This blog is based on the reading materials from class 20 “What is Social Entrepreneurs?”, “Toms Shoes: A doomed vanity project!” and “The broken buy one give one model”.

After reading these three articles, I am opposed to the ‘one for one’ business model because this business model is not profitable in long term and may disrupt the market.

First, ‘one for one’ business model cannot let companies make more profit in the long term. Since companies have to give away free goods when every customer makes a purchase, companies raise the cost of each product sold. Thus, the profit of each product that companies sold decreases. Moreover, companies can increase the number of sales by showing customers that companies help the poor. However, in long term, customers consider more about the quality, design and utility of a product when they decide whether to buy it or not. In this situation, the ‘one for one ‘business model seems costly and useless.

Toms’ ‘one for one’ logo

Second, giving away free goods affects the market of the place which accesses these free goods. Many local merchants are forced to exit the market since people can get the free goods and don’t need to buy goods.  For example, in the case of Toms Shoes, Toms Shoes does help poor people in material assistance. However, giving away free shoes cannot solve the poverty fundamentally. Instead, Toms Shoes hurts the local economy by pushing the local shoes manufacturing companies quit the market. The people who rely on shoes market to make living, such as raw material suppliers, workers and dealers, may face the risk of layoff.

In conclusion, one for one business model is not beneficial for both companies and poor people. In order to become a company that creates shared values, the company should do some real practices to boost the economy and to reduce poverty.

Image sources:

http://exygy.com/the-one-for-one-business-model-evolving-beyond-novelty/