Strategic Audit for the Body Shop - Research Paper Example

? Strategic Audit for the Body Shop Strategic Audit for the Body Shop Introduction The company The Body Shop was founded by Anita Roddick in the year 1976. It was started as a small store in Brighton, South England, and Anita Roddick was the only owner and employee of the store. However, the products were appreciated by people for their unique qualities. Soon, Anita’s husband Gordon Roddick introduced the idea of franchising the company to establish a global presence. Thus, the first franchisee came up in Brussels in 1978, followed by Canada and Australia in 1980 and in 1983 respectively. In the year 1984, the Body Shop became a public limited company. Presently, the company has presence in 53 nations and has around 2045 stores. Current Corporate Strategies of The Body Shop The company, from the very beginning, tried to present itself as the leader in corporate social responsibility. Throughout its history, the company fought against human right abuses, and abuse of animals and plants. Environment protection was an important part of the agenda of the company. As a result, the company gained a large number of environmental friendly customers in America and Europe, and this helped develop a standard image in Asia and Middle East too. The company always promoted five core values which are as follows. 1. Against animal testing The company claims that it will not purchase any ingredient that is tested on animals for cosmetics purposes. In addition, the company campaigns against cosmetics tests on animals. Instead of testing on animals, the company depends on human volunteer trials like skin patch tests. In 1986, the company joined the ‘Save the Whale Campaign’ along with Greenpeace. In 1990s, the company conducted a number of campaigns against animal testing. 2. Protecting the environment The company, throughout its history, has supported all activities aimed at environmental protection. In 2001, the Body Shop joined Greenpeace in the effort to raise awareness of the global warming. In addition, in its environmental policy, the company promoted the idea, ‘reduce, recycle, and reuse’. The company’s policy of recycling, and encouraging customers to refill their products by reusing bottles won the heart of many environment-friendly customers around the world. 3. Human rights Throughout its history, the company fought for human rights. To illustrate, in 2000, the company started ‘Make your Mark’ campaign with their 3,000,000 customers signed up. The program intends to address human rights issues, especially in neglected areas. Undoubtedly, the Body Shop gets a lot of publicity in the effort to promote human rights. An example of this company’s human rights efforts is the fight for the rights of Ogoni people in Nigeria that won the wrath of Nigerian government. 4. Support Community Trade Through this program, the company collects ingredients and accessories from small producers around the world, especially from underprivileged societies. The company ensures fair prices, and this money goes back to the society to improve their lives’ basic needs like water and education. Presently, the company has trades with more than 42 community trade suppliers in more than 26 nations around the globe. To illustrate, as stated in The Body Shop International values Report (Living our values, 2009), its palm oil comes from Columbia, coconut oil from Samoa, timber from Russia, Peppermint oil from Norfolk, cocoa butter from Ghana, Soya oil from Brazil, beeswax from Africa, and Footsie Roller from India. However, one has to doubt if the step will help such communities become independent as they tend to be totally dependent on the company for survival. 5. Self-esteem Te Body Shop always advocated the promotion of self-esteem especially in women. According to the company, it is about respecting oneself, looking after body and soul, and being proud of what one is. In 1998, there came a publication named ‘The Body and Self Esteem’ that was meant to raise awareness on the issues of self esteem (The body shop: The evolution of business in society). However, the problem with the CSR of the Body Shop is that it is too altruistic to be true. It is this extremism that resulted in the going back of the company from its own decisions. An example is the crusade against advertisements. There are a number of allegations against the company that arose because of the excessive levels of attention the company paid to the ethical and human rights issues. Almost all programs ranging from Trade not Aid, environmental claims, and the claims of using natural products faced criticism. Though the company claimed that its all products contain natural products only, later on, it was found that many of its products contain chemicals. All the more, as Roy and Ghosh (September 2008) point out, it was found that in products where chemical ingredients were used, the sources were not mentioned. In addition, in 1993, a batch of contaminated banana shampoo was supplied to consumers. Another area where the company faced criticism was in its environmental protection measures. Many people including its former manager of environmental affairs allege that the company’s claims are just window dressing. Another factor that received great criticism was ‘Trade not Aid’. It was revealed by scholars that the income Body Shop claims to have helped Kayapo Indian people develop was considerably les as compared to their base income (Roy & Ghosh, (September 2008p. 6) The company’s ‘against animal’ test claim miserably failed in the year 1992 when one internal memo of the company revealed that about half of the company’s products are in fact, tested on animals. It was followed by a television program named ‘Body Search’ that blamed the company for misleading its customers. The damage done by these allegations on the company was irreparable. The company lost its all ethical basis that it claimed to possess. Thus, the company became the victim of its own propaganda and its business was going down in 1990s. So, it became necessary for the company to change its corporate strategy altogether. So, Anita Roddick gave way to Patrick Gournay in 1998. Soon, there were a number of changes in the nature of the company. Firstly, around 300 employees were fired in order to reduce cost. Soon, by the end of 1990s, the company started to purchase the franchisees back, and decided to transfer the responsibility for inventory management to the regional teams. In addition, the company decided to develop its heritage ranges instead of introducing new products. Another significant change in stance comes in the form of advertisement. In order to meet the increasing competition, the company decided to give up its crusade against advertisements. In July 2001, the company hired an external advertising agency for the first time in its history. Soon, there was a total change in the appearance of the Body Shop stores. As Roy and Ghosh (September 2008) state, there was a new skin care line, a fragrance collection, and a new color theme for the “Colorings’ cosmetics. In addition, the company changed its corporate logo. As the company’s global marketing director Andy King opined, the new brand image can be better termed ‘mastige’ (Roy & Ghosh, 2008). The terms indicate that the whole new Body Shop stands between mass market and prestige. Evidently, the company has decided to give up some of its blind adherence to prestige and tradition, and has decided to reach masses. The traditional shop interior of dark floors gave way to neutral tiles and hemp-coated backlit screens. Colorful and bulging shelves gave way to attractive glass counters. Moreover, the company introduced new schemes like ‘spa wisdom’ range, ‘invent your scent’ perfume counter, and ‘love your body’ loyalty scheme. Though the company won the 2005 Royal Society Award for Prevention of Cruelty to Animals, evidently, the company has gone back from its motto of ‘reduce, recycle, and reuse’. Presently, the company has its presence in 53 nations. Current Restructuring Strategies of the Company As the company fell prey to its own excessive ethical passions, it became necessary for the company to have a total restructuring by 1990s. Anita Roddick gave up her position as CEO and Patrick Gournay was invited to lead the company. Soon, the company managed to initiate a number of changes. The first change was the replacement of about 300 employees to cut costs. In addition, the company decided to reduce excessive launch of new products and to develop on the existing heritage items. In order to answer the issue of inventory accumulation, the company bough its most franchisees back, and inventory management responsibilities were handed over to the regional teams. In order to force people to give up franchisee, Body Shop stopped supplying key products to franchisees. In addition, the company introduced a totally new format for its stores along with anew skin care range, a fragrance collection and a new color code for the ‘Colorings’ cosmetics line. In order to change the appearance, it also changed its logo. Another drastic change was the dependence on advertisement agencies for publicity. Soon, the company saw Anita and Gordon Roddick selling a considerable proportion of their share in 2005, followed by Ronald de-Waal, a director. This period saw a rigorous effort from the part of the company to reposition itself away from the excessive concern on social issues. The company started drastic efforts to reposition itself and to create anew image in cosmetics market. According to Andy King, the company’s global marketing director, the Body Shop’s new image is ‘mastige’, a combination of mass market and prestige. (Roy & Ghosh, September 2008). This step involved a number of changes. The Body Shop stores had their interior changed considerably. For example, the traditional dark floors and walls were replaced by neutral color tiles and hemp-coated backlit screens. Building colorful shelves gave way to new glass counters. The black-topped bottles which were of many different sizes were replaced by Boston round containers with white caps. In addition, there was the introduction of ‘invent your perfume counter’ and ‘spa wisdom range’, which are solely aimed at those who would prefer the counters of a department store for shopping. Another attraction is the ‘love your body’ scheme which offers a 10% discount for those who buy a 5 pound loyalty card. Evidently, the company gave up its slogan of reduce, recycle, and reuse. International Strategies of the Body Shop The company is aiming to give more independence to its regional teams in managing inventory. Undoubtedly, this will reduce the burden on the management. In addition, the regional team will be able to function in a better way depending on the trends of the local market. In addition, the company is planning to give more importance to Middle East and Asia to compensate for its loss in America and Europe. However, it is seen that the company is developing its corporate social responsibility in places like Singapore too in the same old way. For example, in Singapore, the company has collaborated with Singapore Sports Council to organize a National Leisure Cycling event as a part of the Save the World Campaign. Moreover, the company has joined hands with UNICEF to work for children in East Timor. In addition, there are recycling bin programs, AIDS awareness programs and employment of AIDS positive staff. Though these are highly beneficial for the society, they many not do good to the business. Cooperative Strategies of the Company In fact, the company remains in good relations with almost all environmentalists and human rights advocates. Admittedly, this will do good for the company as they do not attack the company and its operations as they normally do with other businesses. However, the company also makes unwanted opponents like the Nigerian government and the Shell Company (Campaign history). Moreover, it is seen that despite a lot of effort in the social front, what the company gained is equal amounts of acclaim and criticism. The more the company publicized its ethical grounds, the more its flaws were criticized. In addition, the company has developed a poor image by buying its all franchisees back and by depriving the remaining franchisees of essential services. Thus, in total, the company has presented a poor picture in the business world. In other words, its relations with its franchisees are somewhat broken. Now, the only viable solution for the company is to give up its pretence as a saint and avoid unnecessary claims of ethics. It should give more priority to business and business related ethics instead of essentially answering all the social problems. It is ironic to see a company protecting general public when its own employees are losing jobs. Recommended Strategies The company, from the analysis, has been passing through a difficult situation. It is facing problems with the heavy corporate social responsibility it has developed. Undoubtedly, a business is less likely to survive if it stresses more on ethics than on profit. So, the first step for the Body Shop will be to develop a balance between corporate social responsibilities and profit. The second thing is to divide the company into independent units in various continents with separate corporate social responsibility and independent operation. Also, the company should give more responsibility to its regional teams to promote the sales of the products. In addition, regional units should be allowed maximum independence in sales and management. This would help the company identify the areas where there is no profit. Another important point is the expansion of business to Middle East and Asia. Admittedly, the consumers in these continents are not so particular about environment and CSR though they care for it. So, the company should not think about avoiding advertising. Admittedly, the company has done well by reducing the number of new products launched every year. Now, what the company has to do is to introduce new products regionally. First of all, it should observe how various products are sold in various regions, and then either it should modify products accordingly, or should cancel the products for that region and should introduce new products that suit the region. In other words, there should be a research team for each region that looks into the demands of the local markets. The advertising and introduction of new products should be designed accordingly. It is rather wise from the company to decide to buy ingredients from community traders from socially underprivileged societies. Now, when the company moves to new geographical areas like Asia and Middle East, it not only should start collecting ingredients from them, but also should start manufacturing units there. Another vital point is the shifting of all social works and human rights initiatives to the Body Shop Foundation. That should be kept as an entirely separate entity from the Body Shop. In the operation o the company, the only motto should be profit and a part of this profit should be diverted to the Foundation for socially useful works. Admittedly, the company has done well by introducing a totally new interior for its stores. In addition, it seems a good decision to reduce the number of new launches. Now, what the company has to do is to use information technology to keep track of its customers, especially the regular ones. Those who wish to get updated for new products and offers should be given email and mobile alert. In addition, this system could be used to gather customer feedbacks. Another point is to raise the number of outlets in Asia ad Middle East. When it comes to Asia, the company should have their stores conveniently located as most Asian cities are overcrowded. Another point is that in Asia, and Middle East, people look for brand names and quality of products instead of the CSR of the company. So, it is vital for the company to develop the image of a quality brand instead of an ethical brand. Another important point as found by customers is that the company fails to ensure regular supply of items to its stores, and the employees are, at times, unaware about new arrivals. This situation can undoubtedly make the customers frustrated, and they may resort to find new stores. So, according to Jun (2011), it is necessary to ensure proper supply of items. In order to avoid the issue of inventory accumulation, the company should develop inventory for each region separately, taking into account the regional needs. In the case of US and Europe, the company will have to place a change that is not immediate. After handing over the social work to the Body Shop Foundation, the company should stress of profit. As it is found, increase in social work is accompanied by a fall in profit. Despite all these years of total attention on corporate social responsibility, the company could not reach profits. Instead, its performance has gone down. So, evidently, what is required is a balance between both. Implementation and Control The first thing is to have the company divided into independent units for various continents. As the company has already created a highly ethical appearance in Europe and US, it is not possible for the company to introduce a total step back from its stated policies. So, in these two continents, the company will have to improve on its existing range of products, gradually minimizing its stress on social corporate responsibility and unwanted claims. On the other hand, in Asia and Middle East, the company should go for aggressive advertising and marketing, thus making up for the loss it faces in other places for the time being. However, in order to make sure that the essential principles of human rights are followed in its regional operations, there can be a CSR enforcement team that inspects its regional operations many times a year. References The body shop: The evolution of business in society. (n.d). Retrieved from http://links.smu.edu.sg/works/modules/BGS/BodyShop/Body%20Shop%20grp2.pdf Campaign history. (n.d). The Body Shop International. Retrieved from http://www.thebodyshop.com/_en/_ww/values-campaigns/campaign-history.aspx Jun, Y. (June 2011). Two challenges faced by retailer. The Body Shop. Retrieved from http://thebodyshoppers.blogspot.com/2011/06/yijun-1.html Living our values. (2009). The Body Shop International Values Report 2009, 1-54. Retrieved from http://www.thebodyshop.com/_en/_ww/values-campaigns/assets/pdf/Values_report_lowres_v2.pdf Roy, S & Ghosh, L. (September 2008). Business as unusual: A case study on the body shop. Journal of Applied Case Research. Southwest Case Research Association, 1-23. Retrieved from http://www.swcrahome.org/Cases/Body_Shop.pdf Read More