Timberland Case Analysis

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Strategic Case 2- At Timberland, Doing Well and Doing Good Are Laced Together pp. 123 Timberland is known for great shirts and solid climbing boots. The company has had a good financial history with decent revenues and profits. But CEO Jeffrey Swartz wanted something more. In the early 1990s, he began transforming Timberland into a company known as much for philanthropy as it is for its boots. It began when the community projects oriented nonprofit City Year asked for boots for its workers. Swartz convinced other Timberland executives to answer the call, over time providing free boots and uniforms for about 10,000 people. Visiting some of the community projects, Swartz was deeply moved by what volunteers were accomplishing. “I saw what real power was that day,” Swartz recalls. “I didn’t realize how hungry I was for that kind of purpose.” Timberland began shutting down operations one day each year so the company’s thousands of employees could get paid to take part in various company sponsored philanthropic projects, such as building homeless shelters or cleaning up playgrounds. The company started giving employees 40 hours of paid leave annually to volunteer at charities of their choosing. But the emphasis on social responsibility does not come cheap. The all-day event alone costs about $2 million a year in lost sales, project expenses, and wages for employees. When Timberland’s profits were soaring, that seemed fine, but then the company hit a rough patch. It reported its first operating loss since going public, laid off some employees, and shipped some work overseas to cut costs. So, when one of the company’s bankers implied that the focus on philanthropy was hurting the company and its stakeholders, Swartz found himself in a quandary. One of Timberland’s bankers bluntly told Swartz that the company needed to “cut this civic stuff out and get back to business.”

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