BusinessPolicyNotes07

BusinessPolicyNotes07 - STMrEGY ...,..-,,. 7.1 in ':,...

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Unformatted text preview: STMrEGY ...,..-,,. 7.1 in ':, -{:~:~.~ t:':' . '.u w _ '. . .- ~ .---- .- . TheBody Shop Opens TooLate I n 1976, Anita Roddick. a former flower child : and the owner of a small hotel in southern . England, had an idea. Rising sentiment . against the use of animals in testing cosmetics and a wave of environmentalism that focused on "natural" products gave her the idea for a range of skin creams. shampoos, and lotions made from fruit and vegetable oils r.lther than animal products. Her products. moreover. would not be tested on animals. Roddick began to sell her line of new products from a small shop in Brighton. a seaside to\\11,and the results surpassed her wildest ex- pectations. Her line of cosmetics was an inst:lJ1tsuccess. and to capitalize on it. she began to franchise the right to open stores called The Body Shop to sell her products. By 1993. there were more than 700 of these Slores around lhe world. \vith combined sales of more than 51'50 million. In Brit:lin and Europe. to speed the gro\\th of the company, Roddick mainly franchised her stores through alliances \\ith other indi\iduals :ind companies. In her push to enter the LS. market in 1988. however. she de- cided to 0\\'11her stores and forgo the rapid expansion that franchising would have made possible. This was a costly mistake. Large C.S. cosmetic companies such as Estel' Lauder and entrepreneurs such as Leslie Wexner of The limited were quick to see the opportunities that Rod- dick had opened up in this rapidly grov.ing market seg- ment. They moved fast to imitate her product lines, which was not technically difficult to do, and began to market their OV.11natural cosmetics. For example, Estee Lauder 162 brought out its Origins line of cosmetics, and Wexner opened the Bath and Body Works to sell his own line of n:ltural cosmetics. Both these ventures have been very successful :U1dh:l\'e gained a large share of the market. Realizing the competitive threat from imitators, in 1990 Roddick beg:U1to move quickly to franchise The Body Shop in the Cnited States. and by 1993 more than 150 stores had opened. Although the stores have been successful. the delay in opening them gave Roddick's competitors the opportunity to establish their 0\\11 brand names and robbed her enterprise of the uniqueness that its products enjoy throughout Europe. Given that the rnited States is by f:tr lhe world's biggest cosmetics mar- kel JIld n:ltur.u cosmetics are its fastest-growing segment, lhis mistlke cost Body Shop billions of dolbrs in lost rev- enues. Roddick :lcknowledoed that her str.lle"y was :l mis- ~ =". take; however. during the 1990s. she f:ti1ellto energize her company. and in 1998 a new CEO. P:ltrick Gounnay....
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This note was uploaded on 05/12/2010 for the course MAN 6721 taught by Professor Kraft during the Spring '10 term at University of Florida.

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BusinessPolicyNotes07 - STMrEGY ...,..-,,. 7.1 in ':,...

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