Where Will They Bury The Body (Shop)?
The first course I ever taught in strategic mangement included a Harvard Business School case about a firm known as "The Body Shop" and its co-founder, the very charismatic Anita Roddick. Almost every strategy course I have ever taught in the last seven years has included this case. This year I gave the case to my three classes here at American University of Sharjah for the first midterm. Per the usual, the case was a great deal of fun to discuss with the students. The case is so richly detailed and so amenable to being understood from so many perspectives that it never fails to produce both strong opinions and humorous responses.
So what to make then of today's news that The Body Shop is allowing itself to be bought for $1.1 Billion by cosmetics giant, L'Oreal.
Body Shop International PLC, the British retailer which promotes natural-based cosmetics, said on Friday that it has agreed to be taken over by L'Oreal of France in a USD 1.14 billion cash deal.Body Shop will retain a separate identity and its current management, the companies said.
Body Shop was founded 30 years ago in Brighton, England, by Anita and Gordon Roddick. They stepped down from managing the company in 2002, but retain an 18 per cent stake and have remained as non-executive directors.
L'Oreal paid USD 5.25 per share for Body Shop, a premium of 34.2 per cent over the share price on February 21, the day before takeover speculation appeared in the media.
"A partnership between our companies makes perfect sense. Combining L'Oreal's expertise and knowledge of international markets with The Body Shop's distinct culture and values will benefit both companies," said Sir Lindsay Owen-Jones, chairman and CEO of L'Oreal.
Anita is taking great pains to tell people that this deal does not constitute a sell-out of all the principles The Body Shop once held dear:
Dame Anita Roddick today denied the sale of Body Shop to L’Oreal was a betrayal of its customers and the ethical principles of the business.
Criticism that Body Shop was getting into bed with “the enemy” because L’Oreal has not abandoned animal testing was rejected by Dame Anita, who said the £652m (€939m) deal was a chance to strike a fairer deal for the world’s poor.
Claiming the Body Shop was about values and not just animal testing, Dame Anita said: “The most exciting thing about this is that L’Oreal is asking us to teach it about community trade, which is the best poverty eradicator in the world.”
But supporters of her campaigns for fairer trade and on green issues were dismayed by the deal and Ethical Consumer magazine, which ranks firms according to their ethical credentials, urged consumers to boycott Body Shop if the deal goes through.
Ruth Rosselson, of Ethical Consumer, said: “It’s ironic that a company well known for its anti-animal testing stance should sell out to one that tests on animals and which has yet to show its commitment to any ethical issues at all.”
Body Shop would see its ethical rating slashed by the magazine from 11 out of 20 to just 2.5 once the deal is completed.
Ms Rosselson said the fact that Nestle owns a quarter of L’Oreal was also a concern as it is the subject of a long-running boycott because of its marketing of breast milk substitutes.
Speaking to journalists and analysts, L’Oreal boss Sir Lindsay Owen-Jones said the ethical record of Body Shop was admirable but the policy of his company was dictated by testing rules across the 130 nations where it has a presence.
Sir Lindsay said: “I can’t use overnight the Body Shop approach in all of the L’Oreal companies, but our long-term commitment is to join Body Shop on this issue. I cannot be clearer than that.”
This was supported by Dame Anita who said: “The assumption that I’m sitting next to the enemy is quite wrong. “When we’ve got the biggest cosmetics company in the world saying, ‘teach us about family farmers, teach us about women cooperatives’ then we are very happy.”
Yeah, I bet she's happy. What do you think?
Tags: the body shop | body shop | roddick | anita roddick | bodyshop | csr |
See also Dr. David Bruce Allen's analysis of the sale of The Body Shop, especially his account of a talk Anita gave at the Instituto de Impresa a few years back where she expressed regrets about taking the company public.
Comments
Anita Roddick has basically "sold" not only her business but her principles aswell.
Posted by: Fatema Tapya | November 9, 2006 3:40 PM
Well after this intresting news, it turns out that The Body shop image has actual intrest in money more than the environment,
Posted by: Fahad Al-Nafisi | March 18, 2006 6:25 PM
I personally think that the excuse L'Oreal is using to buy The Body Shop is pretty lame and obvious because if they really wanted to be more socially involved then the would've at least stopped testing their products on animals a long time ago. They can't just have a sudden change of heart one day and decide to go in totally different direction to the one they've adopting for so long. Unless they wanted to improve their image to the public and pretend to be a more ethical organization. I also think that Anita Roddick knows that L'Oreal's claims may not be entirely true, but she agreed to deal anyway. Who knows maybe she got tired of all the non-market issues she's been facing for the last 30 years!!
Posted by: Mohammed Yacoub | March 18, 2006 12:35 AM