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TOMS Company Operating Essay

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Updated: Mar 17th, 2020

TOMS depicts a unique organization that is modeled along with the two seemingly distinct elements of organizational sustainability. These elements are philanthropy and profit-making. It is exciting to note the manner in which the Chief Executive of the company, Mycoskie, establishes a company by integrating the philanthropic motive and the profit-making motive.

Through travel and experience of the conditions that prevail in different parts of the world, Mycoskie came up with a unique business idea of alleviating the suffering of people, while at the same time running a business for profit.

The suffering of children in Argentina in terms of difficulty to afford shoes and the negative impacts that were associated with walking barefoot resulted in the creation of a business based on the principle of philanthropic capitalism (Boatright, 2013).

The establishment of TOMS and the subsequent deployment of the One for One initiative continue to play a great role in the expansion of the company, besides making the company able to fulfill its philanthropic mission in approximately twenty-four countries in the world.

From the outset, the operation of TOMS continues to flow smoothly. Nonetheless, a number of ethical concerns keep coming from the commentators in the field of social entrepreneurship, most of whom question the commitment of TOMS to embracing independence as a way of enhancing sustainable development. The provision of shoes to needy children in different countries denotes direct aid.

As such, it creates a cycle of dependency, where the capacity to empower people is lost in the entire business that is built around the provision of direct assistance. Porter and Kramer (2011) observed that real value, as far as the corporate governance of companies in the business environment is concerned, only comes when companies pay attention to the long term development of the community.

This negates the approach taken by TOMS, more so the One for One business strategy that is unsustainable from the perspective of corporate social responsibility and development. TOMS also faces a number of criticisms that come from the choice of business locations. This is related to the establishment of factories in locations that often come under criticism for failing to promote ethical standards in a factory operation (Boatright, 2013).

A look at TOMS’s case reveals that the main stakeholders are the customers, the companies that partner with TOMS in achieving its philanthropic mission, the employees, and the children who are at the receiving end of the philanthropic initiatives. However, according to the case, it is easy to note that the company pays a lot of attention to its customers.

The rationale informing this judgment is that customers play a vital role in supporting both the for-profit and the philanthropic inclinations of TOMS. TOMS pegs the success of its business and philanthropic activities to the customers, whose engagement with the company is critical for meeting the profit objective and the non-profit objectives through the purchase of the products from the company.

The business approaches that are embraced by TOMS show that the company tries as much as possible to put the customers at the center of its sustainable operations as the company focuses on the long-term goals.

A look at the TOMS and the mode of its operation brings out two main theories: The stakeholder theory and care ethics. The stakeholder theory comes out in the way emphasis is laid on the importance of different players in TOMS’s business model of philanthropic capitalism.

For instance, the customers, the employees of TOMS, the companies that partner with TOMS, and the children that receive support from, the company and the communities that these children come from. It is worth observing that business ethics can be hardly explored without paying attention to the stakeholders (Zakhem, Palmer & Stoll, 2008).

Apart from the stakeholder theory, the case also points at care ethics, more so the mention of the approach of business taken by TOMS. This, in one way or another, raises questions about the sustainability of philanthropic capitalism.

TOMS continues to flourish in terms of profitability and expansion based on philanthropic capitalism. Nonetheless, the company needs to pay more attention to other forms of philanthropy, which would be sustainable. This includes the establishment of empowerment programs that can help families of the children who they provide shoes to have the economic capacity to purchase shoes for these children.

This has to be done carefully so that it does not derail from the One for One business tactic. Still, on the issue of sustainable development and the elimination of dependency according to social entrepreneurs and philosophers, TOMS needs to develop initiatives of reducing business costs like the establishment of factories in areas where labor prices are fairly low.

However, the company’s executive has to ensure that the company maintains all other ethical elements of ethical business management while operating in such an environment.

The success that has so far been attained by TOMS is rooted in the application of the business model that integrates with philanthropy. Nonetheless, the emphasis on direct support for the children as evident on the One for One business strategy presents an ethical dilemma where most people whose minds are ethically inclined sees the tactic as unsustainable as it enhanced the cycle of dependency.

Looking at the company from the ethical perspective, one could easily recommend a change in approach, where the company can pay attention to the empowerment of families as this cannot only encourage economic development, but it can also contribute to the expansion of its market.

References

Boatright, J. R. (2013). Ethics and the conduct of business, 7th edn. London, UK: Pearson Prentice Hall.

Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77.

Zakhem, A. J., Palmer, D. E., & Stoll, M. L. (2008). Stakeholder theory: Essential readings in ethical leadership and management. Amherst, NY: Prometheus Books.

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