Toms Shoes is well-known for its one-for-one business model, which aims to alleviate poverty by donating free shoes to the ones in need. While some people say the model beneficent, I think it is nothing more than a superficial bluff.
The ingenious approach towards poverty came from a goodwill, yet it was too idealistic to measure the real life problems. The proposer failed to anticipate that, local businesses in those developing countries will be harmed. When giving out free shoes, less people are willingness to buy shoes from local producers. Hence most of local business will not be able to survive and which will lead to a increase in unemployment. In the long term, people will lose incentive to work and the economy will worsen even further.
However Tom Shoes is still pursing this business model, but for its own good. The model has a powerful marketing effect which boosts brand image and attract more customers. Also, it allows Tom Shoes to rationalize the high price of its products. I think the one-for one business model is not worth implementing because, Tom Shoes forgone a high opportunity cost for very little in return. The donated shoes would raise more profit for the company if sold in the market; and more importantly, poverty still remains as a problem and the society is not better off.
The one-for-one business model is indeed a bald and innovative approach, but if Tom Shoes truly want to gain some social returns, it should target on eradicating the root of poverty. Instead of giving away free shoes, it can invest on teaching local producers how to make shoes more cost-efficiently.
