The Body Shop
Executive Summary
The basic entrepreneurial abilities offer a lead on how to manage a business enterprise especially those operating in the international business environment i.e. The Body Shop. In this paper, it highlights the role of an entrepreneur, Dame Anita Lucia Roddick, DBE in business success in accordance to its relationship between the tools or resources of The Body Shop with the people working in the company and the systems that that the company employ in business processes. Moreover, the concept of culture, communication and commitment is given importance in overall and continuous improvement of a business firm ( 2004). With respect to the excellent entrepreneurial capabilities of Dame Anita Lucia Roddick, DBE, the company, The Body Shop, and its Board members are now using effective corporate governance approach as their competitive advantage.
The Entrepreneur
Dame Anita Lucia Roddick, DBE is the founder of the Body Shop, a company engaged in beauty products. is one of the known personalities engages in ethical consumerism. She also involved in activism and campaigning for environmental and social issues including involvement with Greenpeace and The Big Issue (2007). She was appointed by Queen Elizabeth II as Dame Commander of the Order of the British Empire in 2003. However, in 2004 she has been diagnosed with liver cirrhosis due to long standing hepatitis C. She only revealed it to the public by 2007 and then promoted the work of the Hepatitis C Trust, and campaigned to increase awareness of the disease (2007).
In review of her past, Roddick was once a victim of war. She was born Anita in a bomb shelter in Littlehampton, Sussex, in an Italian Jewish immigrant community, and she was brought up in a family of 4 children. But because of her conviction to help other people and promote the beauty of life, she became successful in her business. As reported in B (2007), really poses the true virtue of a good entrepreneur. Roddick has an enthusiastic vision, promoting the vision with enthusiastic passion, developing strategies to change the vision to reality, taking initial responsibility to cause a vision to become a success, and being a positive thinker and a decision maker. According to. (2000), these characteristics determine the factors or attributes associated with entrepreneurial behaviour, which also become crucial to establish the success of the business organisation in the market.
With regards to the good qualities of Roddick, a study done by (2003) identifies two groups of several factors that influence entrepreneurial behaviour. These factors include locus of control, risk taking, achievement motivation, problem solving style and innovativeness, perception and work values, which are in turn affected by external factors, such as culture, role models, work experience, education, and environment.
Locus of control is important as it helps demonstrate the self-determination of an organisation, which helps determine a higher rate of entrepreneur activity. With an increased self-determination, the company is ready to take risks, which makes the entrepreneur pursue a business idea when the probability of succeeding is low ( 2000; 2001; 2003). This means that the entrepreneur has the courage and the persistence to engage in his venture, even without the assurance of succeeding. The third personal factor is the entrepreneur’s value system, which entails examination, understanding of one’s place in the society, and the individual’s idea about persons and things ( 2003). This includes the perception and the achievement motivations of the entrepreneur, for their values determine their attitude towards their dedication with their work. The fourth factor is the entrepreneur’s problem solving style and innovativeness, which is the central value of the entrepreneurial behaviour, since it is successfully taking an idea or invention to market. Innovation and problem solving capabilities are expected to be the core of the entrepreneurial capability of an entrepreneur, for they are faced with a number of challenges as they try to implement new ideas and solve problems, so their innovativeness counts (2003).
Similarly, these factors are affected by external factors for these external factors interact largely with the mentioned attributes. The education of an entrepreneur is one major concern for his or her knowledge and experience, especially concerning high technology and heavy competition, can affect his or her decisions in the organisation. Related to education is the entrepreneur’s perception or interpretations, which play an important role in the total motivational process, for he or she needs to believe that certain strategic actions done will produce positive results, profits, sales, or market share ( 2003). Culture, role models and support also affect these factors, for these three external factors can influence the decision-making process and the personality of the entrepreneur. Culture affects the propensity to act, thus, the actual number of entrepreneurs that will attempt to start a business is also affected. Some cultures have more role models available than others do, which makes entrepreneurial success based on family and community support ( 2003). It has been reported that social norms had a significant influence on predicting entrepreneurship, as might be due to the high level of locus of control, which would decrease the influence of social pressure (2003).
Basically, the factors driving entrepreneurial behaviour of Roddick include the complexity of issue, resource scarcity, urgency of issue, strong local leadership, and good enough partnerships (2006). These determine the success in business ventures by its interaction and interrelation, which brings good effects to the company if used wisely. Entrepreneurship is an important aspect in the society, for without it consumers will not have many choices in the market. The emergence of new entrepreneurs in the industry leads us to conclude that many would like to take risk, many have the proper values, many are well educated regarding business, and many have the courage to innovate and improve. This is beneficial to the society, for many citizens can be open to alternatives and suit their preferences.
Business Development Practices
A known British chain of cosmetic stores called “Body Shop” which is found almost all over the world shows tremendous success in previous years is also the company The Body Shop International plc. Actually, The Body Shop agreed to a £652 million takeover offer by a French cosmetics group L’Oréal on 17 March 2006. The Body Shop was founded by Anita Roddick, distinguished for selling its own line of products not tested on animals, and produced in an ecologically sustainable approach (2007).
The Body Shop aims for sustainable growth as a broad market leader in cosmetics as well as for segment leadership. In both cases, the brands of The Body Shop will play a crucial part. The Body Shop is able to establish its broad leadership usually by merging with other strong cosmetics companies and their products, which are then combined into a new, larger company. Offering training to its employees, improving the company operations, and the introduction of new beauty products and technologies then reinforces the positions of the various products of The Body Shop. This practically results in economies of scale that is able to create a distribution network for both its local and international products. If a market is already in the control of other companies, The Body Shop devotes its attention towards the development of a premium segment with its various beauty products (2007).
As part of the efficient qualities of Roddick in entrepreneurship, the Body Shop is actually considering the concept of effective corporate governance as their competitive advantage. Roddick, as head of the decision-making body of the company, creates a good system not only in selling their products but also in maintaining expressive relationship to their overall stakeholders. Maintaining good relationship to stakeholders reflects to their effective corporate governance ( 2007).
It can be said that the company has a very good framework that has been established in order to deal with different corporate matters. In fact, there is usually a properly structured program that is further reinforced by company policies and other procedures for the proper guidance of the directors in their daily duties (2007). Consequently, the company has a clear reference guide to its business operations and corporate governance. The Board of Directors guided by the entrepreneur virtues of Roddick which oversee the businesses and the decision-making routines as well as the financial aspect of things, keeps watch. In addition, this includes the maintenance of the standards with regards to corporate governance in the corporation’s different sectors ( 2007).
The Board is made up of ten directors; two are executive while six are non-executive ( 2007). Because of this, there is a fair division of responsibilities and other tasks among them. And while the non-executive directors are independent from the others, they are still able to contribute their experience and knowledge during Board discussions. Without a doubt, The Board is in-charge of caring for the company’s operations, assets, and its shareholders. All-in-all, the board aims to work with these factors in the hopes of maximising performance. Because of this, it is The Board that is responsible for the finalisation of budgets and strategic plans. And in order to ensure the firm’s competent operations, The Board conducts a monthly review of the company’s businesses in relation to its financial movements (2007).
Furthermore, there is a company law that obliges The Board of Directors to carefully prepare each year, a financial report that would have to be accurate and reliable reflecting the true state of the company. All things considered, The Board of Directors is the one that is responsible for the proper safekeeping of accounting statements and to ensure that these records are precise and truthful. In addition, the board is in-charge of guarding the company’s other assets as well as making the necessary steps in order to prevent complications such as fraud and other types of risks.
Aside from the board of directors, the company also has other committees as part of their corporate governance. Just like the board, other committees have a well-established reference guide which also discusses their duties and their scope of authority within the corporation. Composed typically of independent directors who are non-executive, the remuneration committee handles the outline for the company’s remuneration policy which would eventually be reviewed by the board. Moreover, this group is also responsible for the various remuneration packages that are given to executive directors. On the other hand, there is also a nomination committee which is also made up of mostly non-executive directors. The responsibility of this group is to recommend to The Board on which people should be appointed as directors ( 2007).
There is also a group known as the audit committee. Compared to the other two, the members of this committee is purely composed of non-executive directors. This group’s duty is to make proper recommendations with regards to the company’s accounting policies as well as overseeing financial control within the corporation (1998). For this reason, the committee usually receives and reviews financial reports and other statements delivered to them. Then, they make a comprehensive report before they submit it to The Board. Of course, there is also the group’s evaluation of the risks involved which has always been done to assist with the company’s next business move, and have further control of the corporation’s different operations.
Apparently, The Body Shop has a clear code of ethics and all employees must affirm their acceptance of this code. The code of ethics includes a conflict of interest policy to ensure that key corporate decisions are made by individuals who do not have a financial interest in the outcome separate from their interest as company officials. The company also actively monitors compliance with the law and the global financial policies and practices over critical areas. These areas include internal controls, financial accounting and reporting, fiduciary accountability and safeguarding of our corporate assets.
A major factor involved in the improvement of The Body Shop involves the establishment and utilisation of company performance measures or indicators that in turn measure their customer’s satisfaction. These measures or indicators are measurable characteristics of products and services that the company typically utilises in order to study and improve company performance. The indicators that will be chosen should be able to represent the essential factors that are crucial to the improvement of operational and financial performance. Through the analysis of accurate information brought about by the tracking processes, the measures or indicators themselves can possibly be analysed and improved to support such goals.
Effects of Governance to The Body Shop’s Business Ethics and Purpose
With regards to the entrepreneurship practices of Roddick, the Board of Body Shop has been able to attain complete control of all matters regarding the company. Their self-perseverance and obligation to their duties and finally, their obedience to the company laws all contribute to the development of the corporation. As such, The Board constantly believes that all the data pertaining to financial information and other facts regarding to their operations that are currently being used is reliable. The Board’s authority is clearly recognised within the company. And because of this, it is able to have a solid grip on the corporation’s actual operations, stakeholders and its financial concerns. Needless to say, because of the corporation’s proper structure and its commitment to the stakeholders and to the community as well, the board of directors has proven that it can efficiently handle both its ethical and legal responsibilities.
Furthermore, the company is currently maintaining good relations and open communications with its investors. As a matter of fact, shareholders are regularly invited by the corporation whenever there are gatherings to discuss trade updates. Moreover, whenever there is an annual general meeting, investors get the chance to meet The Board members themselves. And of course, for private investors, they can also access the company’s website for various shareholder services. Undoubtedly, the company has good consideration for all of its stakeholders; past, present and future. There definitely seems to be a very well planned framework in the firm’s corporate division. It has good policies and procedures with regards to financial matters and operational concerns. Its procedure of assessing the different kinds of situations that come up is certainly a good move on their part. Not to mention, they have maintained good relations with their stakeholders. And finally, The Board’s authority is unsurpassed. Clearly, these facts prove the strength of the company’s corporate governance structure.
The weakness on this case however, is the fact that it cannot always be assured that there are no losses or other errors which may result from mistakes and inconsistencies by one of the committees or employees involved. In addition, having diverse populations, there can be a possibility of having internal problems between members who have different culture and beliefs. In addition, some problems occur in terms of giving value to the companies’ shareholders. There are times that the shareholder is not given the enough information about the status of the company, specifically that shareholder which have a small part in the business. This happens when the board of directors does not give value to their shareholders. Other negative aspects include the imperfection of financial reporting procedures which may definitely result in ineffective corporate governance.
Innovation
At the business organisation level of Body Shop, innovation simply means managing the elements of the innovation process and maintaining an innovative culture within the company. have been added the responsibility of managing innovation as the premise for doing business in the 21st century. With the proper handling of such a delicate task, the organisation is given the edge that it needs to retain or improve its competitive position in the increasingly complex and globalised market (2005). The challenge of Body shop, therefore, lies in the need to innovate on technology and business models, deal with uncertain environments, cutbacks and massive worldwide economic, political and social shifts. This wide array of new concerns for the organisation’s management may increase the complexity of doing business in this day and age, but it certainly improves the company’s ability to survive in the cutthroat field of enterprise.
The creative destruction process has captured the central paradox of market capitalism that in order for the system to become successful in creating wealth, it should be most efficient in destroying unproductive industries and enterprises through innovation (2001). This replacement of weak industries with fresh and vibrant ones have driven companies the world over to innovate the way they do business in order not to be regarded and eliminated as a ‘weak’ part of the business game.
Conclusion
The discussion of the capabilities and resources of the The Body Shop with respect to the entrepreneur capabilities of revealed very consistencies regarding its strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for The Body Shop. The analysis among the cosmetics industry environment as well as the corporate governance of The Body Shop and their capabilities revealed certain gaps, most of which are biased towards the industry environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of The Body Shop. Also, The Body Shop has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.
Credit:ivythesis.typepad.com
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