Chapter 2:Analyzing the External Environment of the Firm
Companies scan the external environment to predict environmental changes and detect changes already under way. One area that TOMS must pay attention to is the threat of new entrants. This is when a new company similar to TOMS threatens them for competition and erodes their business. One competitor TOMS must be aware of is Sketchers. Sketchers has a product called BOBS. BOBS has the same concept as TOMS; they also donate one for one to children in need of shoes. The price of BOBS shoes are not as expensive as TOMS. However, customers of TOMS shoes are staying loyal, because of the "why" behind TOMS shoe story inspirational story. BOBS does not have as meaningful of beginning. People are more focused on their "how" and marketing ploy for the company. The second factor in the environmental scanning is the bargaining power of the buyers. There are many shoes companies that individuals can purchase shoes from. Like previously mentioned BOBS can be used by the buyers to compete against TOMS. With the threat of competition buyers could potentially force down the current prices. However, this does not seem to be an issue for TOMS. Some individuals may opt for a cheaper pair of shoes, but many stay true to TOMS mission of one for one. The third factor is the power of the supplies. TOMS shoes are manufactured in Argentina, China, and Ethiopia. This is beneficial because it provides jobs in these areas and they are helping their people.
The costs of producing the shoes are relatively inexpensive. Not only are suppliers in support of TOMS many other organizations are in support who donate shoes at no cost. This reduces the threat of increased prices from the suppliers. The threat of substitute products at this time is not a real threat to TOMS. As mentioned before the company has an extremely loyal following because their mission on giving back is so powerful. Blake Mycoskie has reached out to people for help and they have answered. He is also the first to introduce a marketing ploy such as this. It has helped to spread the popularity of the product due to the philanthropic aspects. People are making a difference in others' lives which has led to their loyalty to the brand. Finally we look at the rivalry amongst competitors in areas such as marketing, price, products, and service. The price of TOMS shoes varies depending on what you are looking for. Customers can specialize their shoes are go with simpler design this provides them with options for price point. Marketing for TOMS has been very popular on college campuses and word of mouth has done far for times. Due to the empowering mission behind the product many newspapers and TV shows have spoken with Blake Mycoskie which has added in spreading the message of the product. Blake was also featured on a commercial with AT&T. Other products that are offered in addition to the shoes are eye wear products and clothing.