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The body shop international PLC
Situation Body shop was built not as a profit generating entity but as an organization to make a social change in the world; ethics and social concerns formed the backbone of this company. The case questions it was still true with the body shop and refers to how the company had deviated from its original path of ethics.
Anita Roddick started the Body shop in London in 176 and by 177 it had a number of shops in London. The BSI adopted a very different approach to business and was not like any of the other Cosmetics firms. BSI believed that ads created needs that didn't exist and so none of the BSI products were advertised. It was against using testing products on animals and supported various social groups from PETA to groups supporting the Kurds, Tibetans etc. By 11 it had expanded to the US and had around 40 shops in various metropolitan cities. Both in the US and UK, it faced severe competition but dominated in its niche business of organic or natural products. Financially it had experienced around 50% growth until 10 and then it leveled off. From inception till 11, it was following the "CSP driving the relationship" model. (Fig 1)
BSI realized that the niche of its business would fade if no efforts to strength its brand were taken. Also, in the US market where a number of brands exist it was significant to establish differences in the brand and specific brand awareness. To address this issue, Anita Roddick appeared in an Amex ad talking about her travels in search of exotic ingredients. From 16, BSI started piecemeal advertising to push sales. Roddick also published her autobiography, Body and soul, and also released a documentary series, millennium, and donated a large portion of the proceeds for various social organizations and causes. This created a lot of good press for both Roddick and her company.
Issues The biggest issue in this case is the perceived image of a company and the actual reality that it operated in. BSI was painted as a social responsive corporation and meeting the expectations of all the 4 parts of the CSR model but it reality it was failing in almost all the aspects that it had promised to follow through, the testing against animals, no to ads, organic ingredients etc.
The issues started with a British TV new report on BSI, alleging that BSI had sourced materials from suppliers that had recently performed animal testing. This was against BSI's stand, where it only partners with the suppliers who had not done any animal testing for the past 5 years and would continue so in the future. But the biggest controversy against BSI was due to a report on Business Ethics, by Jon Entine. He exposed BSI in a number of ethical issues Roddick had copied the idea of Body shop from a similar store in Berkeley, most of here recipes were outdated, off-the-shelf formulas that had been abandoned by other manufacturers, only a small % of the products were natural in nature and the rest were all petrochemical products, artificial colors, and lots of preservatives. The article also shattered BSI's philanthropic image by stating that between 186 and 1, body shop contributed far less than the average charitable donations for US companies. And around 47% of its ingredients had been tested on animals. This was followed by share prices dropping, large sale of shares by investors adding fuel to BSI's existing financial problems.
In response to this article, Gordon Roddick sent a letter, refuting most of these allegations, to all Business Ethics subscribers. This reaction instead alleviating the situating caused further trouble for BSI. The subscriber's mailing list used was not authorized by Business Ethics but was obtained from the mailing-list company from a third party.
Stakeholders Anita Roddick, Body shop international and the customers who supported its products due to the ethicality of the operations are the primary stakeholders in this case. The employees, the franchisees, all customers and the suppliers have a lot of stake in this issue. The shares were plummeting and the shareholders have a lot of stake. The competitors like Limited, L'Oreal, and HO etc are keenly observing the situation and they definitely have a lot of stake in what is happening with the body shop. The campaigning groups, which were supported by Body shop, other social organizations have some stake. The media has a lot of stake.
Alternative actions
1. The social auditing process is a good move by BSI. The process can be extended by publishing these audits to the public.
. If the allegations of using large doses of petrochemicals and animal testing by its suppliers are true, then BSI should probably take a step back and decide what it wants to be; another cosmetics firm or a corporate different from the other, a corporate with social and ethical responsibilities. This might curtail its growth in the US market but might establish its name as a CSR company and as a niche player in the market.
. The company can change the unethical practices to their original ethical ones and advertise heavily their efforts to change their practices. This might give them some chance to grow in the US. But this would mean that they change their stance on advertisements and agree that it is a significant part in doing business in the US.
4. The other alternative is, BSI can show increased concern for the social environment and prove to be a socially responsible corporate. This might leads to fewer criticisms.
Final outcome The final outcome recommended is that BSI slow down its ambitious plans to grow. Follow its original goals and be a more socially and ethically responsible corporation than a profit generating entity. This would be the best option for Body shop.
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