External Factors influences and Impact on The Body Shop

The external environment is categorized into seven actors: sociological, technological, economic, environmental, political, legal and ethical. These different aspects can have a huge influence on a businesses’ objective and strategies. The ‘STEEPLE’ analysis is a useful way to assess the impact of the external environment and the opportunities and threats that lies within it. Thus, it allows the company to align positively with the powerful forces of changes in the environment when setting a framework for future development.

I chose the body shop because is the second largest cosmetic franchises in the world and I like they way in which they encourage others to be environmental friendly. There motto is very inspiring, ‘natural’s way is to beautiful’ and it creates a very positive image for the company. The business is known for its cosmetic products that are naturally made and environmentally-friendly which serves as a competitive advantage. The body shop has always been aware of the changing external environment and has always been focused on the ethical, environmental factors.

Many changes have occurred in society in the last few decades, such as Attitudes, value, lifestyle, buying habits, household and age-profile. The demographic changes greatly impact the human resources and market strategies, sales of a company. The first shop was a success in the United States, and so 13 more were soon opened, however, the trouble was that there was a lot of competition rising such as Estee Lauder etc and therefore the company was at risk. Nowadays, due to the aging population, results have shown that the sales for anti-aging products in The Body shop are increasing because the public are more willing to spend on premium-priced products claiming anti-aging properties. From the last couple of years, 20-35 years old, cosmopolitan men are demanding for personal care products, which serves as a great opportunity for The Body Shop to break into a new market. To eliminate the threats, The body shop has decided to merge with other strong cosmetics companies to combine into larger ones, to reinforce their position in the market.

The development of new technology and skills has lead to a lot of businesses adopting advanced technology into their production methods and to their product for added value. The convergence of computing, communication and information has allowed an increase no. of on-line buyers. New technology has allowed cheaper and fast production methods in the Body Shop, which means goods are available and productivity to increase. In addition, the new technology also provided training opportunities for the employees.

Economic conditions highly affect a business’ success and profit at any time because they affect both capital availability and costs and demand. The economy is influenced by the political and government policy, being a major influence affecting government decision. The interest rates charged for loans will be affected by inflation and by the international economy. The downfall of the economy recently has brought a positive and a negative effect to The Body Shop. The falling interest rate plays as a favor of the company’s franchising policy as a growth strategy. However, the collapse of banking institutions and the economy has affected business sales and profits in general as people are less willing to trade. Furthermore, the exchange rate depreciation indicates that the business’s cost has increased a lot as the fall of pounds indicates that they have to pay higher prices for imported ingredients and products which created a decrease in the profit made.

With the increasing globalization of business, society has been more concern with the degradation of the environment and concern for the benefit of the employees and the public in general. The society has call for attention to industries for social responsibilities. The body shop hopes to have a positive corporative image, therefore they run campaigns, encouraging people to care for the environment and work for the world’s wild life. They have formed an alliance with ‘Friends of the earth.’ What they have done to raise awareness is to change to sustainable green packaging, recycle by-products, hoping to bring a better future.

The political factor involves a range of area such as changes in employment, consumer, competition, and tax laws, or a new government. This is important as it might bring new political objectives into the business. The body shop has noticed the political factor’s influences on the company and its image. Therefore they are considering the concept of effective corporate governance as their competitive advantage and to maintain expressive relationships to their stakeholders. The company also actively monitors compliance with the law and the global financial policies and practices over critical area. Such as financial accounting etc.

The legal factors are very important to give a sense of order and safety in the society and this allows the community to feel secure. In order to protect the health and safety of the community, a new chemical legislation has been brought up in the EUM stating that chemicals imported into Europe in amounts of 1 tonne per year will need to be registered with a new European Chemical Agency, and also they have banned the sale and marketing of animal-tested cosmetic products throughout the EU from March 2009.

Although the role of the moral environment is restrictive, and places limitations on business activity. Moral disapproval of certain economic activities can lead to political pressure for legal controls, resulting in laws against such matters such as pollution, which can highly affect the reputation of the company. The body shop has realized that the public is becoming more concerned with the environment and making ethical decisions. Therefore, their whole marketing strategy has been built around an image of moral rectitude. The Body shop’s main focus is to help and support social environmental and human rights issues across the globe. They have a clear code of ethics which includes a conflict of interest policy to ensure that key corporate decisions are made by individuals who do not have financial interest in the outcome separate from their interest as company officials. The Body Shop foundation is the charitable arm of the company and is funded by the company as well as other fundraising measures. They have continued to raise awareness for Women across the world affected by domestic violence in 2008. They gain free publicity due to the frequent media exposure.

Through the STEEPLE analysis, we can see that The Body Shop is definitely very successful in fulfilling the moral obligations and creating brand loyalty and assurance to the consumers. However they would have to make changes to their objectives and add to their unique selling point in order to make further improvements and to be aware of the external factors, such as the sociological factor and the technological factor. For example, they can make further improvements and advertise their company through the use of the internet and improve online channels of distribution and incorporate new machines into the company, utilise resources of the host countries to minimize production cost. Also, they should be up the front and produce cosmetics which will satisfy the wants and needs of the customer and be aware of the changing trends and attitudes to be ahead in competition and grasp every opportunity.