The Body Shop International: US Operations

In 1976, Anita Roddick opened her first Body Shop store in Brighton, England, with £4000 in borrowed funds from a bank. She began by selling a small range of skin and hair care products made from natural ingredients (Roddick, 1991, pp. 19, 76).

In the beginning, Roddick did not possess the skills necessary to run a large organization. This can be seen when the Body Shop International (BST), at first, had no business plan and no job descriptions. As a result of this, when the company expanded, it became difficult to retain managers who sought to run the organization more professionally (Hill and Jones, 2004, p. C178). Roddick thought that financial are not unimportant, but to concentrate only on them, in her view, was a “dumb” thing to do (Hill and Jones 2004, p. C179).

The company’s troubles in the U.S. market highlighted top management’s lack of retail and marketing know – how (Hill and Jones, 2004, p. C186). Wheelen and Hunger (2000, p. 26 – 9) said that unsuccessful managers, too many product lines, copycat rivals who discount, and too few products created specifically for the U.S. consumer were of the biggest problems. Besides that, many of the U.S. stores were located in expensive major cities that led to high real estate costs. Due to lack of advertising, the turnover in the Body Shop U.S. leadership and low brand recognition contributed to the problem as well (Wheelen and Hunger, 2000, p. 26 – 9).

Another situation where Roddick showed that she did not possess the skills needed to run a large organization was when the BST’s rapid expansion began to create difficulties. Instead of patiently learning the unique characteristics of the U.S. market and perfecting sales in its existing shops, the company charged into the top malls, to which it was not accustomed to, in hopes of beating its competitors. Moreover, Roddick’s relationship with franchisees began to deteriorate because some of them did not share her enthusiasm about certain causes. Others were unhappy about having to pay the 60,000 pounds purchase fee – something that their counterparts in the United Kingdom were exempted from. Also, as the company expanded, its communication with its franchisees worsened (Hill and Jones 2004, pp. C180 – C181).

But in 1995, the BST retained a management consulting firm to undertake an appraisal of its structure, objectives, and methods o decision making and problem solving (Hill and Jones 2004, p. C179). This shows that Roddick was learning from her mistakes and requiring the skills needed to run a large organization.

In 1997, when the BST products were regularly accused of being “tired” and “lacking innovation”, the BST placed high priority on rationalizing the product range. The goal was to refocus on core lines and values, communicate effectively with consumers, and create new products that were young funk, energizing, and marketed efficiently. Complaints of cluttered, dark, uninviting shops also led the BST to design a new store format (Wheelan and Hunger, 2000, p. 26 – 12).

Question 2

The primary responsibility of a business organization

The primary responsibilities of a business organization should be ethics within that organization and social responsibility. Ethics in any type of business is very important, especially when the ethnic mix of countries’ population continues to change. For firms, the challenge is to be sensitive to these changes. Through careful study, companies can develop and market products that satisfy the unique needs of different ethnic groups. Changes in the ethnic mix also affect a workforce’s composition. Workforce diversity is also a sociocultural issue. Effective management of a culturally diverse workforce can produce a competitive advantage (Hitt, Ireland and Hoskisson, 2003, p. 47).

The corporate governance arrangements for an organization determine the minimum obligations of an organization towards its various stakeholders. Therefore, a key strategic issue within organizations is the ethical stance which is taken regarding obligations to stakeholders. Johnson and Scholes (1999, pp. 225 – 226) says that ethical stance is the extent to which an organization will exceed its minimum obligations to stakeholders and the key issue here for managers is to understand and influence the ethical stance which the organization is taking.

Whatever ethical stance an organization takes, this stance should become an important element of corporate strategy because it helps a company to decide what kind of company it wishes to be – an important element in defining its organizational purposes. There is likely to be a strong relationship between the ethical stance and the character of the company because this will determine how the organization will try to reach its goals and how it will relate to its various stakeholders (Johnson and Scholes, 1999, pp. 228 – 229).

Johnson and Scholes (1999, p. 230) states that corporate social responsibility is the detailed issues on which an organization exceeds its minimum required obligations to stakeholders. The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit. Strategic decisions often affect more than just the corporation. For example, a decision to retrench by closing some plants and discontinuing product lines, affects not only the firm’s workforce, but also communities where the plants are located and the customers with no other source of the discontinued product (Wheelen and Hunger, 2000, p. 39).

Consumers have become more sensitive about the conduct of companies from which they purchase goods and services. Nowadays many people expect companies to be socially and environmentally responsible (Murphy, Thomas and Glazebrook, 2002, p. 2). Many firms have also built their reputation by emphasizing social responsibility. The BST is one example of this, which are environmental expenditures created an environmentally based competitive advantage (Hitt, Ireland and Hoskisson, 2003, p. 74).

Primary responsibilities, in some organization might be to the shareholders, but in my view, primary responsibilities should be shared equally among shareholders, employees, customers and the community. This is because shareholders, employees, customers and the community make up the organization. Without all of these groups, there will not be an organization.

Furthermore, in the BST mission statement, it states that “to creatively balance the financial and human needs of out stakeholders: employees, customers, franchisees, suppliers, and shareholders” (Hill and Jones, 2004, p. C179). The BST set three objectives, to communicate the company’s relations with its stakeholders and one of them is to manage the business with the aim of maximizing shareholders interest, while also balancing the needs of other stakeholders groups (Hill and Jones, 2004, p. C19).

By 1996, the BST had become a symbol of how business success could be achieved while maintaining responsible – even missionary – attitudes to care for the environment and the rights of people in developing countries (Johnson and Scholes, 1999, p. 228). The BST profess to be socially responsible businesses whose corporate agenda includes concern for their employees, their surrounding community, and the global environment (Solomon, 1993).

Question 3

Should business help solve major social problems?

I agree with Roddick that business is about both, that “business should do more than make money, create decent jobs, or sell good products, and that business should help solve major social problems such as homelessness, unemployment and social alienation.” This is because if one was to help solve social problems, that person would also need funds to do so. Murphy, Thomas and Glazebrook (2002, p. 9)

also says that making a profit is the first priority of business. If it does not make a profit, and a reasonable one at that, it will fail.

Roddick believed that business should help solve major social problems by using its resources to come up with answers. The company encouraged and contributed to social and environmental programs by helping such groups as Greenpeace (Hill and Jones, 2004, p. C185). One example of this is when the BST bought an abandoned factory in Glasgow, where unemployment was above the national average. The factory was converted into a soap factory and produced 250,000 bars of soap in its first year. The plant operates at a profit, with 25% of profits being returned to the community for projects such as elder care and day care (Franssen, 1993).

Roddick takes a holistic view of business, seeing herself “not just as a creator of profits for shareholders, but as a force for good, working for the welfare of out staff, for the community and ultimately for the future of the planet itself.” As part of this view, Roddick emphasizes that social conscience is not compatible with profit (Solomon, 1993).

The BST is now part of the social responsibility movement, dynamic and growing movement that is trying to put idealism back on the business agenda. It is said to be successfully challenging the shibboleths of the chambers of commerce, turning instead to another agency – the Business for Social Responsibility group. They are networking and exchanging best practices and ideas, creating new markets of informed and morally motivated consumers, and succeeding and thriving as businesses and as moral forces because of the gritty determination of the people involved. Roddick believe that if companies are in business solely to make money, no consumer can fully trust what they say or do (Roddick, 2000, pp. 60 – 61).

The BST have made it clear that their corporate objectives encompass much more than the economic wealth of their shareholders. Their support for social causes goes beyond charitable donations. Roddick appears to be making every effort to operate the business in a manner that best comports with the needs of the surrounding community and the interests of society at large (Solomon, 1993).

The BST appears to be making an effort to operate business in a manner that is most beneficial and least troublesome to the global society. Going beyond charitable giving, the BST have managed to incorporate their social concern in their business decisions in a variety of specific instances. They represent the use of business as an instrument for social change, a device to make a better world (Solomon, 1993).

Question 4

Advertising

Roddick believed that conventional marketing techniques are increasingly ineffective because customers are hyped out and they are being over marketed. They are becoming more skeptical about the whole advertising and marketing process (Roddick, 2000, p. 77). Even though Roddick was against advertising that does not mean that she does not use advertising at all. The BST rarely advertises in traditional sense, but they still use advertising to get their message across to people.

What the BST does is “guerrilla marketing”, which means they use unconventional, low – cost tactics to get attention. For an example, they turn their shops into action stations for human rights and they lobby their customers to speak out on issues that affect them (Roddick, 2000, p. 78). The corporation’s highly visible campaigns, which use its stores as a base, also generate priceless publicity for the BST. The firm milks these campaigns for all they are worth. The BST uses the power of the media to promote the cause and the firm (Solomon, 1993).

When her first store was threatened with a lawsuit by two neighboring funeral parlors which objected to having a store name The BST so near a place where bodies (corpses) were kept, this was when Roddick learned how to use free publicity. She contacted the local paper with the sad story of a struggling mother about to lose her small shop and received generous press coverage and this resulted in a large number of sympathetic readers filing through her doors. Ever since, Roddick chose not to market or advertise, believing it to be a waste of time and money that the consumer would end up paying for. Thus, instead of traditional advertising she relied on the generosity of the press (Hill and Jones, 2004, p. C184).

Originally, the BST had neither engaged in advertising nor appealed to vanity to sell its products. The firm does not have an advertising or marketing department. To cut through customer skepticism about advertising and promotion, and to differentiate the BST from its traditional and, more recently, its “green” competitors, the firm has pursued a two – fold marketing strategy: truth and concern for social and environmental issues (Solomon, 1993).

The BST began campaigning in order to capture and channel the imagination and outrage of individuals who, collectively, can do something about corporate misinformation. To do this, they use many different ways – everything from their shop windows to billboards, the sides of their lorries and staff uniforms. They provide information, making everything clear – from their ingredients to their values – in that way letting the customers makes informed decisions about whether they want to do business with them (Roddick, 2000, p. 77).

The BST have used successfully their “politically correct” social policies to generate significant unpaid media coverage for their products. The BST employed similar marketing strategies. Instead of advertising their high – priced, high – quality products, they primarily promote their social causes and the unique way they run their business operations. Pursuing nontrading and marketing techniques, the BST are willing to take stand on controversial political and social issues. The BST promote their products by promoting causes and it subscribe to the view that business must use itself as a communications vehicle to advance appropriate social cause (Solomon, 1993). This shows that Roddick was not entirely against the whole advertising thing; it was just that she was against advertising in the traditional sense, which may lead customers to be over marketed.

The BST’s marketing strategy focuses on engaging customer in a conversation by means of leaflets and posters and information boards in each store. Salespeople are trained to answer questions, but not to be forceful with customers. They are not trained to sell, but rather to give information about the products, anecdotes about the history and derivation of the ingredients (Solomon, 1993).

Bibliography

Franssen, M. (1993), Beyond Profits, Business Quarterly, London, Vol. 58, Iss. 1

Hill, C. W. L. and Jones, G.R. (2004), Strategic Management an Integrated Approach (6th ed), Houghton Mifflin Company, Boston, New York

Hitt, M. A., Ireland, R. D., and Hoskisson, R. E. (2003), Strategic Management Competitiveness and Globalization (5th ed), Thomson South – Western, Ohio

Johnson G. and Scholes, K (1999), Exploring Corporate Strategy Text and Cases (5th Ed), Prentice Hall, England

Murphy, J., Thomas, B., and Glazebrook, M. (2002), Partnership with Business A Small Guide for Small Community Groups, the Triple A Foundation, Wellington

Roddick, A. (1991), Body and Soul, Crown, New York

Roddick, A. (2000), Business as Unusual the Triumph of Anita Roddick, Thorsons, London

Solomon, L. D. (1993), On the Frontier of Capitalism: Implementation of Humanomics by Modern Publicly Held Corporations: A Critical Assessment, Washington and Lee Law Review, Lexington, Vol. 50, Iss. 4

Wheelen, T. L. and Hunger, J. D. (2000), Strategic Management and Business Policy Entering 21st Century Global Society (7th ed), Prentice Hall, America