Sustainable Management Futures - Essay Example

?Sustainable Management Futures Table of Contents Table of Contents 2 Brief of ‘The Body Shop’ 3 PESTEL Analysis 4 of the 'Sustainable' Aspects of the Company 5 Identification of Benchmarks and Good Practices 7 Analysis: 'Esty and Winston's AUDIO Analysis 9 Recommendations 11 Conclusion 12 References 13 Bibliography 16 Brief Description of ‘The Body Shop’ Founded by Dame Anita Roddick, ‘The Body Shop’ was first stared in the year of 1976 with around 25 natural products which were hand mixed. Headquarter of The Body Shop is situated at Littlehampton, West Sussex in England. The Body Shop is at present under the parent company of L’Oreal Group. It has over 2500 stores which are situated in more than 60 markets globally (The Body Shop, 2011). The Body Shop is also involved in running different campaigns such as protecting animals, human rights abuses and fight against HIV among others. The Body Shop’s business is not only concerned for profit generation motive but are also concerned about society and environment and belief in sustainable growth. The Body Shop has their community suppliers. There are around 31 community trade related suppliers in 24 countries. Their commitment is towards trading fairly and purchasing ingredients through Community Trade Programs. They provide preference to rural areas to become the member of the community trade for the growth of economy. The motive of community trading is to provide occupation and to build their livelihood (The Body Shop, 2006). The Body Shop International Plc is a natural, original and ethical cosmetic brand. All the products of The Body Shop are vegetarian. The company is against animal testing and is recognized as the first international cosmetics brand that was ‘Against Animal Testing’ policy. The Body Shop Foundation was launched in the year 1990 with a registered charity number. It is the company’s own charitable foundation which specially focuses to help those who believe in development of the society (The Body Shop, 2011). . PESTEL Analysis PESTEL analysis enables to identify macro environmental aspects that generally are seen as prime drivers for change. The Body Shop has a global presence in number of countries throughout the world. In this context, the situational analysis of The Body Shop will be conducted with respect to the UK scenario. In the UK, the organisations that operate in the cosmetic industry have to abide by the ISO 22716 safety related standards which had been published on February 2010. The organisation such as The Body Shop has to select the specification that they come under from this certificate. In the UK, organisations have to abide by international trade policy to import and export their products. In recent times there has been an increase in the demand for online products. The government as well as the industry of the UK has supported the scheme related to trust mark, which has significantly helped in increasing the demand for online purchases. The exchange rates in the UK have been fluctuating with respect to Pound and also in the various countries from which the company acquires its raw materials. It has impacted in raising the import cost of raw materials as well as finish products. There has been an increase in VAT (Value Added Tax) to 20% in 2010, which has prompted an increase in daily commodity prices and would reduce the consumers from purchasing cosmetics related products. In the UK, high labour cost has been a concern in recent times which obstructed the company from fully exploring their global strategies. In the UK, the percentage of people in the age group of 65 to 85 is increasing, which would provide an opportunity of increasing sales regarding the anti-aging cosmetics. In the year 2012, the London Olympic Games will provide an option to create increased awareness of the products of the company among the huge number of visitors in the UK. The growing trend of natural products that are environment friendly will provide The Body Shop a massive growth prospect as the company endorses such products. The government of the UK has intended to reduce carbon emission, thus the companies such as The Body Shop has to follow the regulations while preparing products (Heather, 2010). Description of the 'Sustainable' Aspects of the Company The Body Shop is globally renowned as an original natural as well as ethical beauty brand. The values of the company have always been towards creating society which lives in harmony (The Body Shop, 2009). It has been regarded as retailer which is environmentally responsible. The company strives to ensure the well being of their existing as well as future stakeholders. The company also focus on putting their efforts on various issues that have an impact on environmental aspect and it also endeavours to reduce or offset those impacts by efficient management, industry collaboration and also stakeholder engagement (Ecodesk Beta, 2010). In terms of corporate social responsibility aspect, The Body Shop has been doing their bit. It has created sustainable supply chain related strategy and has been engaged in community based development related projects. The company works along with its suppliers in order to endorse practices that are socially responsible in supply chain process. Community Trade has been its supply chain strategy which aims towards purchasing natural ingredients as well as accessories from communities that economically or socially marginalized throughout the world. The Body Shop has also initiated Ethical Trade Program to develop conditions for the workers who are in the supply chain. In its community based project segment, The Body Shop had launched ‘Stop Violence in the Home Campaign’. The company also donates a section of the pre-tax profits towards corporate philanthropy. The Body Shop Foundation is working towards providing funding for frontline organisations to support them to get established. The charity also focuses on assisting in areas related to human as well as civil rights, animal and environmental protection (Bilson, 2010). The Body Shop has initiated a strict policy regarding animal testing. The campaign of the company led towards a UK wide ban regarding animal testing of the cosmetic products as well as ingredients. For this policy the company became the foremost cosmetic brand to receive award of the Humane Cosmetics Standard (The Body Shop, 2006). The company was awarded by business a ‘Big Tick’ for their community as well as ethical trade program. The Body Shop also won the RSPCA Good Business Award for their commitment towards animal welfare (The Body Shop, 2009). The WWF (World Wildlife Fund) has applauded The Body Shop for the first toiletries and cosmetics retails to bring in sustainable palm oil in the industry (WWF, 2007). Identification of Benchmarks and Good Practices The differentiated skills and behaviours of the company are the competitive and sustainable advantages of The Body Shop. During the year 1984, company had first gone for initial public offering at 95 pence and rose to the price of 820 pence by 1986. There are certain unique capabilities that make The Body Shop different from others and help the company to retain the customers. The core competencies of the company are as follows: The cosmetic products are all natural that advocated social good The company has the capability to communicate with their customers on heart-to-heart level Ability to discover the product through the practices of women throughout the world No false promises and emphasizing truth in advertising Importance is given to customers’ beauty rather than focusing on models portray The standards are maintained by consistently communicating with customers through links (fax, bulletin boards) in every shop Reliance on direct customer feedback In this context it can be observed that the expense in packaging of The Body Shop had been quite less, it used 0% advertising as compared to other similar industries normal of around 30%. The company generates free media exposure, committed employee (mostly young women) through Shopworks Project. The importance of The Body Shop’s competencies was revealed in the performance by the end of the year 1990. In that year, the return on capital was 43.6% in contrast to 16.5% for the industry. The profit margin was registered at 17.2% in comparison to 4.8% of industry (Kwapong, 2005). There are many competitors of The Body Shop such as Bath and Body Works, Lush and Aveda. Among them the major competitor is Aveda, owned by Estee Lauder and it operates in 19 countries connecting beauty, environment and well-being to form a unique corporate position. The wild medical plants are a vital source of medicine. Oil extracted by Caiapo Indians is used by The Body Shop for manufacturing skin cream as well as shampoo. Aveda manufactures cosmetics by utilizing vegetable bleach called urucum plant (Petrova, 2003). The Body Shop and Aveda are involved in Community Trade. They have the group of suppliers from different regions which supplies natural ingredients to provide employment to the poor people for the development of economy. Aveda was one of the first companies in the United State to avoid plastic packaging. The company considers that authentic beauty is a factor which works in accord along with the greater web of life which cares for the environment. Aveda holds an environmental sustainability policy, which aims to protect biodiversity. The unique features of the head office of Aveda include a corporate wellness related centre, an Organica Restaurant which offers organic foods, and a stress alleviating experience, direct sunlight in all the area of work, on-site daycares, an environmental lifestyle store, and a building surrounded by 65 acres of wetlands (Nicholas, n.d.). Analysis: 'Esty and Winston's AUDIO Analysis The AUDIO analysis considers the different aspects of a company and identifies their impact on various factors associated to it. AUDIO analysis is used for issue spotting by which environmental strategy of an organisation is decided. The prime purpose of this analysis is to identify as well as listen to various aspects in the value chain to find out issues and also opportunities prevalent. The five factors of AUDIO analysis denote aspects, upstream, downstream, issues and opportunities. The following are the challenges for the Body Shop: Challenges Aspects Upstream Downstream Issues Opportunities Climate Change Emission of CO2 Renewable energy source from suppliers Emission from customers driving to stores (hybrid cars policy) Possible carbon charges Emphasis on original positioning of ethical beauty Reducing Packaging waste Quantity of garbage generated Make the suppliers to use the recycle material Packaging can be recycled through standard household and business recycling systems Increase safety legislation and cost of waste disposals Offer to take back recycle options Responsible use of chemicals Use of chemicals in operation End animal testing for cosmetic purposes, no use of preservatives Chemicals in product used by the consumers Improvement in accuracy of raw material data Selling environmental friendly products (The Body Shop, 2009; Esty & Winston, 2009). Recommendations The Body Shop has been recognised as an organisation which provides care regarding the environmental issues and has over the years maintained their concern regarding environmental aspects. In future too, the company should endeavour to manufacture environmental friendly products in order to maintain sustainability. The raw materials that are used in the preparation of products of The Body Shop have to be such which generates low carbon emission. In order to reduce packaging waste, the company should look to recycle their waste material. It also requires its suppliers and customers to inculcate this endeavour of the company so that they also contribute in this providing and using recyclable materials. The company must restore its integrity through greater transparency. The full function of this leads to new leadership. The Body Shop has to appoint an external auditor to conduct an annual social audit to increase transparency and accountability. The company can also use product structuring for quality, packaging and ingredients. There is a need in improvement in franchisee relation and should encourage open communication along with improving training policies (Nicholas, n.d.). The company has to provide emphasis on public relations. ISO 14001 could improve the sustainability of the process used and the safety of the employees. This standard intends to develop environmental management system. This system endeavours to build up a systematic management approach towards environment related concerns for an organisation. It ensures continual improvement in case of environmental management (Martin, 1998). Conclusion The Body Shop is a brand which always tries to maintain ethical standards in their operations. The company have over the years endeavoured to practice fair trade in their business. In this regard, it has developed community trade programs and has also participated in human rights activities and were first to raise their concern and prevent animal testing in cosmetic products. The company was also the pioneer in using products such as natural sustainable palm oil as an ingredient. These aspects have always benefitted The Body Shop to garner applause and praise from local authorities as well as global environmental body such as WWF. In this context, it can be observed that the competitors of The Body Shop are offering products at low cost with low quality but The Body Shop never compromises on quality while manufacturing a product. The opportunities for The Body Shop are to target on ethical beauty and humanitarian issues. It is also observed that the customers prefer online shopping hence it is one of the opportunities for The Body Shop to increase their customer base. The profit of the company and the demand of product had seen a reduction due to recession and product manufacturing can be affected due to fluctuation in exchange rate. The buying power of customers may change and affect the companies which are depended upon the factors such as promotion, ethics and values due to change in culture and behaviour of customers. Therefore, keeping in view these aspects, it can be said that The Body Shop has been able to maintain their sustainability due to their ethical practices and also due to their concern and care for the environmental issues at large. These factors in future can support The Body Shop to maintain sustainability in the prevailing competitive business environment. References Bilson, J., 2010. Corporate Social Responsibility at Body Shop. Home. [Online] Available at: http://www.suite101.com/content/corporate-social-responsibility-at-the-body-shop-a215660 [Accessed April 30, 2011]. Esty, D. C. & Winston, A. S., 2009. Green To Gold: How Smart Companies Use Environmental Strategy To Innovate, Create Value, And Build Competitive Advantage. John Wiley and Sons. Ecodesk Beta, 2010. The Body Shop. Home. [Online] Available at: http://www.ecodesk.com/sustainability/the-body-shop/ [Accessed April 30, 2011]. Heather, J., 2010. Strategic marketing Management. Scribd. [Online] Available at: http://www.scribd.com/doc/53187756/Strategic-Management [Accessed April 30, 2011]. Kwapong, O. A., 2005. MBA Concepts and Frameworks - Tools for Working Professionals. Songhai. Martin, R., 1998. ISO 14001 Guidance Manual. National Center For Environmental Decision-Making Research. [Online] Available at: http://www.usistf.org/download/ISMS_Downloads/ISO14001.pdf [Accessed April 30, 2011]. Nicholas, J, No Date. The Body Shop: Does A “Body” Good? A Social and Environmental Responsibility Audit. [Online] Available at: http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBUQFjAA&url=http%3A%2F%2Fwww62.homepage.villanova.edu%2Fjonathan.doh%2Fbodyshopfinal.doc&rct=j&q=The%20Body%20Shop%3A%20%20Does%20A%20%E2%80%9CBody%E2%80%9D%20Good%3F%20A%20Social%20and%20Environmental%20Responsibility%20Audit%20Janell%20Nicholas&ei=3JG-TeenMcztrQeT2uyCBg&usg=AFQjCNG4GwiMhPdOLe1JmOw7La76rHE4PQ&sig2=tKwCzGa14lt1X89rjg9rrA&cad=rja [Accessed April 30, 2011]. Petrova, A. P, 2003. From the Amazon to the Alps: A Comparison of the Pharmaceutical Biodiversity Legal Protection in Brazil and Switzerland. Pace International Law Review. [Online] Available at: http://digitalcommons.pace.edu/cgi/viewcontent.cgi?article=1179&context=pilr&sei-redir=1#search=%22comparison+between+Body+Shop+and+Aveda+site:edu%22 [Accessed April 30, 2011]. The Body Shop, 2006. The Body Shop A Company With A Difference. Company Profile. [Online] Available at: http://www.thebodyshop.co.uk/_en/_gb/services/pdfs/AboutUs/TBSI_Company_profile.pdf [Accessed April 30, 2011]. The Body Shop, 2011. Our Company. About Us. [Online] Available at: http://www.thebodyshop.com/_en/_ww/services/aboutus_company.aspx [Accessed April 30, 2011]. The Body Shop, 2009. Values Report. Values-Campaigns. [Online] Available at: http://www.thebodyshop.com/_en/_ww/valuescampaigns/assets/pdf/Values_report_lowres_v2.pdf [Accessed April 30, 2011]. WWF, 2007. WWF Applauds New Body Shop Sustainable Palm Oil Pledge. Home. [Online] Available at: http://www.wwf.org.uk/wwf_articles.cfm?unewsid=1536 [Accessed April 30, 2011]. Bibliography Guardian, 2011. Body Shop Deserves Respect For Putting Human Values Above A Quick Buck. News. [Online] Available at: http://www.guardian.co.uk/global-development/poverty-matters/2010/oct/11/body-shop-supplier-dispute-ethics [Accessed April 30, 2011]. Stead, W. E. & Et. Al., 2003. Sustainable Strategic Management. M.E. Sharpe. The Body Shop, 2011. Our Values. Values & Campaigns. [Online] Available at: http://www.thebodyshop.co.uk/_en/_gb/values-campaigns/index.aspx?cm_re=Footer-_-AboutTheBodyShop-_-Values [Accessed April 30, 2011]. Read More