Last Updated 20 Jun 2022

The Body Shop

Category Body, Retail
Words 2835 (11 pages)
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Table of contents

Question 13

  1. The external strategic analysis of The Body Shop3 11° Synopsis of the beauty industry: Macro environment and trends3
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  3. The competition: immediate industry and competitive environment5
  4. The key success factors of the beauty industry and The Body Shop7
  5. The SW(OT) analysis of The Body Shop8 Question 2:8 Applicability and effectiveness of new CEO Patrick Gournay’s strategies8

Financial and strategic objectives:11 Question 5:12 Corporate and business strategies12 Question 615 Balanced scorecard for The Body Shop15 References Introduction The cosmetic industry is one of the biggest industries in the world. The worldwide annual expenditures for cosmetics are estimated at U. S. $18 billion. There is strong competition in this industry all over the world. To compete and obtain a competitive advantage, companies have to invest a lot. They always have to innovate, to invest in the advertising campaigns in order to be known, and to be successful. The Body Shop decided to be different, their products are natural, it is an ethical organization, associated with environmental friendliness. But how The Body Shop takes part in the cosmetic industry? What are their vision and mission and what strategic directions should be recommended to the Body Shop in order to perform successfully in this industry? Section A-A comprehensive strategic analysis of the industry

Question 1

The cosmetic industry is a very aggressive and challenging market, in order to be more competitive and to gain market shares and customer loyalty, companies as The Body Shop have to understand their environment. After analyzing the external environment (major trends of the industry, competitors, and driving forces), the key success factors as well as the strategic issues will be evaluated, in order to provide a SWOT analysis. The external strategic analysis of The Body Shop. Synopsis of the beauty industry: Macro environment and trends. The “competitive structure” of this market and the “critical rules of the game set by the industry” can be explained by using the “Porter’s model of competitive forces” in the cosmetic market. Porter’s model is composed of five forces, the nature and strengths of the competitive pressures associated with these five forces have to be examined force by force to identify the specific competitive pressure which each comprises and to decide whether these pressure constitute a strong or weak competitive force. It permits us to establish how important the market is to current and potential competition. Porter ‘s model of competitive forces in the beauty market  New generation with internet, buyers can compare prices. After this analysis, we can follow the key success factors of The Body Shop.

The key success factors of the beauty industry and The Body Shop “Key success factors are the product attributes, competencies, competitive capabilities, and market achievements with the greatest impact on future competitive success in the marketplace. ” In order to succeed and to be competitive, The Body Shop has to manage key success factors. So we can say that cosmetics brands have: - To be innovative and to propose new products - To obtain global distribution capabilities To have strong e-commerce capabilities (friendly website…) and the possibility to buy online products - To have an excellent and famous branding image: customers could identify them to the brand and its values. - To be different - To maintain a high level of quality and services in order to improve customer satisfaction and loyalty In the next part, we can realize a SWOT analysis to evaluate if The Body Shop meets these key success factors.  The SW (OT) analysis of The Body Shop The SWOT analysis provides an overview of the firm’s situation and it is an essential component of crafting a strategy tightly matched to the company’s situation.

Question 2

Applicability and effectiveness of new CEO Patrick Gournay’s strategies P. Gournay was a businessman with experiences. He wanted to create a new strategy for The Body Shop in order to be a unique brand, different from the others. This strategy was focus on different points: - Be faster to launch new products (less than one year). - Redesign the stores to satisfy the customers and to improve the brand’s image. - Cut the number of products by 25%, to be a focus on “heritage” products. - Acquisition with Cosmo Trading for  7 million to have more control on European operations - Restructuration New products with a strong Body Shop’ identity: Hemp, differentiated products - New leadership - Reclarify the mission and vision of the company: be a strong retailer - Outsource manufacturing and find manufacturing partners in each region - Cut administration costs - Decentralization in 4 main regions - Focus on customer satisfaction Even if some problems were still present in UK and USA, and if some periods were more critical than the others as Christmas for example, the P. Gournay’s 2000 strategy was a new life for The Body Shop. After some mistakes due to bad choices and a lack of experience in the cosmetic industry, P. Gournay planed a real revolution in The Body Shop organization.

As a result of this revolution, profits rose by  9 million to  271 million compared with the same period in 1999 and most of his objectives were achieved. These elements show a very good execution of his strategy. It is always easier to plan a strategy but the implementation of it relieves strong efforts in leadership and management. The organizational changes that are to say the restructuration, as well as the decentralization of the company, we're very good strategic changes. It permits to share the responsibilities and to involve more the employees in this new strategy. P. Germany is a strong leader, he had the capacity to believe in The Body Shop future and to be fast to react. It understood the needs of the markets in creating new products as well as new services as home selling. He also wanted to be more customer-oriented, improving the brand image thanks to the redesign of the shops and developing marketing tools as a customer loyalty program in the UK. Even if his lack of experience in the beauty industry was claimed, he was able to refocus the company to be a strong retailer. The results of his strategy have been done by better profits, share value, and sales. Germany looks to be a good communicant, he explained numerous times his choices and the aim of his strategy, this step is important to create a strategy-supportive culture.nThe applicability and effectiveness of his strategy have been recognized by analysts, by the business community but also by all the company.

Question 3

Vision and Mission. A mission statement focuses on current business activities -- “who we are and what we do” The Body Shop is a global business, based on ethics, his products are known and famous for their nature and because they are not tested on animals. The Body Shop is an organization with strong values and identity. The Body Shop was one of the first organizations that focus on social responsibility and fair trade. The Body Shop offers natural cosmetics and personal care products. They have services like home selling and massages in their shops. With the ageing of the population and the importance of well being nowadays, customers have strong expectations in terms of quality and excellence. Sustainable development is a recent value in our society and customers expect companies as The Body Shop to respect it. The Body Shop is a good retailer; it has manufacturing partners in each of his four region area. This organization has the capacity to create new 100% natural products and to be involved in social causes. A strategic vision concerns a firm’s future business path -- “where we are going” The Body Shop should gain market share and extend his leadership position in the cosmetic industry worldwide. They should be more famous and extend their brand awareness all over the world.

The Body Shop will follow with his ethical values and develop new products and services in order to be more competitive. In other words, The Body Shop has to create new opportunities to leverage their brand globally. To achieve these goals, The Body Shop has to pursue and to improve the broader corporate goals of profitable growth and continuous improvement. The Body Shop should: - Achieve world-class performance by attaining a strong competitive position in target markets. - Exceed customer expectations for quality and value. - Earn in excess of the cost of capital over a business cycle. These elements can be reached thanks to - The distinguished brand The heritage of integrity and teamwork. - The advanced skills - The special relationships that have long existed between the company and the employees, customers, dealers, and other business partners around the world The Body Shop has to pursue his natural products based more on well being than beauty. They have to follow their politics about ethics and fair trade and stay oriented by the environmental friendliness. The Body Shop has to be a focus on customer satisfaction. The management has to be more profits oriented and be more aggressive in order to survive. Types of business, the body shop should be in: The Body Shop should open his shops to new customers. Nowadays there is a new market with men and old people. They should segment their products and adapt them to new consumers’ needs and expectations. They also should create and develop a friendly website where customers could see all of their range of products and buy them online.

Question 4:

Financial and strategic objectives: Financial objectives: Outcomes focused on improving financial performance? Achieve revenue growth of 10% per year This objective is important and it is achievable. Indeed, thanks to P. Gourmay they have reached very good performances in terms of profits and sales. This objective will be the consequences of the new strategy implementation. It also will be the result of better customer satisfaction and brand awareness. This objective can be reached thanks to internal growth as I said before but also thanks to external growth. It will be interesting for The Body Shop to realize alliances with big actors of the cosmetic industry. ? Increase net profit margins from 2% to 4% As we can see in The Body Shop case, that during the Christmas period they have interesting margins. This objective can be the result of scale economies, and costs reductions. Strategic objectives; Outcomes focused on improving long-term, competitive business position.

Different strategic objectives could be developed:? Have more attractive products than rivals Be more focused on customer satisfaction? Gain customer loyalty? be more innovative? Gain recognition as a leader in natural products We are going to focus on 2 main objectives:? be more focused on customer satisfaction This element is a key point to ensure the future of the Body Shop, they have to be more customer-oriented, to understand their needs and expectations. If customers are satisfied and feel considered, they will be naturally more loyal. As we know, a loyal customer is cheaper than a new customer. Different tools will be developed in the new strategy in order to reach this objective. Moreover, The Body Shop will have a new strategy to obtain new customers. Gain recognition as a leader in natural products The core competency of The Body Shop is his capacity to create natural products. To gain market share, they should use this element and work on it in order to be recognized as a leader in the natural cosmetics industry. This element will give to the Body Shop an excellent and famous branding image. The Body Shop will have an image of “specific” companies, with strong skills and know-how.

Question 5:

Corporate and business strategies In order to reach the financial and strategic objectives gave above, The Body Shop has to realize some actions to be more and more competitive during the five next years: The Body Shop has to follow his strategy of differentiation by launching natural Products with elements from all over the world. “The essence of a broad differentiation strategy is to be unique in ways that are valuable to a wide range of customers".  To be very effective, The Body Shop has to study consumers ‘needs and behaviors to understand what they consider important, what they think has value, and what they are willing to pay for. This buyer's study will help them to create new products and services perfectly adapted to consumers’ expectations. It they follow this strategy and tried to be totally different, the consumers will accept to pay more and will be able to identify them to the brand.

This strategy needs also to have a strong corporate culture based on innovation, the human resources have a strategic role, they have to recruit creative employees. The employees have also to be trained in order to be innovative and creative. - Have a bigger brand awareness is necessary for the Body Shop. That is why they have to invest more in marketing. They already have a strong identity but they have to diffuse it thanks to new media opportunities. Communication is an important element, more advertising campaigns will add value and increase brand awareness. A powerful world advertising campaign will be interesting. As the Body Shop is a brand with strong values and politics, they should realize a different campaign as “Benetton” has done a few years ago.

In this campaign, they have to be different and to communicate about their natural products, that is to say, their specific skills, their high quality, and excellence. The campaign will be a “paper” campaign or a TV one if the budget allows these expenditures. - As I said before, The Body Shop has to be customer-oriented. They should realize a friendly website where customers will be able to see their range of products and services and where they would be able to buy online products. It will permit customers to have good references and to be easily found on the world wide web. The website will permit the organization to be more attractive and to attract a maximum of internet users. The organization should develop its customer loyalty programs all over the world. People like to be considerate as a specific customer and expect to have a “specific treatment”. The loyalty card encourages consumers to be loyal in order to receive presents and special offers. - They also could extend their services: Selling at home should be proposed in numerous countries. Customers love being the main interest of the companies. With this service, they feel caring and have the feeling to have customized services. We have also seen that additional services as massages have increased sales. People after having a nice moment want to buy the products used during this time.

The Body Shop should propose services as sauna and hammam for example. - The Body Shop should not stay in a niche market. The new trends and lifestyles give them big opportunities. They should realize a segmentation of their products that is to say they should have specific products for men and old people for example. They have to innovate and to adapt them to the changes. - The Body Shop is already a global company but they should be present in other markets as India, an emerging market. Beauty is an important value in this country, and Indian beauty is known all over the world thanks to L’Oreal’s muse. This new market can ensure new sales and market shares, it is a new opportunity. The Body Shop should adopt a more aggressive strategy; the competition should not be underestimating. The company has to be more profit-oriented. To reach their objectives, they can realize some alliance with a big brand as L’Oreal. Indeed, this alliance will permit them to shares their resources and capabilities in technology and innovation for example. It will help them to realize new products. - The creation of new products will also be strategic elements in a specific period as Christmas. The Body Shop should realize limited products to give exclusivity to some customers. With specific range of products for this specific period, The Body Shop will improve his differentiation.

All these changes require strong involvement of the management and employees, The Body Shop has to be more reactive, and they have to adapt them to their environment: lifestyles, etc. As Germany did, the company has to change its structure when it is not adapted in order to be profitable and to promote innovation in the company. The culture has to be supportive and be oriented on differentiation and creativity. The resources are necessary to invest in an advertising campaign for example, but these marketing tools can lead to an increase in sales, market share, and profitability. The company has to think regionally and globally in order to be present in the new market as an emerging market.

 References

  1. Hough, J. Arthur, A. Thompson, Jr. Strickland III, A. J & Gamble, J. E. 2008.
  2. Crafting and Executing Strategy. McGraw Hill International Edition. - Piercy, N. The Body Shop. A case for burial or rising from the grave? - The Body Shop values report. 2007.
The Body Shop essay

Related Questions

on The Body Shop

How do I shop at the body shop?

More Ways To Shop Introducing our Click & Collect service. Order your favorite products online and select the “collect in store” option. It couldn’t be simpler. Head into store where The Body Shop's friendly, knowledgeable workshop staff will be on-hand to help you explore and experience products like never before.

What is the body shop doing for CARE USA?

Share the Joy. This Holiday season, the Body Shop is partnering with CARE® USA to deliver CARE® Packages to families in need in the US. We’re proud to donate $50,000 to CARE® USA, whose caregiving focus supports job creation and meal deliveries in at-risk communities across the country. *

How do I place a click&collect order at the body shop?

Scrub up your body & scrub up the world at The Body Shop's Stores. To place a Click & Collect order, add your products to the shopping cart and select the “Collect in Store” delivery method during checkout. Once your order is ready to be picked up, we will send you an email with instructions (within 24 hours of purchase).

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