The Body Shop International PLC 2001
Executive Summary
The Body Shop International PLC was once one of the fastest growing manufacturer-retailers, but in a decade’s time their revenue growth slowed from 20% to nearly 8%. These types of results were not uncommon in companies who are experiencing rapid growth but this was a dramatic decrease and, needless to say, a wake up call to management. Competition was increasing and The Body Shop had failed to establish a brand presence during its expansion. Anita Roddick, founder and CEO, attempted to reinvent the company but after a failed attempt would be stepping down and a new CEO would be taking over. Roddick did not necessarily have much financial experience and therefore assumed expanding the business was the top priority and everything else would just fall into place. Patrick Gournay took over as CEO but The Body Shop’s problems that persisted during Roddick’s reign did not necessarily dissolve. Gournay had a plan to implement a new strategy that consisted of enhancing the brand through a focused product strategy and increased investment in stores, create an efficient supply chain by reducing product and inventory costs, and reinforcing the stakeholder culture. Through this strategy, revenue experienced a growth of 13% but pretax profit fell 21%. The expansion of the firm was too rapid and in result sales saw a decline. Their growth rate declined as major competitors entered the market, which I believe in turn led to a panic and some poor decisions were made.
Issues
The Body Shop seems to be experiencing a couple of issues, which led them to where they currently stand. First and foremost is the issue of a lack of short and long term plan strategically and financially. Roddick did not have a sound financial background, which may have led the company to experience unfavorable figures. She was a decision-maker who did not make the most well rounded choices in terms of the potential future effects on company financials. Communication may have also been
The Body Shop International PLC was once one of the fastest growing manufacturer-retailers, but in a decade’s time their revenue growth slowed from 20% to nearly 8%. These types of results were not uncommon in companies who are experiencing rapid growth but this was a dramatic decrease and, needless to say, a wake up call to management. Competition was increasing and The Body Shop had failed to establish a brand presence during its expansion. Anita Roddick, founder and CEO, attempted to reinvent the company but after a failed attempt would be stepping down and a new CEO would be taking over. Roddick did not necessarily have much financial experience and therefore assumed expanding the business was the top priority and everything else would just fall into place. Patrick Gournay took over as CEO but The Body Shop’s problems that persisted during Roddick’s reign did not necessarily dissolve. Gournay had a plan to implement a new strategy that consisted of enhancing the brand through a focused product strategy and increased investment in stores, create an efficient supply chain by reducing product and inventory costs, and reinforcing the stakeholder culture. Through this strategy, revenue experienced a growth of 13% but pretax profit fell 21%. The expansion of the firm was too rapid and in result sales saw a decline. Their growth rate declined as major competitors entered the market, which I believe in turn led to a panic and some poor decisions were made.
Issues
The Body Shop seems to be experiencing a couple of issues, which led them to where they currently stand. First and foremost is the issue of a lack of short and long term plan strategically and financially. Roddick did not have a sound financial background, which may have led the company to experience unfavorable figures. She was a decision-maker who did not make the most well rounded choices in terms of the potential future effects on company financials. Communication may have also been