Social Responsibility or Sustained Greenwashing
Summary
The Body Shop International Plc was founded by Anita Roddick in 1976. Since its foundation, it has been a model of ethical behaviors and it has been offering high-quality products and considered environmental protection as the key responsibility. In making strategic decisions, the Body Shop had a deal with L’Oréal and after the discussion, L’Oréal bought the Body Shop in 2006. Both companies thought that the partnership would bring benefits through sharing expertise and knowledge. However, the difference between the two companies is that the Body Shop was a responsible business or in other words, it complied with social responsibility practices. On the other hand, L'Oréal practiced consumerism. This means that the company was interested in consumer spending to increase sales and profit. The company was also involved in unethical business practices such as women exploitation, animal testing, human rights violation, irresponsible marketing, controversial technologies, and many more. Now, the problem is that critics raise the argument that Body Shop has lost its image, its corporate social responsibility, and its values and principles. The purpose of this paper is to study the case and understand whether L’Oréal intended to buy Body Shop's corporate social responsibility to improve its image. Some critics questions the Body Shop's ethical standards, it means that Body Shop was not serious about its CSR. In other words, it was associated with unethical behaviors and its founders were hypocrites. The paper will go into detail and make a critical argument to understand whether Body Shop is a green washer.
Q1
The merger and acquisition of the Body shop do not conform to the type of collaboration described by the texts. First, L’Oréal aimed to pursue Body Shop's values and increase its target revenues. For many years, L’Oréal has tried to incorporate new brands with strong identity into the business. It is important to note that the strategic rationale toward acquisition is brand equity value (ICMR, 2006). Initially, Anita Roddick thought that the partnership or rather the merger and acquisition would retain the company's core values. However, this was not the case in that L’Oréal learned about the Body Shop's commitment to fair trading. After concentrating on customer's perception and values, it got the chance to enter into the market (ICMR, 2006). Note that during the deal, L’Oréal gained an idea and this indicates that the deal was controversial. This is because, how could Body Shop International Plc, a well-known company for its ethical practices make a deal with a company that does animal testing, and affects human health and the environment? This means that the deal was unfriendly and it did not conform to the type of collaboration described by the literature.
According to Pisano & Verganti (2008), many corporations do not consider collaborative architecture while making collaborative innovation. The author states that corporations should understand that there are different modes of collaboration and therefore, companies need to make critical choices about which companies should cooperate with. The first mode of collaboration is the elite circle. This means that when a company is faced with challenges, it defines the problem and potential solution. Then, it selects a group of experts who will help in developing solutions to the problem. The second mode of collaboration is the innovation mall. This means that when a company has problems, it accepts different solutions from different problem solvers. It then chooses the best solution from the many solutions proposed by experts. The third mode of collaboration is the innovation community. This means that a company opens the door for everyone to come and give a solution to the existing problem. Finally, the model of collaboration is the consortium. This means that the company chooses the best experts who would identify the problem and choose a solution (Pisano & Verganti, 2008). Focusing on this type of collaboration, it is clear that the Body Shop did not understand its company's strategy. In other words, it did not understand the business problem. If it could analyze the business problem and create strategic goals, it could have understood the collaboration networks.
According to Hagedoorn & Duysters (2002), the major purpose of mergers and acquisitions is to increase the company's market power and enhance its capabilities. Therefore, in emerge and acquisition or other forms of collaboration such as strategic technology alliance, the external sources should bring innovative capabilities or in other words, it should renew the company through the creation of new knowledge (Hagedoorn & Duysters, 2002). Apart from these expectations, the authors state that before engaging in mergers and acquisitions, a company should have strategic considerations. In other words, the company should ask questions like; how will the new activities affect the core business? Or are the external activities related to the business core values? If the external activities do not align with the core business, then the eternal source should not be incorporated. From the case study, it appears that the Body Shop did not have these strategic considerations or rather it did not have a high carefulness while creating the deal (Hagedoorn & Duysters, 2002). Rather than creating a sustainable competitive advantage, it allowed the external source to acquire Corporate Social Responsibility hence affections the Body Shop's future performances.
Q 2
According to the texts, Anita Roddick was a transformational leader. This is because she always inspired the organizational members to achieve extraordinary outcomes (Bass, 1990). For example, she did not only focus on the competition but she corporated values of sustainability in the business. She was a rational thinker in that besides economic values, she focused on social responsibility or in other she wanted a company that benefits the community (ICMR, 2006). She ensures that the company goes beyond the goal of productivity and focus on customer satisfaction and community well-being. Bass (1990) states that in transformational leadership the leader goes beyond expectations. He or she has a strong commitment to creating stable environments. The founder went beyond self-interest and put more effort to achieve extraordinary results. She applies her problem-solving skills and adaptability to create a unique setting.
According to Gosling & Mintzberg (2003), the founder of the Body Shop had a managerial mindset. This is because she had self-knowledge, she formed a network of relationships, and she communicated her organization's system. She also studied the real world to understand the external environment, and finally, she combined all the elements to make a change. This mindset allowed her to create a suitable environment and to find viable solutions to the problems. She had proactive management that values customer demand and fulfilled their needs concerning their different preferences. The founder of the company was also an extraverted leader. According to Grant et al. (2011) extraverted leaders offer individualized consideration to the need of the community. She was provocative in her leadership and ensured that the business brings positive changes. She was talkative and authentic and this character inspired the team to focus on value than money.
Q3.
Since the Body Shop is under new ownership, my suggestions for change management is that an effective leadership should be introduced and sustained. The role of the new leadership is to strengthen the business operations and ensure that the company does not only focus on making profit but it also concerned with positive social and environmental change (Gill, 2002). Another reason is that management is unable to address uncertainty complexity as it lacks structures and strategies. Thus, leadership is more important than management because the former will go beyond to develop a new mindset and focus on values and assumptions. Management is associated with many challenges in that it only focuses on the social system (Gill, 2002). On the other hand, leadership understands the challenges and risks and builds power relationships to rate vision, values, and strategy. Moreover, leadership enables the leaders to create empowerment and motivation toward accepting the change.
According to Christensen & Overdorf, (2000) companies are experiencing disruptive changes. These companies have resources, technological know-how, and talented managers to manage the change but still, they are struggling with management. This is because they do not understand the organizational capabilities. Up to this point, the Body Shop needs new leadership that will build a better business. Note that Body Shop is value-driven and therefore the new leadership should have the passion of creating a positive environment for people and communities (Christensen & Overdorf, 2000). Since Body Shop has experienced change issues, the new leadership should understand the organization and have a systematic look at the organization's core capabilities before implementing change. The leader should also understand the company's core values and the knowledge will allow the leader to make independent decisions about whether a change is needed or not.
Q4
The merge of Body Shop and L'Oréal can lead to an ambidexterity-performance relationship. The two companies can increase growth performance through exploitative and exploration activities. This is because the companies have unique capabilities. For example, Body Shop is well known for great quality whereas L’Oréal is well known for research. It conducts comprehensive research to understand innovation and creativity toward increasing quality and efficiency (Popadić & Černe, 2016). Since the L’Oréal is good in technological innovations, Body Shop can explore new knowledge and develop its expertise. Note that the merge and acquisition have created alliance ties and each company will rely on the external actor for resources and knowledge. Thus, each company will benefit from innovation advantages.
Jansen et al. (2006) add that companies are experiencing tension as a result of a high competitive rate. Thus, firms demand new ideas that will help them gain stability. The merger of Body Shop and L’Oréal can lead to ambidexterity in that both companies need to create strategic objectives and they must use different coordination mechanisms to create and achieve objectives. In this case, the coordination mechanism means that the two companies can form connectedness or social relations (Jansen et al. 2006). The connectedness will enable them to develop knowledge and achieve efficiency and control. For example, Body Shape is more interested in protecting the environment, the planet, and human rights and therefore it provide quality products that create a quality life. On the other hand, L’Oréal focuses on strong research to generate positive results on beauty products. This means that companies have unique roles and they can create coordination and benefit from above-average performance.
Q5
The newly merged company of Body Shop and L’Oréal can adopt innovation for shared value by creating a social purpose. First, the two companies should come up with a social mission or solving social problems (Pfitzer et al.2013).Note that it is not possible to create a shared value without stating the goals and objectives. Secondly, companies need to define the social need. The companies can create social value by identifying the issue they need to address, the social condition as well as a plan of action. In this case, they need to identify the problem, its impact on the environment, resources needed, execution capabilities, and more (Pfitzer et al.2013). The companies need to measure the shared value. This means that the companies should evaluate the social and environmental impacts of the initiatives. In creating shared value initiatives, companies also need to create the right structure of a business. The structure will enable the companies to align the resources and establishes the process. Finally, the companies need to create a relationship with external stakeholders in identifying the problems and proposing solutions (Pfitzer et al.2013). These five ingredients will enable the two companies to create social values and become profitable companies.
According to Enkel et al. (2009), the Body Shop, and L’Oréal can adopt for open innovation using the outside-in process, the inside-out process, or the process of the couple. Open innovation means that companies should go beyond their internal knowledge and explore external knowledge to create new products and gain a competitive advantage. The outside-in process means that the company can create a relationship network with suppliers, customers, and competitors (Enkel et al. 2009). The company will gain awareness and understand the perspectives and make decisions based on the outside experience. The inside-out process means that companies can transfer their knowledge to the external market. This process creates corporate venturing activities where firms learn about each other's capabilities and incorporate the knowledge in their business to create a sustainable future Enkel et al. (2009). Lastly, companies can use a coupled process. This means that companies can form partnerships with other firms and allocate resources, knowledge and skills and combine capabilities in developing new products.
Q6.
On sustainability and CSR, the Body is not selling out its values and principles but its goal is to spread the values to other companies. Note that it is concerned with standard corporate practices and in creating a merge and acquisition deal, it stands on the social justice agenda (ICMR, 2006). The company's goal was to change the unethical practices such as misleading claims and unrealistic beauty ideals. It encouraged other businesses to focus on health and safety. Given that the company adhered to corporate responsibility, but Body Shape clarifies that it is not selling its values and principles but rather, L’Oréal will learn the values an increase commitment to the environment (ICMR, 2006). The deal was a long-term plan and within a given period, L’Oréal could change the unethical behaviors and focus on fair trade.
The appropriate CSR model, in this case, is the pyramid model. This is because the Body Shop believes that it has a business responsibility to meet social expectations. Its goal is not only to make a profit but it considers other factors such as obeying the laws and acting ethically (ICMR, 2006). It has an economic responsibility meaning that it has the obligation to create a rational trade, to protect the environment, to execute fair practices, and more. In general, it focuses on improving social activities to improve the well-being of the people
The appropriate sustainable model, in this case, is the social impact model. This model is appropriate in that the Body Shop Company provides a strong brand not only to increase revenue but also want to create a positive impact on society (Clinton & Whisnant, 2015). It focuses on creating ethical products to create mutual trust and strong relationships with the users.
The appropriate Business Model Innovation Grid is a social business model. This is because the Body Shop focuses on sustainable development through social values (Clinton & Whisnant, 2015). It goes beyond economic values to ensure that the business aims to benefit society and protect the environment.
Conclusion
The Body Shop is committed to providing quality products to its customers. It advocates for freedom and security and ensures that workers live in conductive workplaces and provides the customer with natural products. It acknowledges the corporate social responsibility in blowing the whistle against unethical conduct, defending human rights, and protecting the environment and promoting the community well-being. However, the main issues arise when the company creates a deal with a company that is associated with unethical practices such as animal testing. However, the case analysis has eliminated the ambiguity and provided an insight that both companies can benefit from the merge and acquisition. Each company plays a unique role in increasing economic growth and through merge integration, both can create a common goal and objectives.
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