
TOMS Shoes does not engage in such discriminatory classist
ideologies, this nets them a wider market and positive view of the
company by the public.
In short, their competitive advantage consequence to their social
responsibility is based on them being liked by most of society

54. TOMS Shoes is in a good place, they are steadily growing;
They are taking up more social causes which is increasing their
visibility
Their sales are increasing as well and constantly beating the
market from the limited data that is made available.
The trend TOMS Shoes is on shows that it is here to stay.

60. TOMS Strategy is working because in their first year alone they
went from selling 250 shoes to 10,000 shoes.
The company has grown to more than 400 staff.
The company has large sales increases every year.

61. As shown in these charts, the
financial performance is
improving.
It had a triumphant growth in its
first years, but this has slowed
down as the company has
become an established brand.
Regardless of this status,
TOMS Shoes still beats the
market every year in sales.

62. A company achieves competitive advantage when carries out its
operations well, its talent is rare and the methods the company
employs cannot be easily copied.
Applying these criteria for TOMS Shoes,
Criteria Definition Binary Score
(Yes/No)
Shoes Production Are they able to produce good
enough shoes?
Rarity of Talent How rare are the skills and
Talent of the staff of TOMS
Shoes?
Imitability Is it hard to replicate how TOMS
Shoes is running their business?

65. Criteria Definition Binary Score
(Yes/No)
Shoes Production Are they able to produce good
enough shoes?
Rarity of Talent How rare are the skills and
Talent of the staff of TOMS
Shoes?
Imitability Is it hard to replicate how TOMS
Shoes is running their business?