Fy021 Introduction To Business Studies Case Study

Task

Analyse the strengths and weaknesses of the Human Resources (HR) and Financial management strategies within The Body Shop. Which of these do you feel contributes most significantly to the business's success?

Introduction - HR & Financial Strategies of The Body Shop

This paper explores The Body Shop's strategic dynamics, a well-known participant in the cosmetics industry. Anita Roddick launched The Body Shop in London, United Kingdom, in 1976. Since then, it has expanded to become a global brand with over 10,000 employees. It is a division of Natura & Co. and has a market value of about $9.72 billion. Its yearly sales are $5.3 billion, and it makes £17 million in net earnings (Natura &Co, 2022). Cosmetics, skin care products, body care products, fragrances, and various accessories and skin care tools are all offered by the brand. Despite fierce competition from major competitors such as L'Occitane, Yves Rocher, Lush, and Weleda.

This report focuses on The Body Shop's market position and future potential necessitates understanding the advantages and disadvantages of its financial management and human resources (HR) practises. Financial plans ensure the company's continued financial sustainability and growth, while HR policies encourage a progressive workplace culture.

Information on the Human Resources (HR) strategies of the organisation

The Body Shop's personnel and business culture have been significantly shaped by its Human Resources (HR) strategies. The Body Shop takes a unique approach to hiring that is consistent with its brand concept and key principles.

Recruitment strategy

Value-Congruent The hiring process is important because Body Shop prioritises working with people whose personal beliefs mesh well with the business's commitment to social responsibility, sustainability, and ethical business practices (Mahmood and Bashir, 2020). This strategy guarantees a workforce that is highly engaged with the company's objective in addition to being skilled. The organisation places a strong emphasis on diversity and actively works to build a workforce that reflects a range of experiences, viewpoints, and ethnicities. Gender, ethnicity, age, and other demographics are all included in this inclusion, which improves the company's appeal to a wide range of customers and enriches its culture (Culturemonkey.io, 2023). The Body Shop frequently looks for applicants who share their ideals through unconventional recruitment methods. This includes collaborations with nonprofits, neighbourhood projects, and social media campaigns aimed at morally upright people.

Training and Development

The Body Shop strongly emphasises social responsibility, ethical corporate conduct, and sustainability in its training programmes (Thorisdottir and Johannsdottir, 2020). This guarantees that workers are not just competent but also in line with the organization's goals, building a solid, morally motivated workforce. A wide range of skills, including product knowledge, customer service, environmental awareness, and ethical behaviour, are routinely included in training at The Body Shop (Abubakar et al., 2019). This all-encompassing method of training guarantees that workers are competent and well-rounded in all facets of their positions. The Body Shop is a desirable employer because of its dedication to employee development, especially for people who appreciate opportunities for ongoing learning and personal development (SHRM, 2019).

Setting aside time for training can be difficult particularly in retail settings where workforce levels and operational effectiveness are crucial (Li, 2022). It can be difficult to strike a balance between the needs of everyday operations and the time allocated for regular training. "TBS Learning," which embodies The Body Shop's training and development strategy, is a comprehensive and flexible learning ecosystem that meets the many demands of its employees. The Body Shop's intention to become entirely vegan by 2023 is a calculated strategic choice that fits nicely with the growing global trend of ethical and vegan consumption. This change demonstrates the brand's dedication to animal welfare and environmental sustainability, while also positioning it to cater to the changing tastes of an expanding client base.

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Reward

The Body Shop has introduced a shared basket option via QR code, which is an example of how technology has been strategically integrated to improve the shopping experience. Through the use of their smartphones, clients can conveniently access and purchase a customised selection of products that experts have handpicked for them. Shopping is more efficient when customers can swiftly access a pre-selected range of products rather than having to look through the full inventory, especially during events or busy shopping periods.

By tailoring the selection to a customer's tastes, past purchases, or unique requirements, consultants can improve the shopping experience and raise consumer happiness.

The time spent choosing and checking out is greatly decreased using this technique, which is important in crowded retail settings or during promotional events. The Body Shop's commitment to moral behaviour and social responsibility is reflected in its approach to staff rewards, which goes beyond conventional monetary rewards (Agudelo, Jóhannsdóttir and Davídsdóttir, 2019). The recognition of exceptional work through initiatives like "Employee of the Month" and service awards, which honour both performance and loyalty, is essential to this strategy (Tbsah, 2022). The organisation also places a strong emphasis on professional development, including chances for additional training and industry event participation. The need for a work-life balance in the modern workforce is met by flexible working arrangements, such as remote work alternatives and more paid time off. To enhance the general well-being of employees, health and wellness are given priority through programmes like gym memberships and mental health days. Ethical and environmental initiatives, like paid volunteering days and sustainability challenges, are exclusive to The Body Shop's culture and link employee rewards to the company's guiding principles.

Profit & Loss and Balance sheet of the company

Figure 1: Balance sheet of Body Shop

(Source: Finance.yahoo, 2022)

The Body Shop's financial situation over four years is displayed on the supplied balance sheet. The total assets reached their peak in 2020 and have since declined, suggesting that some assets may have been sold off or depreciated. The corporation may have incurred losses or paid dividends because of the large decline in equity from 2021 to 2022, even though total liabilities had decreased (Bobbink, 2019). A reliance on debt funding is implied by the rise in net and total debt over time. On the other hand, stability in equity financing is indicated by a constant number of shares issued. Concerns over the company's net asset worth are raised by the negative tangible book value in 2022, which may be the result of intangible assets like goodwill or brand value. All things considered, these numbers point to a phase of strategic realignment or consolidation, with the necessity of maybe increasing equity and exercising greater caution when it comes to debt levels.

Figure 2: Income statement

(Source: Finance.yahoo, 2022)

The company's overall sales peaked in 2020 and then declined in 2021 and 2022. The decline beyond 2020 may be the result of operational strategy changes or market difficulties. The revenue cost experienced a minor decline between 2020 and 2022. The fact that the fall in revenue costs does not correspond with the decline in overall revenue, however, may point to a decrease in cost-effectiveness (Finance.yahoo, 2022). Like the revenue, the gross profit peaked in 2020 and then declined. This shows that even when sales are down, the business isn't cutting costs on goods sold (COGS) enough to keep its gross margin stable. The substantial operational loss in 2021 might have resulted from one-time charges not included in the summary or from higher operating expenses. During the TTM period, operating income has increased. The corporation experienced a dramatic shift from a net profit in 2020 to a net loss in 2021 and the TTM. This could focus on a strategic reevaluation and is cause for concern.

The Body Shop's financial data reveals a strategic approach that emphasises asset leveraging to support operations and expansion. A decrease in equity combined with a drop in total assets raises the possibility that the business has recently experienced financial strain or strategic reorganisation (Finance.yahoo, 2022). Over time, the total debt has increased, suggesting a reliance on borrowing to support operations or finance expansion in the face of difficult market conditions. The company's financial viability will depend on how well it manages this debt and keeps a strong working capital (Fintech, 2023). Significant intangible assets may have been indicated by the most recent year's negative tangible book value, which may have been influenced by market positioning and brand impression. The Body Shop's financial statements indicate a period of strategic shift overall, with a focus on managing the complexities of financial management in the face of a competitive retail environment while negotiating market expectations.

Evaluation

The Body Shop's brand identity is largely shaped by its commitment to diversity, ethical standards, and staff development. These HR tactics have probably had a big impact on creating a workforce that shares the company's values, which has increased employee loyalty and engagement. The balance sheet and profit and loss statements suggest that the corporation is adjusting its financial strategies in response to market conditions (Bobbink, 2019). Reliance on debt funding implies a goal of expansion or survival, which is typical in the retail industry. Though managing finances is essential for long-term viability and analysing market dynamics, The Body Shop's HR tactics make a difference in their performance. The company's dedication to moral behaviour and social ideals differentiates it from rivals and fosters a strong sense of brand loyalty among both customers and staff.

References

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• Agudelo, M.A.L., Jóhannsdóttir, L. and Davídsdóttir, B. (2019). A Literature Review of the History and Evolution of Corporate Social Responsibility. International Journal of Corporate Social Responsibility, [online] 4(1), pp.1–23. doi:https://doi.org/10.1186/s40991-018-0039-y.
• Bobbink, W. (2019). The Ultimate Guide to Financial Modeling for Startups. [online] www.ey.com. Available at: https://www.ey.com/en_nl/finance-navigator/the-ultimate-guide-to-financial-modeling-for-startups [Accessed 13 Nov. 2023].
• Culturemonkey.io (2023). Diversity in the workplace: Why is it important? [online] CultureMonkey. Available at: https://www.culturemonkey.io/employee-engagement/diversity-in-the-workplace/#:~:text=Diversity%20in%20the%20workplace%20refers [Accessed 13 Nov. 2023].
• Finance.yahoo (2022). Natura &Co Holding S.A. (NTCO) Balance Sheet - Yahoo Finance. [online] finance.yahoo.com. Available at: https://finance.yahoo.com/quote/NTCO/balance-sheet?p=NTCO [Accessed 13 Nov. 2023].
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• Natura &Co (2022). Natura &Co reports sales growth of 26%, driven by strong digital sales, with EBITDA increasing over 400%. [online] Natura &Co. Available at: https://www.naturaeco.com/press-release/natura-co-reports-sales-growth-of-26-driven-by-strong-digital-sales-with-ebitda-increasing-over-400/ [Accessed 13 Nov. 2023].
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• Tbsah (2022). Where can I find the recognition resources? [online] Available at: https://tbsah-gb.thebodyshop.com/hc/en-gb/articles/4406443484433-Where-can-I-find-the-recognition-resources- [Accessed 13 Nov. 2023].
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