analyze the TOMS

Strategic Analysis of TOMS
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Strategic Analysis of TOMS
In 2006, Blake Mycoskie journeyed to Argentina and observed that a large number of children did not have shoes. The observation gave him philanthropy and business opportunities leading to the establishment of TOMS Shoe Company in Santa Monica, California. TOMS is a for-profit charity organization that deals with footwears, eye wears and accessories (Naeini et al., 2015). The company has grown tremendously since 2006, especially due to its one-for-one business model, marketing strategies and attractive brand image (Ahsmann, 2011). However, there is a need to implement changes so that it can gain a competitive advantage over its rivals. In this study, various tools of analysis are used to identify the need, areas and TOMS’ capability to change. Although the current strategies have helped TOMS grow, it needs to adopt a new business model, revise its pricing strategy, and improve its brand image.
PESTEL Analysis
According to Arar, Yurdakul, and Önören (2017), pestle tool helps identify the macro factors that can affect business. As a result of using this tool, substantial threats to the business can be identified and addressed.
Political factors affecting TOMS include democratic government in countries it operates, a well-organized economy in the US, stable political status, favorable foreign trade policies, and government support in the industry.
The economic factors include unemployment in countries it operates, import taxes on shoes, rising incomes in areas that serve as TOMS’ customer base, reduced unemployment, and consistent wage growth.

Social factors include increased disposable income, a large population of teens and young adults who love trendy designs, the high purchasing power of generation Y, and increased number of shoppers in USA and UK (Ahsmann, 2011). Finally, seasonality shapes up consumer demand especially on shoes, handbags and other accessories.
Technological factors affecting TOMs are new designs of its products, increased online retailing, and saturation of the shoe industry due to improved e-commerce.
Driving Forces
Driving forces are factors behind successful operations and productivity in a business. One such factor is TOMS’ “management by absence” style. Unlike other management styles that may require close supervision by seniors, this one sets basics directions and let the employees follow their course. Consequently, such employees can establish a connection with the communities easily. Another powerful factor in TOMS’ success is its brand image that attracts not only philanthropists but also independent customers. Also, the company’s ability to extend to other services and products such as eye wears has also accelerated its growth (Ahsmann, 2011). Another force is generosity from donors and customers which the company attracts through marketing and social stories. The company also supports people of same minds through grants. Last but not the least, company’s use of social media such as Twitter, Facebook, and YouTube helps create sustainable connections.
Porter’s Five Forces
Porter’s five forces analysis is an effective tool that is used to identify market forces that shape up competition in an industry. Porter’s Five Forces tool identifies both consumers and suppliers’ bargaining power, ease of new entrants in the market, availability of substitutes, and the position of a business in the industry (Arar, Yurdakul, & Önören, 2017). In TOMS’ case, there exist several forces. These include low customers’ bargaining power due to the existence of other shoe designers and high level of threat due to the availability of substitute products. Suppliers’ bargaining power, however, is low (Naeini et al., 2015). Moreover, the company’s one-for-one model makes the threat due to new entrants low. Nonetheless, the rivalry in the industry is high since there are many businesses providing shoes.
Strategic Group Mapping
Strategic group marketing is a technique for locating a business’ position in the market. It helps improve customer satisfaction and identify key competitors (Arar, Yurdakul, & Önören, 2017). At the top positions in the industry are Nike, Adidas, and Chuck Tylor’s All-Star shoe companies. These have more market shares than TOMS and sell their products relatively higher than TOMS (Ahsmann, 2011). Below TOMS are companies such as BOBS, Manson shoes, Shoe Malls, Zappos, and Shoedizzles. Below is a strategic map showing the top five companies in the industry and position of TOMS based on their market coverage against prices.

Figure 1. A graph showing group mapping in the shoe industry
Success Factors
These are factors responsible for the growth of TOMS. The philanthropy aspect of the business is a success factor. The company sees that it donates a pair of shoes to a needy child in every pair sold (Naeini et al., 2015). Such strategy attracts customers of good will who would want to support children in developing nations. Consequently, the company donated 3 million pairs in more than 70 percent of its shoe sales as per the end of the year 2017 (Ahsmann, 2011). Another success factor is one for one business model that enables the company to realize profit while at the same time donating to needy children. Finally, another reason for TOMS’ success is its use of social media such as Facebook, YouTube, and celebrities to tell stories. These platforms can help advertise and market products and services better than TV and radio commercials. In this strategy, the company attracts more people including customers and buyers.
SWOT Analysis
Strengths
TOMS has strengths that can help in gaining competitive advantage. It has a well-established brand of shoes that come in different colors, sizes, and design to fulfill demand in different market segments (Naeini et al., 2015). More importantly, TOMS’ shoes are affordable as they sell at lower prices than other brands in the market (Ahsmann, 2011). Finally, TOMS’ one-for-one movement is essential in creating positive influence from the growth of the brand.
Weaknesses
One weakness is that TOMS is not a fully developed company globally. As such, it lacks assets and financial resources that can accelerate its growth and expansion Also, the company’s centers in foreign countries tend to incur high production costs (Ahsmann, 2011). Finally, it needs to work on its marketing and advertising strategies to increase its customer base.
Opportunities
Even with the above-discussed weaknesses, TOMS can expand and grow into a large global company by utilizing opportunities such as the creation of new designs of shows as they trend, venturing into the upcoming markets, and investing in corporate social responsibility programs. Also, the company can extend its one-for-one model in new other products and accessories.
Threats
Nonetheless, TOMS need to address threats it faces in the shoe industry. These include stiff competition from both well established and new companies, increased cost of production in foreign countries, and imitation of its business models by other shoe dealers.
Conclusion
In conclusion, TOMS need to make various changes to fit in the current eternal forces and achieve a competitive advantage over its rivals. Issues identified in this analysis include TOMS low brand awareness globally, unreasonable pricing strategy, controversial business motives since it seems that it mixes charity with profit motives. Also, it incurs costs since it concentrates on many designs of shoes and accessories. Finally, it has a limited market. In line with these findings, it becomes necessary to develop strategies that will enable its growth. Such strategies can include marketing in developed and developing markets, adopting new business models, improve pricing strategy, and revise its brand. Finally, it should focus on one major line of products such as the sale of shoes as the core business line.
References
Ahsmann, A. (2011). TOMS Strategic Plan. Santa Monica, California. Retrieved from https://averima.files.wordpress.com/2011/09/toms-pr-plansbook.pdf
Arar, T., Yurdakul, G., & Önören, M. (2017). Developing Competitive Strategies Based on SWOT Analysis in Porter s Five Forces Model by DANP. Journal of Business Research – Turk, 9, 2, 511-528.
Naeini, A., Dutt, A., Angus, J., Mardirossian, S., & Bonfanti, S. (2015). Case Study: How TOMS Shoes made a cause the center of its activities. Businesstoday.in. Retrieved 14 February 2018, from https://www.businesstoday.in/magazine/lbs-case-study/toms-shoes-shoes-for-free-cause-marketing-strategy-case-study/story/219444.html