HBR Case Study: The Body Shop International Case Facilitation Janssen Anderson Staci Brandt Heather Gunther Jonathan May Michele Moore Debbie Nguyen “Business people have got to be the instigators of change. They have the money and the power to make a difference. A company that makes a profit from society has a responsibility to return something to that society.” Anita Roddick, Founder of The Body Shop

Agenda II. The Brains Behind The Body Shop Building The Body Shop Janssen Anderson II. The Brains Behind The Body Shop Heather Gunther III. The Body Shop Best Practices Staci Brandt The Body Shop Balance Jonathan May V. The Real Beauty Behind the Body Shop Michele Moore VI. The Body Shop Now Debbie Nguyen

Building The Body Shop Janssen Anderson

Brief History The first store was started in 1976 by Anita Roddick in Brighton, England Franchises were granted in 1977 and the first overseas franchise opened in Brussels in 1978 The Body Shop saw considerable growth in the 1980’s and shops were opening at a rate of two per month 1985 -The Body Shop went public on the UK unlisted securities market Anita is selected with as the Veuve Cliquot Business Women of the Year

Brief History con’t Became officially involved with Greenpeace and in 1986 The Body Shop created an Environmental Projects Department with “Save the Whales” as it’s first official campaign 1987 “Friends of the Earth” campaign was launched 1988 Anita Roddick is awarded the Order of the British Empire by the Queen of England Opens first store in the US in NY 1990 The Body Shop Foundation was Established which funds human rights and environmental protection groups

Brief History con’t 1990 AGAINST ANIMAL TESTING campaign is launched First shop opens in Tokyo 1991 has 586 stores in 38 different countries 2001 opens first shop in South Africa 2003 Anita is appointed as a Dame of the British Empire New stores opened in Estonia and Turkey 2005 The Body Shop comes to Jordan and Russia 2006 The Body Shop turned 30 and is acquired by L’Oreal Today The Body Shop has over 2,000 stores in 54 countries and has over 1,200 products

Competitors Bath and Body Works Origins Burt’s Bee’s Aveda What others can you think of?

How has the Body Shop been so successful while defying industry norms? What are important components of the success of the Body Shop?

Leadership Anita Roddick-”ethical leader” VISION COMMITMENT PHILANTHROPY

Products Natural ingredients (honestly!) No animal testing Fair trade “We wanted to be honest about the products we sold and the benefits we promised. We wanted to go in the opposite direction than the rest of the cosmetics industry. I would give that advice to anyone: “Focus on what the competition doesn’t have and promote that.” -Anita Roddick No animal testing Fair trade

Employees/Environment Passionate Simple Fun Knowledgable Commited

The Brains Behind The Body Shop Heather Gunther

Brains Behind The Body Shop Anita Roddick Parents were entrepreneurs Trained in education Library researcher in Paris Geneva to work with Women’s Rights issues Traveled throughout South Pacific and Africa

Brains Behind The Body Shop Anita Roddick “Entrepreneurial Mindset” video

Brains Behind The Body Shop Anita Roddick How important are Anita Roddick’s qualities to her management style?

Brains Behind The Body Shop Anita Roddick What are some interesting decisions that Anita Roddick made as a manager?

Brains Behind The Body Shop Anita Roddick How would you evaluate how Anita Roddick makes decisions as a manager? How did Anita Roddick deal with the following characteristics of managerial decision making? Risk Uncertainty Conflict Lack of Structure

Brains Behind The Body Shop Anita Roddick How important was Anita Roddick’s role in ongoing management? Decisions that she made Interviews with franchisees

Brains Behind The Body Shop Anita Roddick What would be some of the pros and cons of working as a franchisee under Anita Roddick? How might management decision making change as a result of management succession?

The Body Shop Best Practices Staci Brandt

The Body Shop Best Practices “As she built her business, Roddick developed most of The Body Shop’s unique operating practices and management policies to respond to opportunities she perceived. From product development to human resource management, The Body Shop has been described as “innovative,” “daring,” and even “radical”. But there is no question it was successful.” (HBR p. 4)

The Body Shop Best Practices What were some unique managerial decisions that allowed The Body Shop to achieve some of its greatest “best practices,” practices that differentiated them from others in the cosmetic industry?

The Body Shop Best Practices What are some unique managerial decisions in regard to: Pricing Franchising Product Development and Production Marketing and Advertising Organization and Human Resources

The Body Shop Best Practices Pricing “Products were priced more expensively than mass merchandised cosmetics, but well under exclusive department store lines” (HBR p. 3) “Sales” ..made no elaborate claims or promotions. And the products still packaged in plain plastic bottles were never “sale” priced.”

The Body Shop Best Practices Franchising Global Franchising “By appointing a head franchisee in each major national market, Roddick was able to concentrate on the development of new product lines and the company’s global vision, rather than worry about the complexities of administration or personnel management” (HBR p. 4). Selection of Franchisees “openly acknowledged a preference for women as franchisees” Calling it “The Body Shop’s secret ingredient” Management of Franchises “Roddick kept strict control over the franchising process…” “Her objective was to ensure that The Body Shop image and the principles it was based on, were not diluted through franchising”

The Body Shop Best Practices Product Development and Production “Initially, product development had been derived by samples brought back in Anita’s back pack, and the creativity of the herbalist she had worked with since the startup” (HBR p. 5). “Although over 70% of They Body Shop products were supplied by outside contractors, the company hoped to increase its in-house manufacturing from 30% to 50% by the early 1990s.

The Body Shop Best Practices Marketing and Advertising Advertising “Noticeably lacking, for a cosmetics retail company, were any photographs of models with beautiful hair and perfect skin” (HBR p. 3) “Roddick was fond of saying that her concept of beauty was Mother Theresa not some bimbo” (HBR p.3) Marketing “As a cosmetic retailer, The Body Shop defied most accepted marketing practices. In an industry where 30 cents on every dollar of sales was typically devoted to advertising, the company had no marketing or advertising department.

The Body Shop Best Practices Organization and Human Resources “Most businesses focus all the time on profits, profits, profits…I have to say I think that is deeply boring. I want to create an electricity and passion that bonds people to the company” (HBR p. 6).

The Body Shop Best Practices What lessons can be learned from The Body Shop as a corporation and from Anita with respect to managerial decision making?

The Body Shop Best Practices What are some lessons that can be learned from The Body Shop successes?

The Body Shop Best Practices Lessons learned from The Body Shop’s success Authenticity Adds Value The Importance of Staff Selection Globalization Can Lead to Greater Success.

The Body Shop Best Practices The Secret of Authenticity “Leadership demands the expression of an authentic self” Managing Authenticity “If business is managed from the heart, great things can happen” Anita Roddick

The Body Shop Best Practices Select Staff that Support the Vision of the Corporation “We were searching for employees, but people turned up instead” Anita Roddick “In companies with healthy cultures, employees aren’t kept in the dark; rather they are supported in the belief that they are part of an exciting future. They come to work with a fire inside them, a result of clearly stated leadership and business practices that everyone explicitly understands. Every person in the company knows how to individually contribute to its future” John Hamm

The Body Shop Best Practices Go Global the Right Way Exposure to World Markets through previous travels. Passions for global humanitarian efforts afforded her the ability to build relationships with members of the international marketplace. Roddick’s strong focus on communications. “Communication is the key for any global business” Anita Roddick

The Body Shop Best Practices What are some lessons that can be learned from The Body Shop failures?

The Body Shop Best Practices Lessons learned from The Body Shop Failures Don’t Confuse Your Personal Strategies with Business Strategies Advertising and Marketing Add Value Do Not Underestimate Your Competition

The Body Shop Best Practices Keep your strategies clear “Entrepreneurs are far more likely than corporate managers to intertwine their business and personal lives” Marketing News “You can get as political as you like, but it should be remembered that this company is essentially a shampoo outfit. People come to work here mainly to get by in life-they should not need to support a pile of political pressures in their day-to-day humdrum of work life. The politics should come out into the open and let the shampoo company make shampoo” Written by an anonymous employee of The Body Shop

The Body Shop Best Practices Let Advertising and Marketing Add Value “In the rush to expand, we didn’t pay sufficient attention to marketing details.” Anita Roddick

The Body Shop Best Practices Competition can be fierce. “What we didn’t have was a strategy to cope with competition that was so fast and furious. We had not thought of what might happen if a big retailer like Wexner, who rents an enormous amount of retail space in the malls in America, suddenly decided to turn one unit in each mall into a copycat of The Body Shop. Immediately, we had 500 shops competing with us. We never thought like that” Anita Roddick

The Body Shop Best Practices To what extent are these things unique to The Body Shop and to what extent might they generalize to other businesses?

The Body Shop Best Practices Video clip Anita Roddick “The Power of the Story”

The Body Shop Balance Jonathan May

The Body Shop Balance How sustainable is the success of The Body Shop? In particular, what should be done about the emerging problems and expected difficulties with operating the business in the United States?

The Body Shop Balance The U.S. Market Challenge “It was Gordon’s view that while the United States offered The Body Shop the greatest potential for growth, it also represents the greatest potential for disaster.” - Anita Roddick

The Body Shop Balance Challenges of the U.S. Market The Body Shop image Food and Drug Administration Resistance to Advertising Competition

The Body Shop Balance Should they advertise? “It’s very hard to cultivate awareness and familiarity among consumers here without media advertising.” – David Altschiller “There’s no example of anyone doing what we’re doing in America and making it work…” Anita Roddick

The Body Shop Balance What is the measurement of success? Should The Body Shop compromise some of their values in the name of profit in the U.S. market?

The Real Beauty Behind The Body Shop Michele Moore

The Real Beauty Behind The Body Shop Anita claims that part of her goal is not just to create a successful business but also serve as a model for other businesses. Should businesses follow her model of social activism?

Role Model LOCAL TRADE RECYCLABLE PACKAGING GREEN PEACE SAVE THE WHALES FRIENDS OF THE EARTH BODY SHOP FOUNDATION AGAINST ANIMAL TESTING A model for other businesses to follow?

Role Model 4 SOCIAL RESPONSIBILITY VALUES COMMUNITY AND GIVING ENVIRONMENT PARTNERSHIPS FAIR LABOR PRACTICES 4 Social Responsibility Values Doing What is Right – for associates, customers and investors Being inclusive – in our thoughts and behaviors Working for the greater good – of the enterprise and the communities in which we operate Pursuing Excellence – in all we do Community and Giving Win the Susan G. Komen team challenge awards for the most participants in Columbus and Rio Rancho Involved with United Way Tutoring Program Giving Tree – Adopted moms during Mother’s Day and the Holidays Associates for Associates Emergency Fund – for associcates who were victims of the hurricanes in 2005 Community Connections Placed 140 Business leaders in community leadership roles and service on over 155 boards of directors of various non-profit agencies Environment Partnership with ForestEthics To raise environmental standards in the catalog industry. Ensure pulp used in catalogs is not from an endangered forest. Minimize waste reduction Conserve enrgy and preserve natural resources Promote the increased use of recylced content paper Select and partner with environmentally responsible suppliers Forge relationships with environmental agencies and non-governmental organizations Hold themselves accountable for environmental stewardship efforts Natural Resources Focused on reducing energy consumption in stores by increasing the energy efficienty of our ligting. Catalogs made with either 10% PCW or FSC mixed-source content Waste Management 2005 – significantly increased recycling efforts and reduced the amount of waste disposed of via landfill and other means 2005 – recycled nearly 8200 tons of paper and cardboard Recycle close to 75% of all materials identified for disposal. Efficient packaging Made with PET, the most widely used plastic in consumer packing, that is readily recycled and made in an environmentally-friendly way Efficient Transportation Maximize use of ocean-going vessels and train to conserve fossil fuels Partnerships: Currently have relationship with: US EPA – Waste Wise Program US EPA Smartway Program Keep Franklin Beautiful Waste-Not Center Ohio Association of Recyclers National Recycling Coalition Sustainability Roundtable of Central Ohio

Role Model NATURAL PRODUCTS NO ANIMAL TESTING ENVIRONMENTAL HOLISTIC APPROACH

Role Model NATURAL PRODUCTS ENVIRONMENTALLY FRIENDLY HUMANITARIAN EFFORTS COMMUNITY EFFORTS: AmeriCares The Campaign for Safe Cosmetics Coalition for Consumer Information on Cosmetics (CCIC) The Conservation Alliance Habitat for Humanity Institute of Packaging Professionals Lifestyles of Health and Sustainability (LOHAS) The National Arbor Day Foundation Natural Products Association NC Green Power Net Impact North Carolina Sustainable Business Council Piedmont Biofuels Renewable Choice Energy Sustainable Packaging Coalition (SPC) University of North Carolina Kenan-Flagler Business School U.S. Green Building Council

Role Model RECYCLABLE PACKAGING FAIR TRADE NATURAL PRODUCTS ENVIRONMENTAL SUSTAINABILITY GREEN ENERGY EARTH MONTH

The Body Shop Now Debbie Nguyen

The Body Shop Now ! The Body Shop was purchased in 2006 by L'Oreal. Even though it had changed the ownership but the value of The Body Shop maintain the same.

Anita Roddick Anita Roddick retained a role as consultant after L'Oreal bought the firm. Anita Roddick is not only the founder of “The Body Work” but she’s also an author of many books.

Books wrote by Anita Roddick

Anita Roddick Anita Roddick cares passionately - Social responsiveness - Human rights - Environment - Animal protection Therefore, all her books are based on her passions and dedications to the World.

Anita Roddick cont. Few years ago, she found out that she had hepatitis C infection. “I want to use the last years I have to get my hands dirty working for civil change. I want to be able to see the positive difference that money can make by giving away what I have.” In 2004, Roddick donated $1.8 million to Amnesty International, the human rights organization.

Anita Roddick Feb. 2007, she revealed of being diagnosed with Hepatitis C. August 2007, she appeared on live television program called “Doctor, Doctor” in UK as a special guest to talk about Hepatitis C. Anita Roddick passed away on Sept. 10th 2007 at St. Richard’s Hospital.

Please give a minute to remember Anita Roddick, the founder of The Body Shop.

References 04 Sept. 2007 <http://www.thebodyshopinternational.com/>. 04 Sept. 2007 <www.thebodyshop.com>. "Anita Roddick." Business the Ultimate Resource. Cambridge: Perseus, 2002. 1134-1135. Bateman, Thomas S., and Scott Snell. Management Leading and Collaborating in a Competitive World. Boston: McGraw Hill, 2007. Goffee, Rob, and Gareth Jones. "Managing Authenticity." Harvard Business Review (2005). Hamm, John. "The Five Messages Leaders Must Manage." Harvard Business Review (2006): 1-9. Roddick, Anita. Business as Unusual. Chichester: Anita Roddick Books, 2005. Roddick, Anita. Interview. The Entrepreneurial Mindset. 04 Sept. 2007 <http://www.cwerty.com/members.asp>. Roddick, Anita. Interview. The Power of the Story. 04 Sept. 2007 <http://www.cwerty.com/members.asp>. Saunders, Peter. Interview. A Welcome Message From Our CEO. 2007. 04 Sept. 2007 <http://valuesreport.thebodyshop.net/>. Sullivan, Patrica. "Anita Roddick, 64; Founder of Activist Cosmetics Firm." Washington Post 11 Sept. 2007. Washington Post. 11 Sept. 2007.