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The Body Shop and the successes and failures of their strategy - Executive summary

Extracts from this document...

Introduction

The Body Shop and the successes and failures of their strategy EXECUTIVE SUMMARY The topic of this dissertation is the strategy of The Body Shop and the successes and failures of their strategy. In addition, significant focus is placed on the developments and changes in strategies used to gain sustainable competitive advantage for the future, which are in a response to unfolding issues within the cosmetics and toiletries industry. METHODOLOGY This section provides a detailed account of the research undertaken to complete this dissertation and further, goes on to analyse the strengths and weaknesses of each particular method. It is used to give support of the benefits thought to be associated with each research method. LITERATURE REVIEW. This section provides a general overview of the industry in which The Body Shop operates - the cosmetics and toiletries industry. It highlights main competitors of The Body Shop both direct and indirect and details a breakdown of the market. Sales figures, sales growths, profit figures etc... are tabulated to illustrate the position of various companies which compete in the cosmetics and toiletries industry and discussion focuses on how and why it can be argued that The Body Shop is the largest, or at least, one of the largest companies within its industry. This makes for an effective starting point leading onto the introduction and background of the dissertation and its topic. Chapter 1 - Introduction & Background. This section gives a brief summary of the type of company The Body Shop is and the nature of its products that it manufactures and sells. In particularly, it gives an overview of The Body Shop's present place within the cosmetics and toiletries industry. It details current statistics on the number of countries in which the company operates, the number of languages in which the company operates, the number of The Body Shop stores worldwide, the company's number of employees, sales figures, profits in Sterling pounds and the turnover in Sterling pounds. ...read more.

Middle

The company describes itself as, "a high-profile advocate of social and environmental causes." In fact, ethical, social and environmental responsibility is at the very core of The Body Shop's strategy: profits with principles. Anita Roddick's, "aim is to prove that business can and should be a force for positive social change. The company believes that its values are every bit as important as its products and profits, using its stores as platforms to promote its core campaigns of human rights, animal protection and environmental issues," Taken from company profile of Anita Roddick. The Body Shop approach to ethical business operates on three levels: - 1) Compliance: opening up to defined standards of human rights social welfare and worker safety, environmental protection and, where relevant, wider ethical issues like animal protection. 2) Disclosure: only through public disclosure can a real process of dialogue and discussion with stakeholders be achieved and the right direction chartered for the future. 3) Campaigning: to play an active part in agitating and campaigning for positive change in the way the business world works, with the ultimate aim of making a impact on the world at large. be. Taken from the company profile. In terms of how strategy is decided, Anita Roddick carries out what can be called an 'environmental scanning' to find out where the market is going and to see what competitors are doing and then, in her own words, she, "walk(s) in the opposite direction. Whilst Anita Roddick is certainly a talented woman (particularly in public relations), as a strategist it appears that she probably provides the creativity and inspiration for many of the company's strategies but others for example, Patrick Gournay the Chief Executive of The Body Shop, very likely develop these strategies to be more realistic so that they can be implemented. As Gordon Roddick says, "this is very much Anita's company, the rest of us make her dreams come true." ...read more.

Conclusion

This has provided The Body Shop with the competitive advantage of differentiation. "Differentiation occurs when the products of an organisation meets the needs of some customers in the market place better than others. When the organisation is able to differentiate its products, it is able to charge a price that is higher than the average price in the market place," Lynch (1997). According to Bain as cited by Lynch (1997), differentiation is the most effective barrier to entry. This argument is further supported and explained by the diagram below:. Taken from Lynch (1997). For competitors to successfully enter the market they have to offer similar products at lower prices or make extensive use of advertising, or both. But now with competitors introducing less expensive natural products sourced worldwide how can The Body Shop continue to implement its strategy of differentiation to gain competitive advantage? Manufacturers within the cosmetics and toiletries industry have the ability, knowledge and technology to change production operations e.g., from producing shampoo to producing foundation. This form of growth strategy is commonly used within the industry through new product launches. New product launches are successful in setting a company aside from its competitors. In 1997, the company's New Product Development programme led to the introduction of several new products including the aromatherapy range and a total re-launch of the Colourings make-up products line. The Body Shop has recently introduced its new Hemp range, which has already proved popular. It made up 5% of UK turnover in April 1998 after its launch in March 1998. This success is expected to continue, The Body Shop is the only cosmetics and skin products retailer that sells such a range giving the company a monopoly on this particular type of product. Product differentiation is a huge competitive advantage as it increases barriers to entry. "Product innovation (differentiation) may be classified into two broad types: physical and image. The physical products are mainly skin products," Cochrane (1997). ...read more.

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