Modern College of Business and Science The Body Shop Company Case Study see file attached 1900-2000 words ………………………………………………………………………… Submission Deadline
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Module title & code
Foundation to Business Strategy & BC12-2
Assignment number and title
WR-I (Final Assessment)
Assessment type
Individual Report
Weighting of assessment
50%
Module learning outcomes
1.Knowledge and Understanding:
Discuss the concepts and theories underpinning strategic planning and its role in
the success of an organization.
2.Skills and Abilities:
Apply relevant analytical tools to evaluate the impact of external and internal
environment on a given firm’s competitive position and recommend appropriate
competitive strategies within the context of a dynamic competitive environment.
What am I required to do in this assignment?
Report guidelines
Students are expected to analysis the case to qualify this assessment. The case will be provided to the students in 12th week.
Students are expected to complete following tasks:
Task 1
Critically evaluate the charter, vision and mission statement of the Body Shop Company using
academic literature on well-crafted Vision and Mission Statement.
Students are expected to demonstrate the conceptual understanding of the characteristics of well-crafted vison and
mission statement and its significance in designing the strategies of companies to achieve the long run goals using
academic literature. Students are expected to apply their analysis and application skills and evaluate critically the
vision and mission statement of The Body Shop applying the characteristics of well-crafted vision and mission
statement.
Task 2
Using a relevant academic literature elaborate on the types and expectations stakeholder and critically
evaluate the Body Shop’s Stakeholders auditing and position using Mendelow (Power x Interest)
Matrix of stakeholder’s mapping.
Students are expected to discuss following important aspects of stakeholder analysis such as –
Who is stakeholder?
Types of Stakeholder – Internal and External Stakeholders
Stakeholders’ expectations using relevant academic literature.
Students are expected to explain Mendolows matrix of stakeholder mapping by using appropriate diagram and discuss
the power and interest matrix of different categories.
An ideal answer is expected to analyse and evaluate the stakeholders of The Body Shop and bifurcate them into
different categories based on their Power and Interest with justification.
Task 3
Elaborate on the porter’s generic strategies using academic literature and choose the suitable strategy
for the Body Shop to gain sustainable competitive advantage. Justify your answer.
Students are expected to elaborate on the Porter’s Generic Strategy and identify which of the porter’s generic strategy
to be adopted by the Body Shop for gaining sustainable competitive advantage. An ideal answer should include
following important aspects …
➢ What is competitive advantage?
➢ What are the sources of Competitive Advantage?
➢ Explain the Porter’s Generic Strategies and its advantages
CASE
The body shop approach to stakeholder-auditing
Introduction
This case study focuses on how The Body Shop assesses its own business performance whilst taking into account its
different stakeholder groups and their various aims and objectives.
In 1976, Anita Roddick opened the first The Body Shop in Brighton, selling 25 naturally-based skin and hair care
products. The Body Shop International Plc now has over 1,500 stores in 47 countries selling over 400 different
products. The Body Shop story, however, is not just of a highly successful market-oriented manufacturer and retailer
of toiletries and cosmetics. Like its founder, the whole organisation is committed to issues such as respect for human
rights, animal and environmental protection. The organisation has arranged and supported national and international
campaigns on animal testing in the cosmetic industry, women’s rights, anti-nuclear testing and coordinated an
international protest at the sentencing and execution of environmental activist Ken Saro-Wiwa and other Ogoni
leaders in Nigeria who were fighting to protect their community from multi-national oil companies. All business
organisations need to make a profit to survive but the emphasis at The Body Shop is on profit with a wider social
responsibility i.e. ‘profit with principles.’
The Body Shop Mission Statement
•
To dedicate our business to the pursuit of social and environmental change.
•
To creatively balance the financial and human needs of our stakeholders employees, franchisees,
customers, suppliers and shareholders.
•
To courageously ensure that our business is ecologically sustainable, meeting the needs of the present
without compromising the future.
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•
•
•
To meaningfully contribute to local, national and international communities in which we trade, by adopting
a code of conduct which ensures care, honesty, fairness and respect.
To passionately campaign for the protection of the environment, human and civil rights and against animal
testing within the cosmetics and toiletries industry.
To tirelessly work to narrow the gap between principle and practice, whilst making fun, passion and care
part of our daily lives.
Underpinning the Vision and Mission Statement is a Trading Charter which addresses the three principal ethical
concerns of The Body Shop.
The Body Shop Vison and Trading Charter
The vision statement of The Body Shop is – “Our predominant focus is on being a world-class retailer, offering our
customers prestige products at value-prices, with excellent customer-service.”
The Trading charter of Body Shop is as follows –
We aim to achieve commercial success by meeting our customers’ needs through the provision of high quality, good
value products with exceptional service and relevant information which enables customers to make informed and
responsible choices. Our trading relationships of every kind with customers, franchisees and suppliers will be
commercially viable, mutually beneficial and based on trust and respect.
Our trading principles reflect our core values. We aim to ensure that human and civil rights, as set out in the Universal
Declaration of Human Rights, are respected throughout our business activities. We will establish a framework on this
declaration to include criteria for workers’ rights embracing a safe, healthy working environment, fair wages, no
discrimination on the basis of race, creed, sex or sexual orientation, or physical coercion of any kind.
We will support long term sustainable relationships with communities in need. We will pay special attention to those
minority groups, women and disadvantaged peoples who are socially and economically marginalised.
We will use environmentally sustainable resources wherever technically and economically viable. Our purchasing will
be based on a system of screening and investigation of the ecological credentials of our finished products, ingredients,
packaging and suppliers.
We will promote animal protection throughout our business activities. We are against animal testing in the cosmetics
and toiletries industry. We will not test ingredients or products on animals, nor will we commission others to do so on
our behalf. We will use our purchasing power to stop suppliers animal testing.
We will institute appropriate monitoring, auditing and disclosure mechanisms to ensure our accountability and
demonstrate our compliance with these principles.
Traditional economic theory suggests that the primary reason for a company’s existence is to expand its profitable
business. Assessing the company’s performance becomes simply a question of comparing profit levels with forecasts
and targets. The owners’ prime objective is to maximise their wealth. The Body Shop, however, has been at the
forefront of a growing number of companies who recognise that there are a number of different groups in society with
an interest in its performance. These different groups, or stakeholders, may have different priorities. The way the
business operates affects them and their expectations may influence the way a company sets its objectives and how it
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seeks to achieve them.
The Body Shop believes that it should be open and honest in its business dealings and first committed itself in 1991 to
an active programme of ethical auditing. This has come to include:
a social audit, an environmental audit, an animal protection audit.
The Body Shop directly employs 2,500 staff at the Headquarters in Littlehampton and all company-owned facilities
and shops in the UK. The employees’ aspirations include job security and diversity, a fair income, promotion and
training opportunities. Workers’ rights, including a safe, healthy working atmosphere, fair wage rates and no
discrimination on the grounds of race, gender, creed or sexual orientation are set out in The Body Shop Trading
Charter. Senior managers must run the organisation in such a way as to satisfy the different groups of stakeholders.
This may not be easy and conflicts of interest may develop. Priorities may have to be agreed and compromises made.
The managers’ jobs may be made harder as the different stakeholders’ objectives may change over time according to
how the firm is performing.
The Body Shop is a multi-local business, built on franchising. Although the firm owns a number of shops, 1,300 of the
1,500 outlets are franchised. This has allowed the phenomenal growth rates of the firm over the last 21 years.
Franchisees have the benefit of an easily recognised, proven product and brand name, guaranteed supplies, training
and advice and the use of the company livery. Franchisees own their businesses and are dependant on them for
income. This will, therefore, affect their objectives.
In the 52 weeks to 28th February 1997, The Body Shop recorded 87 million customer transactions. This means that
every 0.4 seconds, someone, somewhere buys something from The Body Shop. Customer care therefore has become a
crucial part of the trading policy. The Body Shop customers demand not only high quality, value for money products,
but also recognise the need for environmental responsibility. The customer needs to be well-informed in order to make
responsible choices.
The Body Shop has hundreds of suppliers, all of whom have their own stakeholders to satisfy. For smaller suppliers,
profits and income may be significant, but also discounts and payment periods may be important. In 1990, The Body
Shop introduced the idea of product stewardship which attempts to assess the credentials of ingredient suppliers,
giving them a score from 0 to 3 stars based on their commitment to environmental management and auditing, water
management and the ecological impact of the ingredients and packaging production. In order to assist the suppliers,
The Body Shop has begun to share best practices and benchmarking.
This is a group of 25 suppliers in 13 countries (as at May 1997), such as Brazil, Ghana and Bangladesh, specifically
chosen because they are struggling economically. The Body Shop believes that this trade should be more than the
simple exchange of goods and currency. It wants to help create livelihoods and explore tradebased approaches to
supporting sustainable development by sourcing ingredients and accessories directly from socially and economically
marginalized producer communities. The emphasis is on long-term trading relationships, seeking to work with the
communities rather than exploit them for a profit. The Body Shop offers its knowledge, training, creativity and
purchasing power in exchange for materials. These communities clearly have a stake in the future success of the
organisation.
The Body Shop is a Public Limited Company and its shareholders are the legal owners. Individuals and institutions
buy shares in order to make a return on their investment. Although shareholders may recognise the importance of
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social and environmental issues, the share price remains important. A falling share price can wipe millions of pounds
off the value of a company. In theory, if the shareholders are dissatisfied with the performance of the company, they
can remove the Board of Directors at the Annual General Meeting.
Although a firm has many objectives, it is part of a local community and therefore, has a responsibility to the
community in which it operates and the local economy. In Littlehampton, for example, a town with unemployment
above the national average, The Body Shop is the second largest employer. Job creation is therefore very important to
the town. The Body Shop also allows its employees paid time off to do volunteer work in their local community.
The Body Shop is committed to best practice in environmental management and is against animal testing on cosmetics
and toiletries. All groups involved in these issues will be interested to see how The Body Shop performs. Their
objectives may be different from other stakeholder groups and their measures of success may conflict.
Methodology
The word ‘audit’ may conjure up images of finance and accountancy, but an audit is simply a method of checking a
firm’s progress. How successful has it been compared to its stated objectives? With so many different interested
groups, with contrasting aims and objectives, this is not as straightforward as it may appear. As with a financial audit,
the first step is to find a suitable, credible independent organisation to verify the audit with its social audience. The
Body Shop worked closely with the New Economics Foundation, a UK based think-tank, to design and tailor the audit
methodology to The Body Shop.
The over-riding challenge of stakeholder, or social, auditing is finding a way to measure how people think. Some
objectives, targets and performances are reasonably easy to quantify; if, for example, the local community’s objective
is to reduce regional unemployment, then new jobs created can be measured. Shareholders’ dividends, employees’
wages or customer complaints are quantifiable, but for many of the objectives, it is impossible to apply tangible
measures such as numbers and statistics to intangible human thoughts and emotions. It is also important not to let the
voice of one stakeholder drown others. Minority views need to be recognised and therefore the external verifier must
ensure that the correct balance is struck. The Body Shop took a year to research, develop and formalise its social
auditing procedures and since its adoption in 1994, a great deal of fine tuning has occurred.
The audit involves a mix of focus groups, market research-style questionnaires, face-to-face interviews and data
collection. The information is collected from each of the stakeholder groups – in all, more than 5,000 people were
consulted in the 1995 audit. As with any kind of audit, the true value can only be measured by what follows, so
feedback processes and future action plans are critically important. The overriding objective of a stakeholder audit
must be to make The Body Shop more efficient, more accountable and more effective. Therefore, the organisation
must be completely open and honest and be prepared to acknowledge its failures as well as its successes. External,
independent verification is also important if the report is to be a useful policy tool and not merely a marketing ploy.
Stakeholder auditing: The Body Shop published its first Values Report in January 1996. Inevitably, the report
contained both good and bad news. Around 75% of the employees said they were proud to be part of The Body Shop
whereas 71% said they enjoyed their job. Nearly one in four felt they would have to change companies to develop
their careers.
As far as business partners franchisees are concerned all the international franchisees sampled agreed that the
company takes active steps to make the business more environmentally responsible. Around 91% were satisfied with
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the communications on environmental management and auditing and 35% either had no opinion or disagreed that The
Body Shop portrays its business practices accurately to the public.
Customers being key component of the The Body Shop business scored 9 out of 10 for its ‘Against Animal Testing’
stance and 7.8 out of 10 for its commitment to environmental responsibility. Whereas 7.5 out of 10 for campaigning
effectively on human rights, environmental protection and animal protection. However, it is very much evident from
the survey that the customer complaints rose from 18.3 per 100,000 in 1992/3 to 20.9 per 100,000 transactions in
1994/5.
The 80% of the Body Shop suppliers recognised prompt payment, clarity of delivery and purchase order requirements
and fairness of quality assurance arrangements. Whereas 20% disagreed or strongly disagreed that The Body Shop
purchasing and logistics functions are well structured and efficient.Community Trade suppliers, despite a general fit
with the Fair Trade Guidelines, a small number of partners, questioned by an independent organisation, were still
struggling to be commercially viable in the conventional sense, even though there had been a range of social gains
from The Body Shop relationship. However, from the shareholders’ point of view, 90% shareholder agreed or strongly
agreed that The Body Shop takes active steps to make its business more environmentally responsible.Only 29%
thought that the company enjoyed the trust of the financial community. Whereas 33% did not think that The Body
Shop has a clear, long-term business strategy.
In 1994/5, The Body Shop staff gave 19,500 hours to projects in the community, but this commitment came from only
25% of the employees. As far as The Body Shop campaigns were concerned, more than 3 million signatures worldwide were collected calling for stricter enforcement of the Convention on International Trade in Endangered Species,
but tragically a human rights campaign which started in 1993 failed to prevent the execution of Ken Saro-Wiwa and
eight other Ogoni leaders by the Nigerian military government.
The future – an on-going process
A stakeholder audit must be evaluated on a continuing basis. The analysis of these results enables The Body Shop to
plan for the future. For example, there are plans for:
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improved communications and more involvement of franchisees in decision making
better internal communications with employees
better indicators for monitoring customer satisfaction
improvements in communication with and support for suppliers
Establishment of formal trading agreements with Community Trade suppliers and the launch of a six point
plan for the encouragement of community volunteering.
For the shareholders, there were promises to adopt a progressive dividend policy and develop and build relationships
with shareholders and prospective shareholders. Shareholders’ interests would be maximised while also balancing the
needs of other stakeholders. Following the publication of the results of a social audit, it is vital to obtain feedback
from stakeholders and engage them in dialogue. This helps shape future audit cycles, enables indicators and data
presentation to be fine-tuned for future cycles and helps set priorities for future action by the company.
The Body Shop sets itself very tough standards and has an exceptionally ambitious mission – to dedicate its business
to the pursuit of social and environmental change. Measuring how well the company matches up to its ideals has been
a huge challenge. Auditing of all forms is a new science and the principles and pitfalls need to be understood. When it
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comes to such open disclosure, the company can benefit greatly from the negative as well as the positive feedback to
improve performance.
Source: Abridged version of the case adopted from www.businesscasestudies.co.uk
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