session-11-case-The-Body-Shop-International

HarvardBusinessSchool9-392-032Rev.July13,1995ProfessorChristopherA.BartlettandResearchAssociatesKentonElderkinandKristaMcQuadepreparedthiscasewithanadditionalcontributionbyMyraHart,asthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.Copyright©1991bythePresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685orwriteHarvardBusinessSchoolPublishing,Boston,MA02163.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,usedinaspreadsheet,ortransmittedinanyformorbyanymeans—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.1TheBodyShopInternationalBusinesspeoplehavegottobetheinstigatorsofchange.Theyhavethemoneyandthepowertomakeadifference.Acompanythatmakesaprofitfromsocietyhasaresponsibilitytoreturnsomethingtothatsociety.AnitaRoddick,founderandmanagingdirectorofTheBodyShop“Let’sfaceit,Ican’ttakeamoisturecreamtooseriously,”AnitaRoddickwasfondofsaying,“Whatreallyinterestsmeistherevolutionarywayinwhichtradecanbeusedasaninstrumentforchangeforthebetter.”Thishereticalstatementbytheheadofthefastest-growingcompanyinthecosmeticsindustryreflectedherhabitofgoingagainstthetideoftheindustry’sestablishedpractices.TheBodyShopdidnotadvertise,avoidedtraditionaldistributionchannels,spentaslittleaspossibleonpackaging,andusedproductlabelstodescribeingredientsratherthantomakemiraculousclaims.Itsproductswerebasedonall-naturalingredients,andweresoldinrefillable,recyclablecontainers.Butthemostunconventionalofall,wasTheBodyShop’sstrongsocialmessage.AsRoddickexplained:“Therehasn’tbeenanethicalorphilosophicalcodeofbehaviorforanybusinessbodyever,andIthinkit’sgoingtohavetochange.”Fromasinglestorefrontin1976,TheBodyShophadgrownto586shopsby1991,tradingin38countriesand18languages.Worldwideretailsalesfromcompanystoresandlicenseeswereestimatedat$391million.Alongtheway,TheBodyShopwasvotedU.K.CompanyoftheYearin1985,andU.K.RetaileroftheYearin1989.Inaddition,RoddickhadbeentheVeuveCliquotBusinesswomanoftheYearin1985,andCommunicatoroftheYearin1987.In1988,shewasawardedtheprestigiousOrderoftheBritishEmpirebyQueenElizabeth(whoherselfwasrumoredtouseTheBodyShop’sPeppermintFootLotion).AnitaRoddick:TheEntrepreneurTheworldofbusinesshastaughtmenothing...IhonestlybelieveIwouldnothavesucceededifIhadbeentaughtaboutbusiness.AnitaRoddick392-032TheBodyShopInternational2BorntoItalian-immigrantparents,Roddick(néePerella)grewupworkinginthefamily-ownedcaféinLittlehampton,WestSussex.Trainedineducation,shetaughtbrieflyinalocalelementaryschoolbeforeacceptingapositionasalibraryresearcherfortheInternationalHeraldTribuneinParis.Next,shemovedtoGeneva,whereshejoinedtheUnitedNationsInternationalLaborOrganizationtoworkwithissuesofThirdWorldwomen’srights.Withmoneysaved,shetraveledthroughouttheSouthPacificandAfrica,developingafascinationalongthewayforthesimplicityandeffectivenessofthebeautypracticesofthewomensheencountered.ReturningtoEngland,shemetGordonRoddick,aScotspoetandadventurerwhosharedherloveoftravel.ThebirthoftwodaughtersforcedtheRoddickstosettledown,andthecoupledecidedtoconvertaVictorianhouseinBrightonintoahotel.In1976,however,theysoldtheirbusinesssoGordoncouldfulfillalifelongdreamofridingonhorsebackfromBuenosAirestoNewYorkCity—ajourneythatwouldtakeuptotwoyears.Anitaagreedtotheplan(“Gordonneverwasaboringman”)and,at33,undertooktosupportthefamily.Shehadanideaforashop.Witha£4,000bankloan(approximately$6,000),Roddickdevelopedalineof25skinandhaircareproductsbasedonnaturalingredients.Sourcingexoticingredientslikejojobaoilandrhassoulmudfromalocalherbalist,shepreparedthefirstproductbatchesonherkitchenstoveandpackagedtheminthecheapestcontainersshecouldfind—urine-samplebottles.Handwrittenlabelsprovideddetailedinformationabouttheingredientsandtheirproperties.Alocalartstudentdesignedherlogofor£25.TheBodyShopname—atongue-in-cheekinspirationAnitatookfromautorepairshopsshehadseenintheUnitedStates—turnedouttobeapotentialliabilitywhenshelocatedherfirstshopinasmallstorefrontnearafuneralparlor.Whenhernewneighbor’slawyerthreatenedtosueunlessshechangedhershop’sname,Roddicktookthestorytothelocalnewspaper.Thecuriosityinspiredbythesubsequentarticleassuredthatherfirstdayofbusiness,March27,1976,wasanunqualifiedsuccess.Roddickgraduallydevelopedaloyalclientele.Somefoundthenaturalproductslessirritatingtosensitiveskin;otherslikedtheirnovelaromasandtextures;andmanyjustenjoyedtherelaxed,honestshopenvironment.Asthesoleemployee,Anitaformulatednewproducts,ranthestore,purchasedsupplies,keptthebooks,andconstantlytriedtodrawattentiontoherbusiness.(Inonesuccessfulruse,shesprinkledstrawberryessencealongthestreetleadingtoherdoor,inanattempttolurecustomersbythepleasingaroma.)Afterasuccessfulsummer,Roddickexchangedahalfshareinherfledglingbusinessfora£4,000investmentbyalocalbusinessman,fundingtheopeningofasecondstore.InApril1977,whenGordonreturned(hishorsehaddiedintheAndes),hehitupontheideaoffranchisingasawaytocontinueexpansiondespitelimitedcapital