TOMS ‘one for one model’

Toms is a brand that mainly sells shoes. However it is different from the original shoe industries. When you buy a pair of TOMS shoes, it means giving another pair to the impoverished child, which is known as the ‘one for one’ business model.

Companies like TOMS are defined as social enterprises. These industries set objective that benefits the society but still the company needs to make money to sustain its work and also applies a business framework to produce better. They usually create shared value.

Although TOMS can produce shared value to the society, there are still problems for it to operate the ‘one for one’ project. First, the most serious problem for the poor area is not about the shoes but some other basic needs, such as starvation and clean water. Basically, provide shoes for them does not solve the problem, but lead to a replacement of local markets, thereby hindering development. Secondly, the transportation fees are also a high cost that needs to be taken into account.

Therefore, how TOMS is going to operate the company still remains a problem, although it seems to solve the poverty issue of other countries, what TOMS should think more is about what people really need.

Japanese yen depreciates during the past years

The exchange rate of Japanese Yen remains at a decreasing trend in the past years. Japan’s currency touched a six-year low and it has slid 2.9 percent in September, on track for its biggest loss since November.

Why the Japanese government wants such a low exchange rate?

I think the first reason is because of the economic downturn of the domestic economy. For Japan to increase the competitiveness, it is necessary to lower its exchange rate to increase its exports. Because lower exchange rate means that the product is relatively at a lower price, therefore increase the demand for exports. (If the price elasticity of demand is elastic) Besides it can also attract more investments from abroad.

However this is not always the case. When the Japanese yen is depreciating, although more foreign investors might be attracted, but the low value of the currency also decreases the profit they earned from Japan. Therefore some of them might no longer willing to invest in the future. Besides, there are also some other cons, for example, low exchange rate also make the price of imports higher, so the imported raw materials may cost more, which results in a cost-push inflation.

In conclusion, lowering the exchange rate both has its benefits and drawbacks. Japanese government might take action such as deflationary monetary policy to control the domestic price in order to control the inflation.