TOMS Shoes Case Study

TOMS Shoes Case Study

Impact of the External Environment 

One of the factors that is likely to affect TOMS Shoes’ ability to realize its vision is the cost of supplies. Supply purchases in the industry include foam, leather, canvas, plastic, and rubber, among others. It was estimated that between 2017 and 2022, these supplies would constitute 80% of industry costs (Thompson et al., 2021). When the cost of supplies is high, profit margins reduce, and this would affect TOMS Shoes’ ability to realize its vision. Another external factor that will likely affect the company’s ability to realize its vision is the threat posed by new entrants. Thompson et al. (2021) aver that the threat of new entrants threatens the position of rival firms because firms now compete fiercely for market share. As new entrants increase, a firm will likely implement defensive measures such as price reduction, eventually leading to a revenue drop.

TOMS Shoes’ Major Competitors

Some of TOMS Shoes’ competitors include Clarks, a brand that focuses on a sophisticated design that targets wealthier consumers. Other brands include Addidas, Sketchers, and Nike, which focus on athletic footwear. The competition between these companies is based on efficiency, economies of scale, and cost-effectiveness.

Other Factors Affecting the Growth of TOMS Shoes 

Other factors that may affect the growth of TOMS Shoes include product differentiation. There needs to be more than just selling high-quality products at reasonable prices to guarantee success for firms. To that end, TOMS Shoes should target a niche market with a desired product image. Besides, product innovation and advertising are crucial to creating a competitive edge in the market. For instance, Clarks, one of TOMS Shoes’ main competitors, adopted a sophisticated design to appeal to high-end consumers.

Internal Factors That Must Be Considered for TOMS Shoes to Achieve Its Mission and Vision

Corporate social responsibility (CSR) is key to supporting TOMS Shoes in achieving its mission and vision. CSR is a broad theme encompassing efforts toward creating customer value. For instance, making charitable contributions and supporting community service endeavours are essential to the success of a brand (Siddiq & Javed, 2014). For instance, large companies like IBM, Google, and Cisco support a wide range of community service and art programs aimed at enhancing community welfare. Also, McDonald’s has a McDonald House program that provides homes for seriously ill children receiving treatment away from home (Thompson et al., 2021). For TOMS Shoes to achieve its mission and vision, the company must have comprehensive CSR programs to convince customers that it is not only interested in profits.

Marketing and promotional programs will also influence the company’s success. To that end, traditional advertising, word-of-mouth influence, and social media advertising are key to driving sales. TOMS Shoes eclipsed its main competitors with over four million Facebook likes and over two million Twitter followers by 2020 (Thompson et al., 2021).

TOMS Shoes’ Strengths and Weaknesses

Table 1

TOMS Shoes’ Strengths and Weaknesses

Strengths	Weaknesses
Popular brand name Attention to CSR initiatives Direct marketing campaigns	High pricing Lack of commercial advertising Limited product line

Challenges or Threats TOMS May Face

One of the major threats facing TOMS Shoes’ success is the concern about the brand’s high pricing. TOMS Shoes locks people with low incomes from accessing its products by setting high prices. Also, TOMS Shoes faces stiff competition from established brands such as Nike, Clarks, and Addidas (Thompson et al., 2021). Thirdly, the lack of TV advertising affects the brand negatively since not all populations access social media networks.

Feasibility of Success

TOMS Shoes is poised to succeed based on reigning internal and external factors. Firstly, the brand has access to affordable means of production in China. The production cost for some units is as low as $9, yet the same products retail at $50, creating a sustainable revenue for the company (Thompson et al., 2021). Besides, the company’s CSR initiatives have enabled it to create a household name, a recipe for loyal and returning customers.

References

Siddiq, S., & Javed, S. (2014). Impact of CSR on organizational performance. European Journal of Business and Management, 6(27), 40-45.

Thompson, A., Peteraf, M., Gamble, J., & A Strickland. (2021). ISE crafting & executing strategy: The quest for competitive advantage: Concepts and cases. Mcgraw-Hill.

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Assignment Content

Read “Case 6: TOMS Shoes: Expanding Its Successful One For One Business Model” in your Connect textbook.

Evaluate TOMS Shoes’ sustainable competitive advantage by analyzing the case study and answering the following questions in 350 to 525 words:
How will the components of the external environment impact TOMS Shoes’ ability to realize their vision?
Who are TOMS Shoes’ major competitors?

What other factors are affecting the growth of TOMS Shoes?
What internal factors must be considered for TOMS Shoes to achieve its vision and mission?
What are some of TOMS Shoes’ strengths and weaknesses?
What challenges or threats might TOMS Shoes face?
What is the feasibility of TOMS Shoes continuing to be successful? Why?