Strategic management plays a significant role in framing some effective strategies that brings an organization towards growth and success. Body Shop is United Kingdom’s famous international cosmetic brands which was earlier founded by. Anita Roddick in 1976. Referring modules, writer asked to submit strategic management assessment by addressing Learning Outcomes:
- Application of theoretical models along with their potential for improving strategy and support strategic decisions.
- Evaluate theoretical developments in strategy.
- Analysis of strategy making process in multinational organisations
- Examine the effect of strategy making in fluctuating environment.
- Identify the importance of formulating and implementing strategy along with the challenges faced by the management of Body shop.
Strategic management involves the formulation and implementation of the major goals and initiatives taken by company's top management on the behalf of owners based on consideration of resources and an assessment of the internal and external environment in which the organisation competes. It is the process that defines the entire organisational strategy. In this present case study of Body Shop. It is one of the famous international cosmetic brands in United Kingdom. Anita Roddick was the founder of Body Shop in 1976. Body Shop got environmental award and it is the second most trusted brand in retail sector of UK. Body Shop is now owned by L'Oreal, a French beauty and personal care company. It is operating in more than 50 countries in the world. This present report will describe the strategy of Body Shop from its inception to present condition. Moreover, external and internal analysis of firm will also be studied in this report.
1. Company’s overview and strategies of Body Shop from its inception
Body Shop is one of the famous international brands. It is just an ordinary shop when Body Shop has started its business and now it has 1000 products with 66 franchise stores. It was founded by Anita Roddick in the year1976. In present report, it has its operation in 50 countries with 1900 outlets. In 2017, its revenue is about $1.4 billion.
There are some major effectual strategy implemented by Body Shop is its organic and environment friendly product. Company has focused on the health of people and provided environment friendly products to customers.
Here are some strategies of Body Shop by which company has great success in the global market:
Growth Strategy- This is the strategy that is followed by Body Shop as this strategy has focus on earning profit by grabbing a large share in market. Company is growing rapidly only because it considers all the factors of macro and micro environment. Company is own top height due to its concern of people health (Morden, 2016).
Ethical and Environmental Strategy- Body Shop has achieved great success as because they focus on producing and providing eco-friendly products and services. Anita Roddick never ignores environmental factors, this is the reason why company achieved great success in global market. Body Shop is known for its organic products.
Customer Satisfaction Strategy- According to Anita Roddick, customer are their key persons and their needs and wants remain on first priority. They always try to give optimum level of satisfaction which is the reason why company is on list of top brands. She has used various natural ingredients that come from different countries such as Sesame seed come from Nicaragua, Shea butters from Ghana, coco milk, strawberries and mangoes, etc.
Uniqueness Strategy- This is also the main strategy that gives intense success to Body Shop. Their style of product is totally different from others like its labelling is written by hand. They use biodegradable boxes and many more things are there which make Body Shop unique from its rivals.
Innovation Strategy- Body Shop is famous for its innovation and creation in their products. Anita Roddick has become famous as in each and every new product, there is new feature. They never sell similar types of products regularly in market. Innovation strategy help Body Shop in earning as well as increment in profit to 17% to ₤ 11.7 million (Ethiraj, Gambardella and Helfat, 2018).
2. Analysing the external and internal factors of Body Shop
When Body Shop entered in the global market, they have to focus and considered all the factors that are included in the business environment. The external environment is currently in an extreme state of flux. It is very important to analyse the factors of macro environment that have great impact on the business. A macro environment is the condition that exists in the economy as whole rather than a specific sector or region. Inflation, employment, gross domestic product, monetary and fiscal policy. In order to analysis the external factor, it is very essential to use external analysis tool as because company cannot control its impact. Body Shop is also greatly affected by external factors from their inception to now. By using STEEPLE analysis, company can track the impact of external factor.
This is a popular and simple strategic method of management for analysing the external factors (Bettis and et.al., 2015). It is the addition of PEST analysis. STEEPLE stands for S- Socio-culture, T-Technological and E- Economic, E- Environmental, P-Political, L-Legal and E- Ethical. All these factors influence the decisions, profitability as well as entire operations and functions of Body Shop.
Socio-Culture Factors- Socio-culture factor is one of the most essential factors. It includes system of beliefs, customers, traditions, practices and behaviour of people in the country. It further includes the trends of fashion and activities of market which influence decisions and actions. Body Shop never ignores all these elements; they consider all those factors while functioning (STEEPLE Analysis. 2017). This factor influenced the decision of marketing managers as well as strategic decision regarding marketing. Objectives and goals of organisation entering in the new market Body Shop has a greatly affected by socio-cultural factor.
Technological factor- Technological factor has a great impact on the Body Shop. There is rapid innovations in cosmetic industry. In order to achieve success in the global market, it is essential to adapt technological changes. The reaction of Body Shop in the area of technological changes is always positive, management of company accepts and implements changes in their products in order to achieve the organisational goals and objectives.
Economical factor- Economic factors include employment, behaviour of consumer, rate of interest, inflation and banking as well as overall economic indicators. When Body Shop has taken decision of setting the price of their products, they consider all those elements of economic factors of country. According to the rate of inflation and foreign exchange, management took decision of pricing.
Environmental factors- Body Shop is known for its eco-friendly products (Meyer, Neck and Meeks, 2017). They are highly concerned about the environmental factors. Environmental factors include creating image, obtaining appreciation from customers and environmental policies. These factors influencing business are linked to actions and procedures required to prevent natural environment as well as increasing efficiency of company. Body Shop is always concerned about their products as per the climate and weather as well.
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Political factors- Political factors include government policies, laws and regulations of the country. Body Shop is associated with the fair trade. These factors have a great impact on the decision of functions and operations. When Body Shop Company is moving forward, they always consider and take care of all these laws and regulations of government. They never ignore and disobey laws and regulations.
Legal factor- Legal factors include all the legal laws of government like employment laws, discrimination laws, antitrust law, trade unions, health and safety laws, etc. All these laws influence the decision making of company. Body Shop always follow all these rules and regulations. They are very concerned about the health and safety of consumers as well as their employees.
Ethical factor- Legal factors are somewhat similar to economical factors as in these factors, belief, values, norms, etc. are included. Body Shop uses proper techniques of marketing. They always say truth about their products and services. They also inform their customers about their mission and vision to their stakeholders (Wheelen and et.al., 2017).
Illustration 2: STEEPLE Analysis
(Source: STEEPLE Analysis, 2017)
The role of internal analysis in assisting the strategic planning of Body Shop
In order to sustain in the global market, Body Shop has focus on its internal conditions and capabilities. With the help of SWOT analysis, company can find out its internal weaknesses and capabilities. It is one of the best models to do internal analysis of company.
Illustration 3: SWOT Analysis
(Source: SWOT Analysis, 2017)
3. Implications of ethical goods and globalisation on Body Shop using theory
Body Shop is famous for its environmental friendly or organic products. In the era of globalisation, there is continuous increase in pollution (Hitt and Duane Ireland, 2017). Companies are using chemical products and disposing wastage in the environmental surroundings which is a great threat for environment. But Anita Roderick has developed policies to protect the environment by producing and providing products by more environmentally sound and replenisher (Hill, Jones and Schilling, 2014). Consumers are very concerned about the environment as well as their health. Thus, Body Shop always takes in consideration the environmental factors, people’s health and renewable energy. The strategy of Body Shop has keen focus on environmental protection. Body Shop is using a theory which builds positive relationship in between customer’s beliefs and environment too.
Here is the theory which is used by Body Shop:
Reasoned Action Theory
This theory was matured by Martin Fishbein and Icel Ajzen. It is the theory predict that behavioural intend is caused by two factors which are attitudes and subjective norms. It is basically in the field of social psychology. This model will help in defining the interconnection in between beliefs, attitudes, intentions, norms and consumer behaviour. There is an equation of TRA (Behavioural Intention= Attitude + Subjective norms). Body Shop is using this theory because they want to identify the beliefs of customers in environment protection or ethical products. This model helps company to identify the actual behaviour of their customers (Hill, 2017). For example: there are some people who have major preference to use organic product but there are some other people also who are not concerned about the organic product and so, these are the two factors that define the behaviour of customers (Reasoned Action Theory. 2017). As per Anita Roderick, they believe that customers are more concerned about environmental friendly products and so, they make strategies, product’s ingredient and product packing considering environment as a major concern. Here are some factors which show that Body Shop Company is highly concerned about their customers as well as environment are as follows-
Using biodegradable packaging- Company is using biodegradable packaging for their products. They used to pack their products with recycled containers. There are various advantages of using biodegradable packaging as it is eco-friendly, reduces waste and energy saving. By adopting this strategy, Body Shop has a great contribution in reducing tons of waste in the environment.
Ethical Products- Body Shop is famous for its organic products as they used to favour organic products, free trade and cruelty free. Products of Body Shop are not harmful to the environment and society. Company is highly concerned about the protection of environment and health of consumers too. So, they always focus on producing ethical products. They avoid the use of chemicals in their products (Robson, 2015).
From the above report, it can be concluded that it is very important to take in consideration environmental factors, people’s health and renewable energy. Besides this, the strategies of Body Shop has entire focus on environmental protection is also concluded in this report. STEEPLE inlays and Reasoned Action Theory is also understood in above report. Beside this, The Role of internal analysis in assisting the Strategic planning of Body Shop with the help of SWOT analysis is also understood in th