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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's commitment to social responsibility, such as donating a pair of glasses for every pair sold, likely helps enhance its reputation. This positive image can lead to increased sales and brand loyalty, as consumers may prefer to purchase from businesses that demonstrate ethical practices. Furthermore, this approach can attract socially conscious investors and potential employees who value corporate responsibility.
Step 2
Possible counterbalance to profitability
Answer
However, there may be a trade-off between being ethical and being profitable. The costs associated with the donation of glasses can impact profit margins, potentially reducing overall profitability. Consumers may also prioritize lower prices over social responsibility, affecting sales if Warby Parker cannot compete with cheaper alternatives.
Step 3
Conclusion regarding profitability
Answer
In conclusion, while being a socially responsible business is a unique selling proposition for Warby Parker, it may not directly lead to increased profits. Instead, it could create a balance where the brand's ethical stance attracts a loyal customer base, but could also come at the cost of lower profit margins. Therefore, the overall impact on profits would depend on how effectively Warby Parker can manage its pricing strategy and operational costs while maintaining its social commitments.