Body Shop International: Case Study

Introduction

The nineties saw caring business’ revolution, businesses large and small were nearly always faceless corporations with closed doors and displaying only carefully crafted media interviews or choreographed events. The dot.com boom of the nineties had a lot to do with this change; suddenly there was competition not just on the high street but on the information superhighway too and the personality and ethics of a business could give them the edge in getting media attention and respect from customers.

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Body Shop has become an ideal for corporate social responsibility (CSR). It is known for its total herbal products, its stand on environmental issues and it policy of treating all as equal. The principles that Anita Roddick followed, was imbibed in the organization. Body Shop was started as a very small set up in the UK. The products were made of complete herbal ingredients. Roddick, due to paucity of funds, packaged the products in urine sample bottles. Though the retail venture was started very subsistently, Roddick did not adopt any measure that could harm the environment, society, her employees and still gained profit. So Body Shop has become an example of corporate social responsibility and ethical organization.

Even though the organization did everything apparently, to facilitate its stakeholders, critics believe that the company had ulterior reasons to adopt such socially responsible measure. In this essay we try to understand the meaning of corporate social responsibility through the four component model of CSR and how Body Shop follows the aforesaid four components. Is the business ethics that Anita Roddick champions in her environmental awareness is “chick business ethics” as Peter Drucker described it. Then we try to analyze if Roddick’s philosophy of business relevant and practical and if Roddick is a successful leader, entrepreneur and a manager. In the end we try to find how ethical Body Shop is as an organization.

Caroll’s 4 part definition of CSR states that it encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time. Economic and legal responsibilities are absolutely required for a corporate to follow. Economic obligations relate to maximization of cost or sales or minimization of cost etc. Legal responsibilities mean that the corporation should abide by the law and regulation of the land. Ethical, which means to be fair and just, and discretionary, which expect the corporate to be a good corporate citizen, obligations, are expected but not necessarily something that the corporate must follow. 1 Doing an analysis of Body Shop based on the 4 part model we get the following findings:

  • Economic: The company went public in 1984 with the founder retaining 30 percent of the shares. In subsequent years it reaped higher profits and as is believed by industry analysts, the company is capable of running smoothly even when the economy faces a downturn. Hence, we see that the company is in a position to satisfy its shareholders with increasing profits and strong sales.
  • Legal: Body Shop, by principle, detests and rejects animal testing of their products. The case does not explicitly speak of any illegal activity that the company had indulged in. but it does speak of fair treatment of the employees in other nations where the wage differential with the UK or US is huge. But the company tries to pay them a wage almost at par with the wages in the UK or US.
  • Ethical: Roddick tried to imbibe ethics in the culture of the company. The company does not claim that its products will make the customer look beautiful, but rather it states that they will make them “look their best”. The company has actively participated environmental and social causes. It abhors animal testing and refused to go into alliance with any company which practiced animal testing.
  • Discretionary: Body Shop is a generous contributor to organizations such as PETA and AMNESTY International. It is said that the company’s contributions are far more than what is stated in their financial reports. Hence we see that the company is an active donor and supporter of causes such as human rights and environmental issues.

On doing a further detailed analysis we see that there is an increasing tension between the company’s discretionary and financial obligations. This is so because in the recent years the company’s performance has slipped from that of its previous years. But the company has not restrained from its active participation in social causes and its pecuniary contribution towards such causes. Further, due to its ethical conduct and rejection of animal testing the products are costlier than that of other cosmetics giants. This makes their product dearer in the market, which affects sales. Further, the concept of providing free advice to anybody who walks in the store has made it a place for advice seekers who do not intend to buy the product. Such things have affected the company’s sales and profits which restricts their economic obligations.

Corporate social responsibility (CSR) doesn’t have to be a money making exercise for charities, you can also get yourself a name as an ethical business by engaging with the community in projects such as school career evenings and assembly’s and gratis work for local projects and businesses if you’re able to. CSR doesn’t have to be a task either; it can be and is good fun. Charity projects can even be a good way to boost staff moral or encourage team building as they pool resources and ideas for a common goal.

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A way of establishing and maintaining the company socially aware and ethical status is to produce a CSR policy. This document outlines a company’s dedication and stance towards social responsibility and how it believes its actions can help make the business and local community a better place. When it comes to completing tenders and pitches, this information can also come in good stead for making you stand above the competition.

There are many reasons why a business should embrace a CSR programme, the most important being that it helps you gain respect from your peers and creates a sense of place in the community and kinship amongst staff. These aren’t and shouldn’t be a businesses only incentive to become involved in the community and establish ethical practices, if it’s only for show this will inevitably come across. CSR should be a core belief of the company before any activity is undertaken and they should see their status as a chance to help society as well as forge a place in the business community.

The image of Body Shop was that of a company which is clean and ‘green’. A company that believes in causes and feels that the responsibility of the corporate does not solely vest in profit making. The company faces criticism of using its socially responsible image to promote the company commercially. As was pointed out in the case the company has made a brand of exotic products which appeals to a niche market through the usage of “emotional appeal”. The ethicality of the usage of emotional appeal to promote or advertise their products is debatable. But no one could have been a better advertisement prop for her business than Roddick herself. This is so because she herself had the vision on basis of which Body Shop was built. So nothing else could have delivered this better than her. So her making public appearances were ethical and important for the promotion of the business and the values that it fostered. But her usage of social cause may be considered as a marketing gimmick to make its space in an already competitive cosmetics market where big players like L’Oreal were already established and create a niche for itself.

Anita Roddick’s philosophy of business which states:

“The purpose of a business isn’t just to generate profits to create an ever-larger empire. It’s to have the power to affect social change, to make the world a better place. I have always been an activist, I have always been incredibly impassioned about human rights and environmental issues. The Body Shop is simply my stage.”

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The essence of social responsibility that Roddick deeply feels is that business is not solely run by profit. It has a social and environmental responsibility. It should always try to apply the power it derives from its economic success to bring about social changes. Ethically all business need to be aware socially to make the “world a better place”. Her philosophy of selling completely organic products, not doing animal testing of her products and not promoting her products as “miracle products” were a few philosophies she strictly adhered to. Her philosophy was that business that embodied green values, be committed to a better world, could be turned into a profit making concern. Recycling was encouraged and fair-trade was top of the agenda at The Body Shop.

Further, the raw materials for the cosmetic products were sourced from underdeveloped nations like Ghana and Guatemala, essentially from smaller producers, and ensuring that they got a fair price for their goods. This showed that the organization, as was Roddick’s philosophy, followed a responsibility not only for the local community but for global humanity. Well some critics would believe that this is not social responsibility as Roddick goes beyond the edge to support her cause and make donations of shareholder’s money. But what we believe is that her taking a stance towards this socially aware and responsible organization has made the organization and has provided a differentiation from other cosmetics company. But this socially aware organization that Roddick built felt a set back in 2006 after its merger with L’Oreal. The share prices of the company fell and there were enormous boycotts of its products. This clearly shows that Body Shop had generated a belief in ethical organization which was breached when it merged with the cosmetics giant and smeared its reputation. This was definitely not Roddick’s philosophy, then why did she allow this to happen? But being an ethical organization is not an easy task (Trevin˜o and Brown, p. 70).

Anita Roddick is an “environmentalist” as she herself proclaims. She worked for the UN as a researcher and then started a venture where she thought she will infuse her strong social and ethical beefs in her entrepreneurial venture. But the question is how good she is as a leader? She believes in humanitarian causes. She is radical in her views and in her approach towards her business. Her radicalism is definitely a quality that makes her a leader of its own kind, a leader with string beliefs and the courage to carry it forward. She was very successful as an ethical entrepreneur but her failure came when she went public and expanded the organization. She was not Richard Branson who enumerated charisma but she was a strong woman with strong beliefs. She was a leader of her own accord but not a leader who could drive the corporate like Body Shop is today. She was too radical for the business. Her views often enraged the directors but she was “Body Shop”. Her ideas had framed the organization. So she could not be separated from the company. Roddick can be termed as a true ethical leader being a strong moral person and manager (Trevin et al., 2000). Recall that being a “moral person” who is characterized by integrity and fairness, treats people well, and makes ethical decisions is important. But those elements deal only with the “ethical” part of ethical leadership (Trevin and Brown, p.79).

If a more experienced person was brought in as a marketing head of the company, it will loose its essence. The organization will loose its strength which was vested in Roddick. She was the epitome of a moral leader and constantly showed that her belief that her business was to assume a moral leadership. This was not possible fro a professionally experienced marketer. Further, Roddick’s leadership had the quality of an informal message to the organization that reflected through the culture of the organization and made the whole process more effective (Trevin and Brown, p. 73; Trevin 1999).

Body Shop can be termed as one of the first truly ethical businesses pioneered by its founder Anita Roddick. The company shot to success in the mid eighties following a change in consumer awareness in how beauty products were tested and began seeking alternative techniques. The Body Shop continued with its strong ethics and pioneering campaigns by partnering with Green Peace. An ethical business doesn’t necessarily have to be at the level of The Body Shop as even small gestures like participation in community events or collections for charities can improve an organization’s appearance to outsiders. On the outset, one of the main benefits to a business being ethical or proving its social conscious is the attention that it can generate; indeed philanthropy can often make up the vast majority of news in the local and regional press. The awareness of global warming and the damage that everyday activities businesses can have on the environment have spawned the birth of another type of ethical business; the green business. In the print industry and similar where the use of natural resources is an everyday necessity it is possible to achieve internationally recognised accreditation for environmental management programs which is increasingly appealing to business and consumer customers alike. This shows the power the organization held on the society and its customers.

Questions regarding personal heroes are common in interviews. This shows the person’s inclinations and beliefs. This gives a clear view if the person will fit into the company’s ideologies and culture. But it is quite debatable if these questions are ethical? Such interviews are intentional and are framed in the form of gathering information. Such interviewing questions may not be considered unethical because they are not forcing the person to change to the company’s wishes and change his/her views to align that of the company’s. Rather the company can be said of discriminating against people who have a different view regarding the issues that the company supports. We believe that this line of questioning is ethical as the company is taking in people who believe in the causes the company believes in and so will merge in a better way with the organizational culture, thus reducing turnover.

Reference

Carroll & Buchholtz (2003) Business and Society: Ethics and Stakeholder Management, 5E, South-Western, Thomson Learning.

Drucker, P. F. (1981) “What is business ethics?” The Public Interest, Spring.

Trevin, L. K. (1999) “Managing ethics and legal compliance: What works and what hurts.” California Management Review, 41(2): 131–151.

Trevin, L. K., Hartman, L. P., Brown, M. (2000). “Moral person and moral manager: How executives develop a reputation for ethical leadership.” California Management Review, 42(4): 128–142.

Trevin, L. K. and Brown, M. E. (2004) “Managing to be ethical: Debunking five business ethics myths” Academy of Management Executive, Vol. 18, No. 2.

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