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Assess whether the decision to be a socially responsible business is likely to increase Warby Parker’s profits. - Edexcel - A-Level Business - Question 1 - 2019 - Paper 2
Question 1
Assess whether the decision to be a socially responsible business is likely to increase Warby Parker’s profits.
Worked Solution & Example Answer:Assess whether the decision to be a socially responsible business is likely to increase Warby Parker’s profits. - Edexcel - A-Level Business - Question 1 - 2019 - Paper 2
Step 1
Positive effects of being a socially responsible business
Answer
Warby Parker donates one pair of glasses to SightSavers for every pair it sells. This charitable action enhances its reputation and may lead to increased customer loyalty. By being associated with a noble cause, Warby Parker can improve its brand image, attracting potential customers who prioritize social responsibility.
Additionally, this socially responsible initiative may appeal to ethical investors and enhance the company's market presence, potentially leading to increased sales. A robust reputation can also make Warby Parker a more attractive workplace, drawing talented individuals who share similar values.
Step 2
Counterbalancing factors
Answer
Despite the positive aspects, there are potential trade-offs. The costs associated with funding the donation of glasses might detract from overall profitability. Price-sensitivity could also play a role; customers might choose Warby Parker based on ethical considerations rather than price competitiveness. If the operational costs increase due to this commitment, it may lead to reduced profit margins.
Step 3
Judgment on social responsibility's impact on profits
Answer
In conclusion, while being socially responsible is a unique selling proposition that differentiates Warby Parker from its competitors, it can also pose challenges. The balance between maintaining ethical practices and achieving profitability is delicate. If managed effectively, Warby Parker's commitment to social responsibility could boost its bottom line; however, mismanagement or unforeseen costs associated with these initiatives could lead to lower profits.