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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 socially responsible
Answer
Warby Parker's commitment to social responsibility, such as donating a pair of glasses to charity for every pair sold, can enhance its brand image and reputation. This positive image may increase customer loyalty, which could lead to increased sales. Additionally, attracting socially-conscious consumers may open up new customer segments, ultimately resulting in higher profits.
Step 2
Counterarguments to profitability
Answer
However, there may be potential trade-offs between being ethical and being profitable. The costs involved in providing free glasses can impact profit margins. Some consumers may choose to purchase glasses based on lower prices rather than the company's social initiatives, complicating the impact of social responsibility on profitability.
Step 3
Long-term strategic advantages
Answer
Being socially responsible is a unique selling proposition (USP) for Warby Parker that differentiates it from competitors. Over the long term, this strategy may lead not only to greater sales but also attract investments and loyal employees who are motivated by the company's values.
Step 4
Potential risks and conclusions
Answer
While there are risks associated with lower profit margins, Warby Parker's reputation and commitment to social causes could ultimately enhance its profitability by building a solid customer base and attracting ethical investors. A balanced approach, focusing on both social responsibility and competitive pricing, may help Warby Parker maximize its profits while serving its mission.