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The Bodyshop with CSR

The Bodyshop with CSR

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Executive Summery

This report focuses on the benefits of Corporate Governance (CG) and Corporate Social Responsibility (CSR) engagement as well as the company¶s strategies involving CSR by using The Body Shop as the main focus of the report.

The Body Shop was regarded as one among the first companies in the cosmetic industry to publish a report on its social responsibility commitment. The Body Shop has been using Corporate Social Responsibility (CSR) successfully established itself as leader in the arena of social responsibility, and increasing awareness of its name and product ranges. One of the company strategies is providing extensive programs aimed at educating its consumers about corporate actions and using Anita¶s philosophy related to the Environment, Human and Animal rights and Fair Trading program for the selling point.

The Body Shop went through the tough time later with the criticisms from the activist groups campaigning for consumer to ban The Body Shop. As these activist group accused the company of misleading the information and abusing the CSR for the benefits of the company.

She managed to bring the problems to attention of a local newspaper. Nijhof and Jeurissen. Nijhof and Jeurissen. She was inspired to set up the shop after seeing a store called µThe Body Shop¶ in Berkeley. grains of rice. Asia and Australia used locally grown plant extracts to care for their bodies (Van. in Brighton. µThe Argus¶ (Van. The newspaper published the story as a centrespread. 1991. cited in Van. having worked as a United Nations researcher in the 1960s. California. Nijhof and Jeurissen. The Body Shop was unable to afford any advertising. 2006). Nijhof and Jeurissen. The Body Shop History The Body Shop was founded in 1976 by Anita Roddick. Also. which people could also reuse. The product packaging was simple with handwritten label. that sold cosmetic like shampoos. almonds and bananas (Van. Urine sample bottles. such as bees wax. the cheapest packaging available at the time. 2009). 2006). lotions and body creams (Purkayastha. Nijhof and Jeurissen. 2006). 2009). Nijhof and Jeurissen.1. At first. which generated free publicity for her shop. USA (Purkayastha. 2006). Anita acquired the US right to the µBody Shop¶ from the two entrepreneurs of Berkeley. Anita made a virtue out of a necessity by bashing her soaps and lotions on natural ingredients. were used as containers (Purkayastha. 2009). UK (Van. 2009). Anita was aware that men and women in Africa. selling natural soap and lotion products. USA. Anita managed to compensate amply for this cleverly playing the role of the underdog (Van. . cocoa butter. When two funeral directors threatened to sue her if she used the name µBody Shop¶ as they considered inappropriate name (Purkayastha. 2009). 2009). In the 1980s. The First Body shop had to be financed from extremely limited resources (Roddick.

The lack of attention to CSR and social performance by organizations is gaining prominence in the strategy field as there is growing acknowledgment that skilful stakeholder management contributes to firm¶s value creation process. CG and CSR engagement can enhance opportunities for strategic alliances or other partnerships as major business opportunities for corporations with external constituencies. 652 2. 1995. 2008). Body Shop announced that it had agreed to be taken over by L¶Oreal in a million deal (BBC news.On March 17. The major potential benefits of Corporate Governance (CG) and Corporate Social Responsibility (CSR) engagement As Zenisek (1979) cited in Maharaj (2008) stated that in order to be accepted as a good corporate citizen organizations must be cognizant about societal expectations. Furthermore. Also. 2006. 2008). better reaching market segment like ethical consumers and socially responsible investors as mentioned from above. and. there are a growing number of investors who are solely investing in companies that are recognizing their role as corporate citizens and being socially responsible (Maharaj. such as reputation and subsequently its competitive advantage (Clarkson. from an internal point of view. 1999 cited in Maharaj. Hillman and Hitt. enhancement of labour relations and employee commitment (Keinert. by enhancing a firm¶s intangible assets. 2008). Such proven benefits good CG and CSR can bring the achievement of competitive advantage.1 Achievement of competitive advantage . 17 March 2006). 2.

2008). (2008) stated that µdo good in order to do well. Firstly. 2009).¶ Doing good certainly is the favourable influence exercised on key stakeholder attitudes and public opinion toward corporations outstanding in their engagement for society and the environment (Campbell et al. µThe Body Shop¶s mission statement (Purkayastha. The company has differentiated itself by developing a niche product line and unique buying experience (Menon et al. all of these had given The Body Shop the competitive . p196) cited in Keinert. Body Shop provided product information. a number of leaflets and poster on recycle paper provided information about social causes that the company believed in and encouraged its customers to get involved. The Body Shop focused on being to become a good corporate citizen organisation and socially responsible. Therefore. it was associated with the social responsibility which also strongly associated with the social activism of Anita. Body Shop was one of the first companies to publish ³Values Report¶ in 1996 (Purkayastha. (2003. Seifert et al.CSR has long been discovered as a major source of competitive advantage for many reasons. CSR helps crating intangible assets. CSR engagement will enhance the market position. 17 July 2003) ones said µI don¶t give a damn if we were made successful by Mrs Rosie Brown who love her vitamin E cream. 2006). Anita wanted to establish a business with ethics. Behind us there was a tacit acceptance of what we were doing. 2006). For instance. She was very critical of what she called the environmental insensitivity of industry and called for a change in standard corporate practices (Purkayastha. For example. 2006). 1996 cited in Keinert. 2008). and had no plan to perform tests of this kind in the future (Van. 1999). The Body Shop asked its suppliers to sign declarations that they had performed no animal testing in the past five years. The Body Shop had adopted this very well from the start.¶ The Body Shop distinguished itself clearly from the competition. Nijhof and Jeurissen. the indirect and direct impact upon sales through the creation of positive publicist and enhanced reputation (Keinert. Anita (BBC news.

advantage. 2. and not interested in portfolio µfashion and fads¶ (McLachlan and Gardner. The Body Shop has extensive programs aimed at educating their customers about corporate actions and philosophies related to the environment. they tend to be loyal and made a repeated purchase or willingness to pay a premium (Keinert. Establisng credibility.2 Value-added to products and services Another advantage potentially implied in CSR engagement is the creation of new business opportunities through value-added to products and services. The Body Shop developed a loyal customer base. The Body Shop staff would receive half a day wage for services to the community (Van. 2008). and investors prefer shares from socially responsible firms (Keinert. The Body Shop was creating to the needs of the ethical consumer and socially responsible investor by creating identity called µ profits with a principles¶ philosophy and the brand was closely associated with the social justice agenda (Purkayastha. . This form of voluntary work is now a popular expression of one aspect of CSR. 2006). truly engage with the company. the company seemed to attract the µSocially oriented investors¶ who tend to be loyal. Moreover. personalising purchases. Therefore. 1999) As a result. and raising consumers¶ and investors¶ interest in the corporation and its respective offers (Keinert. 2009). and adding perceived value to the product and service are some of the factor creating customer and brand loyalty (Menon et al. 2008). like taking opportunities within the market and appeal to consumers and investor as well as building partnerships and alliances. this group of consumers once they dispose of sufficient knowledge about The Body Shop engaged with CSR. Furthermore. Nijhof and Jeurissen. Moreover. Also. 2008). As research suggests that consumers prefer to buy products and services. the company has been able to expend very substantially its market share in both a consistent and sustainable manner to the degree that it has even entered the mainstream market after gaining strength and visibility in a market niche. 2004 p13 cited in Keinert.

which crucial for continuous growth. 1998 p 245 cited in Keinert. Nijhof and Jeurissen. 2008). 2008). 2. An organisation which builds employee commitment through CSR engagement will also be more likely to attract and consecutively retain employees with equally high standards (Keinert. Evidence suggest diversity leads to overall improved decision making. 2005. employees are selected very much on the basis of personal values (Sodeman. increasing loyalty and identification with the corporation. For example. and might find a more cogent approch to identification and solution of upcoming problems (Keinert. diversity and their inherent benefits Compliance with equal Opportunity legislation has become a MUST within the developed world (Keinert.4 Equal opportunity compliance. and to develop products and services that meet their needs more accurately (Eyring. Companies that mirror the general population on all levels are apt to better understanding the needs and wants of customers.3 Achievement of organisational commitment CSR engagement and an excellent corporate reputation for high values and ethical standards in the treatment to their stakeholders can be.5 Opportunity for partnership and alliances . as a diverse group takes advantage of increased awareness of global opportunities. 2008). 2009). 2. CSR has been found to be also part of overall product and service evaluation and thus exercises at least an indirect influence on consumer and investor loyalty (Keinert.2008). increasing the company attractiveness. p 370 cited in Keinert. and thereby rendering employees more committed to the interest of the organisation (Del Mar Garcia de los Salmones et al. 2008). 2. 2008). The benefit of equal opportunity for the firms lies in the benefit arising from diversity and its underlying potential for innovation. 2008). 2003 cited in Van.

Last but not least. indigenous rights. using themselves at the centre of an array of mutual relationships with persons. 3. 2009). the company created the mission statement (Exhibition 1) that reflected on Anita¶s environmental. The Body Shop published its first . 1995 cited in Dennis. 2008 ). while improving the quality of life of the employees and their families. grant them access to community knowledge and thus provide them with valuable new insights. groups and entities called µStakeholder¶ (Steiner and Steiner.CSR engagement and sincerely upheld values and principles clearly build confidence in a company (Kaptein. and political values. P.2005 P 14 cited in Keinert. 1998). 1999). therefore a CSR champion is likely to be more trustworthy partner for strategic alliances that a firm not know for its social orientation (Keinert. Neck and Goldsby. 2008). First of all. as well as of the local community and society at large (Watts and Holme. when engaging with stakeholders and community to gain considerable competitive advantage through the enhancement of their image. social. The Body Shop was discovering their core values from the very early days. the company produces and promotes its product lines with environmental and social sensitivity as a major theme. they have been including CSR in their marketing strategies to represent their commitment by behaving ethically and contribute to economic development. than promote a bubble bath¶ (Entine. Furthermore. The Body Shop has sticked to their core values from the beginning. Anita once said µI¶d rather promote human rights. As Keinert (2008) stated that partnerships with governments or communities may serve to reduce criticism and distrust towards corporations. environmental concerns. Furthermore. The Body Shop¶s CSR initiatives for growth The Body Shop has been engaging the Stakeholder Business Model from the early years as part of their expansion. The Body Shop has being socially and ecologically as part of their core values.

2009).2 Support community trade . The Body Shop has been engaging their stakeholders.1 No animal testing The Body Shop asked its suppliers to sign declarations that they had performed no animal testing in the past five year. According to Paulette Cleghorn. These reports were audit statement of its social. the developing world and does not test on animals´ (Wheeler. ³Our products offer the consumer an alternative ± a high quality. environmental and animal protection practices. 2009). Secondly. and had no plan to perform tests of this kind in the future (Van. which is not burdened with mountains of packaging waste (Van. in recognition of its efforts on this issue (Purkayastha. Nijhof and Jeurissen. the company was awarded the first place in the cosmetic category for µAchieving Higher Standards of animal Welfare¶ by the royal Society for the Protection of Animals. 3. 1994). The reports were given a top rating in a worldwide ranking by Sustanaiability for the United Nations on environmental and social reporting (Purkayastha. naturally based. including the animals. 2006). and the environment. inspired product from a company that cares about the environment. a spokesperson for the company. As a result in 2005. for which steps are taken to prevent their use in cosmetic testing. 3. 2006). 2006). alongside native population groups seeking an income. Nijhof and Jeurissen.µValue Report¶ in 1996 and its second µValues Report¶ in 1998 (Purkayastha.

and hair-care company to tackle the industry¶s chief environmental challenges: successfully treating raw factory waste on site with an experimental. the company had the highest ranking in an environment report published by the UK (Boulton. 2006). the company pays the Kayapo¶ well above the market price for Brazil Nut Oil´ (Bavaria et al. The Body Shop also published its first social report in 1995. after consulting more than five thousand stakeholders. 2006). The Body Shop developed a set of Fair Trade Guidelines and Ethical Trade Standards (Exhibition 2 and 3). 1997). 3.thebodyshop. 1998). In fact. they became the ³first international skin. It is about exchange and value.com/ bodyshop/values/support_community_trade. P. By installing a Living Water waste treatment system. For instance.3 Protect the planet The Body Shop has a history of taking action to address environmental concerns.. For the year 1997. Neck and Goldsby. friendship and trust¶(www. The company also supported materials and technologies that caused minimal harm to the environment and promote the use of renewable resources and sustainable ingredients (Purkayastha.The company developed the Trade not Aid program to support developing countries by trading with them. In Anita¶s words µOur trade with the communities is not just about creating another product or market for The Body Shop.jsp. it has dealt with the problem of waste water affluent. Neck and Goldsby. P. The Body Shop guaranteed a living wage for its community trade suppliers and their workers through a predictable and long term business relationship (Purkayastha. accessed on 17 July 2010). trade and respect. the company has been a proponent of ³green´ packaging. ecologically sustainable system´ (Roderick. To ensure that the company Trade not Aid program would be successful in fulfilling a community¶s goal. For example. This makes the . 1994 cited in Dennis. 1993 cited in Dennis. 1998). These environmental efforts have paid off for The Body Shop.

Neck and Goldsby. precisely the activities that The Body Shop claims it is preventing. 1995 cited in Van.company a front runner in the development of sustainability reporting (Wheeler and Sillanpaa. up from 34 percent the year before¶ (Entine. there is evidence this claim is not completely true. 2006). 4. 1998).1 Against animal testing The Body Shop initially claimed that its products contain ingredients that are tested on animals. in an internal memo dated May1992 µ noted that 46.5 percent of its ingredients have been tested on animals. 1995 cited in Dennis. 1997 cited in Dennis. Criticisms 4.2 Trade not Aid program The Body Shop was accused of paying exploitative wages and having an anti trade union stance. Nijhof and Jeurissen. P. The Body Shop used ingredients in its products that have been tested on animals by other companies (Entine. 1997 cited in Van. 1998). As a result The Body Shop ended up junking its deceptive label. 4. According to Bavaria. P. The company¶s purchasing manager. The program was also viewed as patronizing and was said to have created tensions and divisions within indigenous communities and undermined self sufficiency and self dependence (Purkayastha. µIn its promotional materials The Body Shop stated that the harvest of Brazil Nuts is µa viable and sustainable alter native (Kayapo) to cutting down their forest¶ However. the Kayapo make the bulk of their income from selling logging and mining concessions on their lands. replacing it with the equally disingenuous µ against animal testing¶ (Entine. The money Kayapo make from Brazil Nut oil and . Nijhof and Jeurissen. Becker and Billenness (1994) stated in their research that. 2009). Neck and Goldsby. 2009).

Analysis The Body Shop is a special company in many respects. committed to the CSR from the beginning. It also appears that the spills were first identified by the officials of the Hanover Sewerage Authority and traced back to The Body Shop.3 Environment There have been environmental problems associated with The Body Shop. the leadership of the company.wristbands is just supplemental income that could never match the level of income achieved by selling logging and mining rights¶. She created brand identity that closely associated with the CSR and pass on her philosophy to her employees and her value customers. 1995) To conclude this. Secondly. there were three leaks of product into the environment (Dennis. According to the records of the company and local Hanover Sewerage Authority. while the majority was brought on the world market (Entine. At the company¶s former New Jersey warehouse. at least 62 gallons of shampoo and shower gel were released. in fact only a small proportion of the ingredients were purchased through fair trade programmes. Firstly. 5. 4. 1998). Neck and Goldsby. Becker and Billenness. it is clear that the company focused in the stakeholders in the early years and tries to continue to do so. The pattern of spills suggests that management at The Body Shop¶s facility was lax in its safeguards and tardy in its reporting (Bavaria. The company tried to differentiate itself from its mainstream industry by using . 1990 cited in Bavaria. who is Anita Roddick. Becker and Billenness. According to Kohli and Jaworski. the production volume that could be generated from the trade not Aid program is too small for worldwide sales. 1994). Moreover. 1994 stated that. P. so a proportion of the production is purchased through the mainstream market. the leadership of an organisation is believed to play a critical role in shaping its values and orientation.

The Body Shop has also shown how a company has the option of purchasing goods based on a fair price. The company has succeeded in appealing to a very specific customer group and investors. Also. Conclusion I conclude that The Body Shop is a good example of the company that applying CSR successfully. As a result. .CSR with its marketing strategies involving their stakeholders and focusing on environmental awareness. 6. the loyalty customers. attracting the employees with the same value with the company and The Body Shop was imaged as the social and environmental sustainability company. I can classify that The Body Shop¶s strategy is involving its stakeholders and using Anita¶s philosophy as part of the company values and point of selling. Anita Roddick¶s philosophy and ideals. The company has still preserved with various CSR projects in the face of criticism. being socially and environmentally aware buyers of its products who identify with the founder. the company invented µagainst animal testing¶ policy in the cosmetic product development. For example. From this report. This makes The Body Shop a front runner in the development of sustainability reporting. the company created the µGreen customers¶ base. the Body Shop shows how to set up and expand a profitable company based on unconventional assumptions. The Body Shop was actually a pioneer in the dialogue with its stakeholders and the development of Values Reporting.

those whose opportunities are limited. Community We are looking to work with established community organizations which represent the interests of their people. whilst making fun. honesty. Community in Need We target those groups who are disadvantaged in some way. customers. y Courageously ensure that our business is ecologically sustainable. Creatively balance the financial and human needs of our stakeholders: employees. and against animal testing within the cosmetics industry. y Source: www. Benefits . to defend human rights. y Tirelessly work to narrow the gap between principle and practice. meeting the needs of the present without compromising the future. passion and care part of our daily lives. national and international communities in which we trade by adopting a code of conduct which ensures care.thebodyshop.Appendix Exhibit 1 The Body Shop¶s Mission Statement y y Dedicate our business to the pursuit of social and environmental change. 3. suppliers and shareholders. y Passionately campaign for the protection of the environment. y Meaningfully contribute to local. 2.com Exhibit 2 The Body Shop¶s Fair Trade Guidelines 1. fairness and respect. franchisees.

Commercial Viability It has to make good commercial sense meaning that price. 4. 5.We want the primary producers and their wider community to benefit from the trade socially as well as economically.thebodyshop. Environmental Sustainability The Trade has to meet The Body Shop standards for environmental and animal protection.com . capacity and availability are carefully considered. quality. Source: www.thebodyshop.com Exhibition 3 The Body Shop¶s Ethical Trade Standards y y y y y y y y y Employment is freely chosen Freedom of association and the right to collective bargaining are respected Working conditions are safe and hygienic Child labours is not used Living wages are paid Working hours are not excessive No discrimination is practiced Regular employment is provided No harsh or inhumane treatment is allowed Source: www.

Neck. Mehegan. E and Billenness.2 February.37. Investing for a better world. Chowdhury. (2006) µBody Shop Agrees L¶Oreal Takeover. text and cases.115-127.1-15. D. pp. Purkayastha. (1996) µGreen on green¶.co. Menon. R. L.27.«. .12. Management Decision. (2006) The Body Shop: Social responsibility or sustained greenwashing?.2. (2009) Business.p. (2008) Corporate Social Responsibility as an International Strategy.pp 1-8. Boulton.References Barvaria J. S. Boston. Franklin Research¶s Insight. Steiner.649-653 Keinert. P. BBC news. (1997) µBody Shop tops league table of µgreen¶ reports¶. M. McGraw-Hill Irwin.7. PhysicaVerlag. Becker. 10. B.J and Steiner G.43. Menon. A. Corporate Governance. 8.uk.pp. 17 March 2006. pp. Brandweek. New York..? Maharaj. C. (1998) Body Shop international: an exploration of corporate social responsibility. ICFAI Center for Management Research. Journal of Marketing Theory and practice. J and Jankovich.news. viewed 3 July 2010. C and Goldsby. Financial Times. (1999) Envolving paradigm for environmental sensitivity in marketing programs: A synthesis of theory and practice. (1994) Body Shop scrutinized faces allegations on social performance. 2.www. Government and Society: A managerial perspective. 36. Ajay.bbc.p.S. (2008) Critiquing and contrasting µµmoral¶¶Stakeholder (MST) theory and µµstrategic¶¶ Stakeholder (SST): implications for the board of directors. J. Dennis.

P and Holme.viewed 7 July 2010.(1994) µAu natural¶.36-42 . viewed 2 July 2010. and Jeurissen.org Wheeler. A. Corporate Social Responsibility: A case study approach. Soap-Cosmetics. R. (1999) Meeting Changing Expectations. D.thebodyshop. Edward Elgar Publihing Limited.The Body Shop International (2009). http://www. Watt. (2009) Sticking to core values: the case of The Body Shop in C Mallin.Chemical Specialties. Living Our Values: Values Report 2009. 70. Cheltenham. Corporate Social Responsibility. B. Nijhof. R.wbcsd.com.pp. 7. Ven.www.

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