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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 includes donating a pair of glasses to those in need for every pair sold. This can enhance the company's reputation, potentially increasing sales as more consumers may be inclined to choose Warby Parker over competitors. Additionally, the improved reputation can foster greater brand loyalty among existing customers, encouraging repeat purchases.
Step 2
Attraction of investors and talent
Answer
Being socially responsible can also attract ethical investors who value corporate responsibility, which may increase capital available for expansion. Furthermore, the company may become more appealing to potential employees who are looking for socially conscious workplaces, which can lead to enhanced talent acquisition.
Step 3
Counterbalancing factors
Answer
However, there could be drawbacks to this approach. The costs associated with providing free glasses might be high, and there is a risk that these expenses could outweigh the profits from increased sales. Customers might also expect lower prices due to the social responsibility aspect, which could compress profit margins.
Step 4
Conclusion and overall impact on profits
Answer
Ultimately, while being a socially responsible business can create opportunities for increased sales and customer loyalty, the potential financial trade-offs must also be considered. A strategic balance must be struck to ensure that the costs of social initiatives do not undermine profitability in the long term.