Wednesday, December 9, 2015

SHARED VALUES AND TOMS



It truly is amazing the increasing number of for-profit corporations that are focusing more on producing societal impact with their products as well as generating profit.

For instance, the shoe brand TOMS promises that for every pair of shoes that is purchased, a donation will go to a person in need. The benefits received include improved access to water, prevention of bullying, and other social issues that occur in the developing world.[1] According to Creating Shared Value, by identifying a connection between competitive advantage and social issues companies can help subvert some of the costs of creating this social impact.

In the TOMS example, the connection between supplier access and viability is evident. “Opportunities to create shared value arise because societal problems can create economic costs in the firm’s value chain.”[2] To emphasize this point, in areas where suppliers have little access to water, TOMS efforts are addressing this issue. It is worth noting that in today’s society, the social impact a country possesses has a direct correlation with the amount of millennial consumers it attracts. Unlike other shoe companies, like Nike, that pride themselves on the quality and endurance of their product, TOMS uses the shared value it creates to encourage brand loyalty and increase its profit margin. 

In my opinion, this is a wonderful example of the profitability of shared value and the manner in which it can be employed by big-name companies. The traditional, shareholder model is steadily being replaced by the growing popularity of the stakeholder model. The stakeholder model posits that a corporations sole purpose is not only to generate profit, but also to address the needs of all those potentially influenced by a company’s decisions.



[2] Michael E. Porter,, and Mark R. Kramer. "Creating shared value." Harvard business review 89, no. 1/2 (2011): 62-77.

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