BMO5501 Business Ethics And Sustainability, Victoria University, Australia
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Question: Prepare an article for the business magazine that reports on, and critically analyses, the objectives, operations and outcomes of a social enterprise or sustainable tourism business or special topic - and include performance data and photos where possible.
Answer: Social Enterprise
Introduction: With the growth of civilization organizations have become more and more materialistic and thriving for better achievements, higher growth. The fast growth of civilization has paved way for job creation and better living. However, this has also affected the basic three areas of sustainability that are social, economic and environmental. In order to acquire better success and remain competitive, organizations are adopting such measures that might affect the environment, society severely and create a short term economic growth which might not sustain for long. In such scenario, people are gradually coming to realize the need for sustainable measures. The growing concern regarding sustainable measure of donning business has given birth to a new concept that is social enterprise. This refers to such organizations that are able to build a bridge between profitability and contribution for the betterment of living as well as wellbeing of people.
The story of TOMS shoes
According to Unglobalcompact.org (2019), "Social sustainability is about identifying and managing business impacts, both positive and negative, on people. The quality of a company's relationships and engagement with its stakeholders is critical. Directly or indirectly, companies affect what happens to employees, workers in the value chain, customers and local communities, and it are important to manage impacts proactively."
Now the number of social enterprise is growing, and now forms nearly 9 percent of the small size business in UK. It is also observed that nearly 11.44 million people are being applied by the small size social entrepreneurs, which indicates that they are also creating significant contribution to the economic development of nations (Civilsociety.co.uk, 2017). Analyzing the success story of one such organization would help to have a better glimpse inside the functionalities of such organizations that can successfully think of merging profit with social needs.
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Many consumers now know about the popular entrepreneurial organization TOMS shoes and the way it has been contributing for social betterment for the past years. However, the history of its birth lies dates back to a decades ago when, the young founder Blake Mycoskie traveled to Argentina. After witnessing the gloomy scenario of needy children in there, he soon devised the noble plan of helping these children, while making profit alongside this social endeavor. Witnessing children in bare legs, gave him the idea of developing a company which would contribute one pair of shoe to the needy people in exchange of every purchase made in this company (Toms.com, 2019). This is how he bridged between the need of consumers, with the means of helping out needy people. The company started with a novel mission and now the outcome is quite promising. Since its establishment, the company is able to contribute nearly 60 million shoes to the needy people.
After its initial success, it has expanded to several other arenas. The company expanded its business to eyewear, bags and coffee, each of them with a better plan to help society and think for social benefit and not profit only. In the year 2011, the company successfully helped nearly 400,000 people in need to get eye treatment, glasses and so on. With the same objective of helping the needy people, the company has provide over 335,000 weeks of safe water in 6 countries, in the year 2014 (Lebowitz, 2016). The same way it has been helping with child birth by providing required training to attendant's proper procedure. The key objectives of the company are to improve social scenario and help people in need, without compromising the chances of economic growth and profitability. First its objective was to help people in Argentina have a better childhood with free pair of shoes. The next objective was to expand the arena of helping people by developing programs.
The operation of the business is based on the buy one and gives one business model. This is considered to be one of the most sustainable ways of conducting business. In this case the company counts the overall revenue that the company is able to make within a short time span. The increasing growth of this organization is depended on the way customers are changing their perceptions (nnifer Risi, 2017). Consumers prefer such companies that have social concern. Consumers are growingly becoming conscious about the sustainable methods and approaches by companies and by being part of ethical and sustainable companies they are making themselves a part of the drive of greater good.
Toms shoes have several charity partners. They do not directly give the products or services to the targeted needy population. They tie with local nonprofit and charity partners in order to reach to the needy people while maintaining and focusing on production and core business functions. Being a charitable organization, it is crucial for the business company to maintain its cost structure and figure out proper strategies of business operation that can help to save cost. In order to save cost, this company makes the shoes for donation in the targeted country only. It also has an effective marketing strategy that has helped the company promotes its business objectives among its customers. It has been thanking its customers for making a difference. One of the board members have twitted, "I received 2,803 letters in support of universal background checks from my constituents. Thank you for speaking out, and please don't let up-we need your voice (Stories.toms.com, 2019). "
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The admiration makes consider part of the drive for greater good and this further fuels the intention of being with such organizations.
Till now the company has delivered 720,000+ weeks of safe water. It has contributed to 770,000+ of sight restorations and given shoes more than 93 million+ to needy people (Stories.toms.com, 2019). This is the performance result that shows the continuous growth of the company. However, the journey has not been an easy one for the company. After making an equity deal with Bain Capital, in 2014, the company's profit margin has dropped to nearly half of the previous amount (Eliza Ronalds-Hannon & Kim Bhasin, 2018). The shareholders are worried about the company success. This is palpable from the degrading share price. Its debt is now trading below 70 cents on the dollar.
However, the financial statement of 2018 do not show much disappointing performance that may indicate to its inability or maintaining profit while being a sustainable company. The profit belies the fact that it is hard to be social or ethical when profit is an aim. The following tables shows financial performance of the company.
Conclusion: The upheavals that a social enterprise faces can become the land marks for the future generations. As the concern surrounding degrading environment and social scenario comes to the forefront, it has become essential for organizations to take steps that can reduce the negative impact caused by their activities. For long, it was considered that a company that focus on contribution and making world a better place, might end of chocking itself due to the rising competitive in each industry. Tomshoes, have shown a way out to this concern. It has depicted how a company can be profitable without harming sustainability or without being aggressive for profit making. The success of this company has also pointed out how people are becoming conscious about the need to be ethical and think of other people, the need to reduce huge gap between rich and poor around the world, and the need to make the little contributions that they can do to society. Now social entrepreneurship is an emerging trend and is to become more prominent in the upcoming days.
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