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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 donates one pair of glasses to SightSavers for every pair it sells. This initiative is likely to improve its reputation as a socially responsible business.
Increased sales may result from Warby Parker's improved reputation. Customers are more inclined to support a company that actively contributes to social causes, potentially attracting a loyal customer base who prioritize ethics in their purchasing decisions.
Additionally, this socially responsible approach may attract ethical investors who value companies that prioritize ethical practices, enhancing Warby Parker’s financial stability.
Step 2
Possible counterbalance to profitability
Answer
However, there is a potential trade-off to consider. The costs associated with donating a pair of glasses for every sale could diminish profit margins, as the company incurs additional expenses.
Customers may not exclusively choose Warby Parker for its socially responsible approach. Some might be more price-sensitive, preferring lower-cost alternatives. This could lead to Warby Parker having to lower prices, which can further impact profit margins adversely.
Step 3
Potential judgement on long-term profitability
Answer
Being socially responsible is likely a unique selling proposition (USP) for Warby Parker, differentiating it from competitors. While lower prices may lead to decreased profit margins initially, the long-term benefits of brand loyalty and increased customer base driven by ethical considerations could ultimately enhance profits.
Warby Parker’s focus on combining affordability with social responsibility may lead to sustainable growth, balancing profit with purpose.