The Body Shop Harvard Case Solution & Analysis


However, the company had been able to gain a significant share of the market and maintain a strong brand image that attracts the customers and position in the market. In doing so, under the leadership of Anita Roddick, the company growth was completely ceased in the late 1990’s, where the companygrowth revenue decreased from 20% in the mid-1990 and 8% in late 1990. This couldhappen to the arriving of anew competitor, causing the increasing level of competition in the market. This couldresult in decreasing the profitability and revenue generation ability of the company.

On the other hand, the company lost its brand identity in the market, as it created multiple product lines and expanded in almost every mall in the United States as well as in every street corner of Britain.In addition, as the growth rate was declining constantly, Roddick stepped down as CEO in 1998 and in her place the company appointed a new CEO Patrick Gournay.

Moreover, despite the primary changes in the management, the company revenue grew only 13%, while the company profit was declined by 21% of the pretax. However, it can be determined that the company was facing tremendous issues, in such way the company had compromised its historic growth ability. Therefore, the company should need to develop new ways and strategies to make the organization profitable again.

On the other hand, thecompanyneeds to re-establish the structure of the company that appeals more to customers as it was started. These proposed changes affect the major changes in the company profitability as well as the increase market share in the competitive environment. However, the success of any business depends on the innovation and develops the product that attracts the customer attention towards that product in the market. So in such cases, thecompany need to understand the market and customer needs and develop the product according to the need of the customer in the market.

In addition to this, Body shop was known for cosmetic products that are naturally made and environment-friendly. The company would have to follow the same approach as they were following at the beginning. But also need to adjust the strategies related to the demand of the customer that customer want from the company.


Under the assumptions mentioned above, the annual sales growth was assumed at 13.0%. However, the cost of sales amountedto 30.0% of the sales revenue. The ordinary dividend remained constant at 10.9, over the next three years period. Moreover, the interest rate assumed at 6% of Debt, EFN, and Excess Cash, while the operating expense was assumed at 52% of the sales revenue. The company inventories amountedto 13.7% of the sales revenue. However, it can be estimatedthat the company would require 126.8 million to cover its cost of sales in the year 2002. In the same way, it would require 143.3 million and 161.9 million in 2003 and 2004 respectively. The company’s sales turnover was calculated on the prior year’s sales revenue added by the growth in sales...............................

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