“Turning Coffee into Water to Expand Business Model"
“Turning Coffee
into Water to Expand Business Model” by Stephanie Strom, is an article
indicating the new risky business venture TOMS is undertaking in another effort
to expand its business practices to further the betterment of the globe. One
might ask, “How or why is this significant?” The issues of water scarcity and
sanitation are huge issues that are becoming major problems for all co
untries
not just a select few. Even in the United States, recent news has indicated the
pollution of waterways and drinking water in North Carolina. TOMS Company is
endeavoring to help constrain the major issues of water scarcity and sanitation
around the world and reduce the billions of people that are affected. Without
access to clean drinking water and sanitation, countries are prevented from
furthering their development.
Water Stress
As noted in the maps below, “Water Stress” and “Total Population:
Access to Sanitation,” these issues of water scarcity and sanitation are
affecting all countries and continents. The United States is even beginning to
see an increased level of water stress, however, their sanitation accessibility
is still very high. Some countries have more than 50% of their population being
unable to access proper sanitation, which impedes their quality of living and
some have supreme water stress with absolutely no accessibility to physical
water whether it is for drinking, agriculture, or sanitation purposes.
TOTAL POPULATION: ACCESS TO SANITATION
TOMS is a company
completely committed to social responsibility. TOMS Company created an entire
business model called “One for One” in an attempt to help fix global problems. This
originally began with shoes, then eyeglasses, and now as indicated in the
article, coffee. For every pair of shoes sold, another pair is given for free
to those in need. This is the same for all business products. Their strategic
vision, “TOMS is in business to help improve lives. We identify a global need
and create products to help address them. This simple idea is what makes us
more than a company—we’re a movement that’s continually evolving” (TOMS Shoes, 2014). With the
development of a line of coffee, TOMS identified the need for sanitation and
water availability. For any coffee sold, “the sales will be used to provide
clean water for cooking and drinking as well as for sanitation to the more than
two billion people around the globe the United Nations estimates lack such
essentials” (Strom, 2014).
Each bag of coffee covers a week’s worth of clean water financing for one
person. So far, this “One for One” business model has been quite successful for
the company and for the betterment of global challenges. It has been so
successful that many companies including blue-chip companies such as Neiman
Marcus have undertaken the same business model. General Mills now donates
computers to African children due to its sales of Betty Crocker Fruit snacks. The
“One for One” business model was extended to eyeglasses and coffee due to
criticism of the company not addressing the “fundamental problems of poverty” (Strom, 2014). Blake Mycoskie, the
founder of TOMS, took this as truth and indicated “There are two things you
need to alleviate poverty: education and jobs” (Strom, 2014).
Therefore, his efforts expanded to the coffee business. He also pledged to
build a manufacturing facility in Haiti to increase jobs for the country. They
will also be supplying sanitation and hygiene education in developing countries
to help prevent the spread of the issues.
How does a company
manage to succeed with its business plan so quickly? TOMS offers shoes that are
constructed with sustainable and vegan materials and they invest in their
employees. Their goal, “In the coming months, we’ll broaden our understanding
of our product and their impacts, explore additional sustainable materials and
designs, and deepen our conversation with our supply chain partners. As we
climb the mountain in front of us, we’ll celebrate our success while eyeing
that next peak in the distance” (TOMS Shoes, 2014). They identified a need in the societal
environment and recognized they should take advantage of this societal need and
profit off of it. They identified the need to focus on the betterment of their
employees in the task environment and create a wonderful quality of work life,
and good ethics and morality in each employee. The company identified potential
agency costs found with holding their production facilities and supply chains
in China, Ethiopia, and Argentina and monitor their overseas suppliers and
vendors to ensure the mother company’s corporate responsibility standards are
being upheld. They were also first in the industry with this particular type of
service of donating one of each product for every one that is sold. TOMS does
have the threat of new entrants now because other companies are realizing the
benefits of their business model, however, TOMS keeps expanding their product
lines and maintaining their success. TOMS also faces the threat of imitability.
Their service can be easily imitated by other companies who have realized the
worth of the model. What other companies cannot take, however, is TOMS’ tacit
knowledge. It is embedded in the company’s culture. Their corporate culture is
one completely formed of social responsibility.
With the betterment
of the company and the mission to improve the global situations of billions,
TOMS Company’s corporate reputation is highly regarded by the public. Blake
Mycoskie hopes that once people understand the quality of the product as well
as the impact each has improving situations for the billions, they will
endeavor to purchase TOMS’ products and also make it their mission to help
those in need.
Bibliography
Strom, S. (2014, March 11).
Turning Coffee into Water to Expand Business Model. Retrieved from New
York Times:
http://www.nytimes.com/2014/03/12/business/turning-coffee-into-water-to-expand-a-one-for-one-business-model.html?action=click&module=Search®ion=searchResults%230&version=&url=http%3A%2F%2Fquery.nytimes.com%2Fsearch%2Fsitesearch%2F%3Faction%3Dclick%26re
TOMS Shoes. (2014). TOMS
Company Overview. Retrieved from TOMS: www.toms.com
In the article, "Changed Life of the Poor: Better Off, but Far Behind," the consumption of the poor to the middle class is compared. What is interesting to note is that the prices of goods such as housing, personal care, clothing, vehicles, cellphones, toys, personal computers, equipment, and televisions have plummeted, but prices for college, child care, health care, maintenance, and food have skyrocketed. This is predominantly why the poor might seem richer especially as compared to the rest of the world, however, in fact they are much poorer then ever before.
