Evaluating Corporate Social Responsibility at TOMS Shoes Company

This case study analyzes the Corporate Social Responsibility (CSR) of TOMS Shoes using Carroll's four-part model (economic, legal, ethical, and philanthropic). It examines the advantages and disadvantages of TOMS sourcing its shoes from suppliers in China, Ethiopia, Kenya, and Haiti, considering issues like wage differences, governmental regulations, productivity, and corruption. The study also addresses the ethical implications of using sweatshops, referencing business ethics theories to support the analysis. The case highlights TOMS' 'One for One' campaign, its efforts to manufacture products in developing countries, and its challenges in navigating complex supply chains and ethical considerations within diverse socio-political environments. This includes addressing criticism of its supply network and the materials used, as well as the company's response to these concerns by diversifying its production sites and adhering to local regulations. The analysis provides a comprehensive view of TOMS Shoes' approach to CSR and the challenges it faces in balancing profitability with its social mission.

Running head: AN INTRODUCTION TO BUSINESS AND MANAGEMENT
AN INTRODUCTION TO BUSINESS AND MANAGEMENT
Student’s Name
University Name
Author’s Note

2AN INTRODUCTION TO BUSINESS AND MANAGEMENT
Table of Contents
Answer to Question 1.................................................................................................................3
Answer to Question 2.................................................................................................................5
Answer to Question 3.................................................................................................................8

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Answer to Question 1
Q1. Using Carroll’s account of Corporate Social Responsibility and information in the
case study, what are the Corporate Social Responsibilities of Toms and why? Of those
CSR you identify, which do think is most important for Toms and why?
Corporate Social Responsibility defines the expectations of the society or a certain
demographic group at a certain point of time. Carroll professes fours aspect of Corporate
Social Responsibility which can create a foundation required to delineate or characterize the
pattern of responsibilities towards a society. These four factors are also empirically
interrelated and conceptually connected. They are legal, ethical, Philanthropic as well as
economic.
1.1 Economic Responsibilities
Economic expectations as a part of social responsibility is something out of odd.
However, business organisations need to be able to profitably operate and incentivise the
shareholders so that they continue to invest resources and the business organisation continues
to be in profession. Through making profits, the business firms generate value to all the
stakeholders of the firm and thus addresses the needs of a social group (Berman et al. 2015).
In this context, the community welfare strategy that have been adopted by the company can
be highlighted. This is generally perceived as a big CSR through a passive eye. However the
company have extended the facility of giving away products to 60 countries. As an impact,
the company is receiving Word of Mouth as well as social media publicity among a very
large customer base (Boulouta and Pitelis 2014). Most importantly, by means of this
campaign the company is able to make successful market entry in to various countries. For
being able to successfully keep up the rate of giving away products and thus helping people
they have to keep their rate of profitability intact also. Mycoskie made an initially strong

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business framework by adopting this innovative CSR based strategy of business promotion.
This helped to fulfil the economic aspect of CSR as pointed out by Carroll et al. Moreover,
in order to provide the high amount of initial investment for the company, he took two other
significant steps. These are:
 Selling his Software company to fund the beginning of production and the “One on
one” giveaway infrastructure.
 Moving the manufacturing unit of the company to China in order to reduce the
operational cost.
 Selling 50pc stake to Bain Capital, thereby increasing the valuation of the company to
$625 million.
1.2 Legal Responsibilities
Carroll’s four step model requires that the profit making organisations meet some
basic requirements like fulfilment of the legal obligations of the societal stakeholders and
establishing the business as law abiding embodiment. In this context, the supply chain of
Toms shoes have been under subtle criticism several times. The company’s supply network
was questioned and the materials involved in the production of shoes were under focus
(Brusseau, Chiagouris and Brusseau 2013). The company have been using recycled polyester
instead of standard suede. Initially in several countries, this production criteria raised
concerns. After that the company shifted its production sites to several developing countries
including Kenya, Haiti and other countries. This is how they are bringing in diversity in their
supply network, setting up alternative supply lines and meeting the regulatory obligations of
the various countries that requires that the countries which have active sales channels in those
countries should have at least 30% indigenously manufactured products in their sales line.
1.3 Ethical Responsibilities

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The basic goal regarding ethical responsibilities is that the activities, policies,
practices as well as the standards should align with some of the major needs of the society
even if the codified law does not professes that the companies should officially stick to it
(Carroll 2012). The One on One campaign is itself an exemplary campaign that advocates
Toms Shoe would donate a pair of shoes for every pair of shoes bought by customers.
Besides, the company manufactures 30% of the products in the countries where the
company carries out their philanthropic activities, primarily focusing on the Asian and the
Latin American countries.
1.4 Philanthropic Responsibilities
Philanthropic activities are mostly driven out of the desire to participate in social
welfare activities out of self-invocation. In case, if the social contract between business
making organisations is studied, it would reveal that the citizenry have general expectations
that the companies would engage in charities of various forms, for example monetary
resources, service as well as product donations and volunteerism. In this context, it is evident
that the Toms Shoes company engages in community faceted endeavours compulsorily with
every business endeavour they indulge in to. The company have already helped 30000 people
since 2011 by donating various products of every requirement like shoes, maternity kit and so
on (Hopkins 2015). The company actually gives guidance to the NGOs also to mitigate the
difficulties like cross border differences, community issues and others in their effort to reach
out to maximum possible number of people with help.

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Figure 1: Carroll’s Pyramid Model
(Source: Developed by the Researcher)
Answer to Question 2
Using information from the case and concepts from Readings 58, 60 and 61, what do
you think are the advantages and disadvantages of Toms’ sourcing its shoes from suppliers in
China, Ethiopia, Kenya and Haiti?
Economic Responsibilities: the company have sold 50pc stake to Bain
Capital and moved the manufactueing unit to China for reducing
operational cost
Legal Responsibilities: the company shifted its production sites to several
developing countries including Kenya, Haiti and other countries. This is
how they are bringing in diversity in their supply network, setting up
alternative supply lines and meeting the regulatory obligations of the
various countries that requires that the countries which have active sales
channels in those countries should have at least 30% indigenously
manufactured products in their sales line
Ethical Responsibilities: the company manufactures 30% of the products in
the countries where the company carries out their philanthropic activities,
primarily focusing on the Asian and the Latin American countries.
Philanthropic Responsibilities: Toms Shoes company engages in
community faceted endeavours compulsorily with every business
endeavour they indulge in to. The company have already helped 30000
people since 2011 by donating various products of every requirement like
shoes, maternity kit and so on

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One important issue identified in the reading materials is the staggering complexities
in production chains existing in the cross-country production networks. These networks often
prove to be disadvantageous for the company. Instances like wage differences can be
considered along with other governmental regulations. Many governmental regulations
require that a certain proportion of the products circulating in the native markets be
manufactured by local workers in indigenous factories (Kesavan, Bernacchi and Mascarenhas
2013). However, the Toms Companies regulate not only the products that are manufactured
for commercial purpose, but the other products that they distribute to the poor people in those
developing countries. Hence the manufacturing cost of the company often exceeds the
estimated by a huge difference.
The supply chain of few countries are not suitable also. Preferably in the countries
like Haiti, this is a poignant issue where the company have to import the raw materials from
the Asian countries (Kuratko et al. 2017). The interrupted supply network often results in
delay of production and as such the company often undergoes the losses owing to detoriation
in relation with the sales channels caused by delay in production or often exceeding the
anticipated cost framework.
Another issue identified is that of productivity. The productive capacity of labourers
in various markets is different. Often the products manufactured in various markets do not
match the standards of the product quality of the finished products manufactured in the other
countries. For a global company like Toms shoes, the fluctuation in the product quality
directly impacts the consumer’s perception. Again in some countries like Kenya government
have a share of franchise in the business and as an impact the company have to shuffle the
regulations and production framework according to the guidelines of the government (Lee
and Jay 2015). This have been a major cause of concern for the company. However the
company is liable to follow this guideline without questioning the framework. On the

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contrary, there is another positive aspect related to this also. The intervention of the
government keeps away other anti-constitutional forces from penetrating in to the affairs of
the business. In some countries, there are non-government pressure groups which demand
monetary funds and intercept with demands of having a quota in the employee base or in
other aspects of the business share (Lindström 2018). In case if the government is an
important stakeholder in business, the other pressure groups cannot intervene in to the
professional affairs of the organisation or its production.
Another poignant and highly impactful issue that the company might face is the high
level of corruption in the public service sector in the developing countries. As an outcome,
the company faces various issue like copyright related issue, problem to get patents and also
issue like imitation of label graphics. In case if the company faces such issues in operating
within the business context of some country, the production would be hampered without any
doubt. The company in such cases have to invest a lot of time, monetary resources as well as
other resources for ensuring sustainable business conditions. The infrastructure of granting
licenses is not stringent is some countries. As an outcome, with the hands of corrupted
government officials, many companies and other embodiments are often able to get sanction
to the same patent or sales or distribution right as that of another registered company (Luo
and Bhattacharya 2006). Sometimes such cases are done deliberately by the local firms only
in order to disrupt the business of the big international corporations. In such cases, companies
incur huge amount of financial loss, owing to the monetary investments that goes in to
entering in to legal battle with some fraudulent companies. The same scenario is faced in
many countries by the NGOs associated as franchise partner with Toms Shoes. The franchise
network faces various disruptions, threats and other forms of challenges while operating in
the socio-political atmosphere of various countries. In those countries, the company cannot
accomplish high publicity rate and the CSR campaigns accomplished in 21% of cases goes

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unnoticed (McPhee 2014). That is why the company makes their own press releases for
detailing about their CSR platform and their self-less distribution activities. In countries were
the activist groups are active, the company faces a lot of difficulty to accomplish their CSR
campaigns.
Factors Advantages Disadvantages
Outsourcing and offshoring The company’s ethical
ventures and endeavours to
help people by developing
employment opportunities
gets publicised
The operational cost
increases
Regulatory Policy The government
intervention gives security
of operations
The regulatory framework
becomes stringent
Bribery The company have to pay
bribes to maintain the supply
network often
Corruption The operational cost is
affected
Ethical Standpoint The Word of mouth
publicity hemps in
company’s promotions
Attracts criticism of other
agencies
Answer to Question 3
Is it acceptable for a shoe manufacturer to use sweatshops? Use business ethics theory
from blocks 6 and 7 to support you answer.

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The company is often troubled by the issue of making their production units work in
sweatshop conditions. This scenario is particularly dominant in Chinese conditions. The
countries Pakistan, China, Thailand as well as India are reputed for running sweatshops. It
have been reported by Mishra and Schmidt (2013), that is some stitching factory of India, the
workers do not have access to proper toilets or medical care and even drinking water. Again,
according to the information provided by Plerhoples (2011), the workers in one Chinese
company once, reportedly worked for 21 hours per day during the busy months and did not
take a day off for few consecutive months. Even in many countries like Kenya, workers are
forced to accept less than even the legal minimum standard wage in the country. In the end
they earn a salary that is barely sufficient to fulfil their basic requirements. In this case the
Moral Consequentialist model can be used to shed light on whether sweatshops are ethically
acceptable or not. According to the Utilitarianism, if the company is providing more than
standard wage and heavy incentives and it is an available option to the workers if they want
to work for the extra hours with the perspective of earning incentivised income, then it can be
justified that the sweatshops are actually ethical. However, if it so happens that the company
is rigorously making the employees work for the bare motive of fulfilling the organisational
goals, then it is evident that the company’s approach is highly unethical (Torelli, Monga and
Kaikati 2011). The theory of business ethics can be highlighted in order to discuss whether
the Toms shoes follows ethics or not in their business endeavours. The first concern is the
direction of the sense of duty. In this context, the business organisation is never concerned
with the sole objective of earning profit for the company. Rather they have always
acknowledged their sense of duty towards the society and helped people and provided
employment opportunities where the living and economic standards of the people are
generally low. The next most important question is that whether the business firms should be
driven by self-interests? The feasible answer is obviously yes. The company indulges in high

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level of philanthropic activities and as such the economic stability is the most primary
concern. In case if the company is not able to put up with the economic standard, they would
not be able to properly serve the social groups (Williams et al. 2018).
The last question raised in this theory is that what should be the basis of the thought
process of the business leaders, compassion or consequences?
In this context, consequence is obviously the end outcome for which the company
operates. However, compassion of the business leaders of Toms is reflected in their decision
to implant new factories in developing countries other than China, knowing fully well that
higher production cost could impact the revenue generation in those countries.

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