TOMS Shoes: Industry Analysis

This assignment delves into a comprehensive analysis of TOMS Shoes. It begins by defining the target market segments based on demographics, behavioral patterns, psychographics, and geographic location. The assignment then examines the intense rivalry within the footwear industry, considering both exogenous (trade policies, regulations) and endogenous (competition, capital investment) barriers to entry. Finally, it explores relevant external factors like inflation and competition from generic brands, alongside internal issues such as resource allocation effectiveness.

Running head: STRATEGIC AND OPERATIONS MANAGEMENT
Strategic and Operations Management: TOMS Company Report
Name of the Student
Name of the University
Author’s note

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STRATEGIC AND OPERATIONS MANAGEMENT

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Contents
Sector and Industry Analysis...........................................................................................................2
Global market..............................................................................................................................2
Environment Analysis.............................................................................................................2
Industry Analysis.....................................................................................................................3
Competitiveness...........................................................................................................................4
Industry Segmentation.............................................................................................................4
Industry Rivalry.......................................................................................................................5
Exogenous and Endogenous Barriers......................................................................................5
Relevant External and Internal Issues..........................................................................................6
Reference list:..................................................................................................................................7

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Sector and Industry Analysis
The industry that TOMS operate is in lifestyle, which is one of the most dynamic and
competitive industry. This segment is largely influenced by the changes in the trends and fashion
and hence the competition is intense. This is a sector that is largely based on human resource and
is impacted by the external business environment. TOMS is a multinational company based out
of United States, California. As a company that manufactures shoes and accessories it has a large
opportunity of expansion and growth due to the dynamics of the industry. The foundation of the
company is based on a unique vision of offering every new pair of shoes to a needy child for
every pair bought by a consumer. This is something that sets the company apart from the other
competitors in the market1.
Global market
Environment Analysis
In order to understand the business environment and global market Pest analysis is as
follows:
Political: To expand the business to other countries and other markets, the company should be
aware about the rules and regulations related to the industry in that particular country. The
companies are expected to abide by the political guidelines laid down by the country.
Economic: Factors such as inflation, changes in the exchange rate, situation or the condition the
home economy impacts the business of a company. Before expanding in other countries the
1 Yang, Shuai, Yiping Song, and Siliang Tong. "Sustainable retailing in the fashion industry: A systematic
literature review." Sustainability 9.7 (2017): 1266.

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company should be aware of all the economic factors and analyze whether it is working on the
behalf of the company.
Societal: The lifestyle industry in mostly impacted by the societal environment as the fashion and
the changes in the fashion trends impact the industry. The current fashion trend of a country has
a direct impact on the industry and the company that is trying to expand in the particular country.
Technology: The changes in the technology and the advancement of the technology in the
country where the company wants to expand impacts the cost of infrastructure in terms of
technology installation and maintenance.
Industry Analysis
To understand the industry Porter’s analyses are as follows:
 Threat of New Entrants: If an entrepreneur wants to enter the lifestyle industry he or she
should be aware of the investment and competition stress and the risks that are
associated. The threat to new entrants is moderate.
 Bargaining Power of Suppliers: This barging power of the suppliers are moderate as the
switching cost of the suppliers low or negligible and as there are companies that are
comparatively larger in scale in this industry, the suppliers could switch over.
 Bargaining Power of Buyers: The switching power of the buyer in this industry is high as
they can easily move to other companies that sell shoes in the market. But they will not
be associated with the CSR that the company associates with2.
2 Kozlowski, Anika, Cory Searcy, and Michal Bardecki. "Corporate sustainability reporting in the apparel industry:
an analysis of indicators disclosed." International Journal of Productivity and Performance Management 64.3
(2015): 377-397.

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 Threat from Substitute Products: The substitute of products that can be is based on the
material that is used to manufacture the shoes and the accessories that are available in the
industry in comparison to the ones that is sold by the company3.
Rivalry among the existing players: the competition and rivalry among the players in the industry
is high as all the company is aimed to increase their sales and grow the company
Competitiveness
The industry that TOMS operate in has heavy competition as the factors related to setting
up the business in this sector are easily available. One of the biggest challenges that are
identified in the process is the investment and capital requirement is huge. The direct competitors
of TOMS are Sperry Top-Sider, UGG and C&J Clarks and some of the indirect competitors of
TOMS are Nordstrom, Zappos and Macy’s etc.
Industry Segmentation
According to the divisions of the market, the company simplifies the goals in order to
make the objective more achievable in the long run.
Demographic: The age of the people who are targeted by the company as a potential consumer is
in between 20-45. In terms of gender, the company manufactures design of shoes both for men
and women. There is also a separate segment for the kids as well available.
Behavioral: the company offers designs that are not only trendy but are also comfortable. The
products are priced moderately hence the people who have a knack for fashionable yet
3 Grant, Robert M. Contemporary Strategy Analysis Text Only. John Wiley & Sons, 2016.

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comfortable items can be a potential customer for the company. Some of the popular products
are the boots and the casual shoes4.
Psychographic: The target segment of the market are people who like to use branded products
and people who are inclined towards the fashion and do not mind spending on an extra pair of
shoes.
Geographic: The Company is available on several online platforms all over the world5.
Industry Rivalry
Aforementioned the competition in the industry is intense and the entry of new entrants
are also moderate hence the rivalry in the industry is high. Though the driving force of the
company is different and the CSR aspect of the company has garnered TOMS a good position in
the market.
Exogenous and Endogenous Barriers
Exogenous: Trade policies of a country and the rules and regulations related to the lifestyle
industry in the country is a major barrier for the business.
Endogenous: The intense competition and the large capital involved in running the business are
identified as one of the barriers to business6.
4 Ulutas, Berna, and A. Attila Islier. "Dynamic facility layout problem in footwear industry." Journal of
Manufacturing Systems 36 (2015): 55-61.
5 Szenberg, Michael, John W. Lombardi, and Eric Y. Lee. Welfare effects of trade restrictions: A case
study of the US footwear industry. Academic Press, 2014.
6 Vitalari, Nicholas P. "Prospects for the future of the us healthcare industry: a speculative analysis." Am J
Med Res3.2 (2016): 7-52.

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Relevant External and Internal Issues
External: One of the major external issues that the company can face is the fluctuation of the
inflation rate as it directly affects the cost of product and distribution. Another external issue that
is faced by the company is the competition with generic brands and duplicate products. As the
company operates in the international market the company is open to duplication of products
which lead to a major setback for the cause the company has been set up7.
Internal: The resource allocation effectiveness is one of the major issues that are faced by the
company. Several operational methods like kaizen and Six Sigma can be incorporated to recover
this problem8.
7 Tonnon, Susanne C., et al. "A qualitative study of the anticipated barriers and facilitators to the
implementation of a lifestyle intervention in the dutch construction industry." BMC public health 14.1
(2014): 1317.
8 Čiarnienė, Ramunė, and Milita Vienažindienė. "Management of contemporary fashion industry:
characteristics and challenges." Procedia-Social and Behavioral Sciences 156 (2014): 63-68.

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Reference list:
Čiarnienė, Ramunė, and Milita Vienažindienė. "Management of contemporary fashion industry:
characteristics and challenges." Procedia-Social and Behavioral Sciences 156 (2014): 63-68.
Grant, Robert M. Contemporary Strategy Analysis Text Only. John Wiley & Sons, 2016.
Kozlowski, Anika, Cory Searcy, and Michal Bardecki. "Corporate sustainability reporting in the
apparel industry: an analysis of indicators disclosed." International Journal of Productivity and
Performance Management 64.3 (2015): 377-397.
Szenberg, Michael, John W. Lombardi, and Eric Y. Lee. Welfare effects of trade restrictions: A
case study of the US footwear industry. Academic Press, 2014.
Tonnon, Susanne C., et al. "A qualitative study of the anticipated barriers and facilitators to the
implementation of a lifestyle intervention in the dutch construction industry." BMC public
health 14.1 (2014): 1317.
Ulutas, Berna, and A. Attila Islier. "Dynamic facility layout problem in footwear
industry." Journal of Manufacturing Systems 36 (2015): 55-61.
Vitalari, Nicholas P. "Prospects for the future of the us healthcare industry: a speculative
analysis." Am J Med Res3.2 (2016): 7-52.
Yang, Shuai, Yiping Song, and Siliang Tong. "Sustainable retailing in the fashion industry: A
systematic literature review." Sustainability 9.7 (2017): 1266.

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STRATEGIC AND OPERATIONS MANAGEMENT