Body Shop the Business Model Term Paper

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Their pricing is relatively high due to high product differentiation.

SWOT analysis

Strengths

The Body Ship has almost 2, 500 stores in 61 countries. Started in the late 1970s to appeal to a market that has been increasingly enamored with natural ingredients and products, this market has only grown whilst trends for holistic and organic items have, if not stayed constant, certainly increased. In this way, the Body Shop not only managed to carve a niche for itself when inclination for natural products was just beginning but it has gained a reputation and foothold in this field, that a rare few have been able to beat.

The Body Shop is a mature market and a long-established company having a niche in the field. It has high entry barriers making for tough competition and little opportunity for new entrants. Their key strength is, therefore, their name, experience, and image. They also have the financial backing and experience of L'Oreal.

Weaknesses

The 1994 investigative article on the corporation, published in Business Ethics magazine resulted in a huge brouhaha in the international and national media, including its story running in the New York Times and on ABC World New Tonight. The story essentially demonstrated that the founder of the story, Anita Roddick, not only stole the store's name, design, marketing concept and most product line ideas from another store in Berkeley, California but she also fabricated her story of traveling around the world discovering exotic beauty ingredients. It was also found that Roddick's 'natural' products contained immense amounts of artificial colorings, scents and preservatives and that, despite claims of the Body Shop giving "most if its proceeds to charity," documents retrieved from Britain's Charity Commission showed that the Body Shop had not given anything to charity during the past 11 years. In fact, the Body Shop, despite presence of a Foundation is penurious in its philanthropy today. The story led to questioning the Body Shop as being a 'socially responsible' company and there was a 50% drop in the market value of shareholder's stock as well as the industry facing millions of dollars in claims by disenchanted industries that had bought their products.

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The company has never since then regained its former luster or credibility, a number of stores in the UK closed since and it lost a lot of money and supporters over the scandal. Still today, the case is cited widely in university business ethics classes.

Threats

Their cosmetics companies source Aloe Vera from Guatemala, but Guatemala has been undergoing periodic political instability. Similar political instability exists in Peru, which is their source of Brazil nut oil (extracted from the Amazon forest).

The collapse of banking and economic institutions as well as the recession have been hurting, and can still hurt the store. Similarly too, the fall of the British pound indicates higher prices for imported ingredients and products.

There are increasingly stricter and newer legislation appearing all the time regarding chemical products and ingredients used in their items. One such legislation passed in 2008, for instance, stated that all chemicals imported in Europe in amounts at 1 ton per year (including blends) would need to be registered with a European Chemical Agency (ECHA). This makes for slower distribution as well as unstable supplies of ingredients, materials, and products.

The EU also passed a ban on the sale and marketing of animal-tested cosmetic products.

Opportunities

Falling interest rates are favorable for the company's franchising policy. The Internet with increasing interest in e-commerce is proving advantageous for the Company in that they have an increased number of online buyers.

There is also increased male awareness about beauty products and increased interest in enhancing male appearance (called the 'metrosexual' factor).

Altogether, there is an increased awareness of organic and eco friendly products and an increased awareness regarding ethical trading.

An ageing population with motivation and the capacities to spend on premium-priced products that claim to possess natural anti-ageing properties is another factor….....

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