Value Chain Analysis Of The Bodyshop

1064 words - 4 pages

Value Chain AnalysisValue Chain divides activities within a firm into two broad categories: primary activities and support activities. It highlights the explorations of internal analysis of a chain of business activities and explores the role and contribution of organization's resources corresponding to primary and support activities in a cost-effective way to gain cost advantage (Lynch, 2000).4.1 Procurement:As for the Procurement in support activities, the Body Shop has developed long-term sustainable trading relationships with key suppliers and created a special purchasing programme-Community Trade. This programme trades with communities in needs around the world and receives ingredients and accessories directly from the developing countries. The Body Shop substantially benefits from the community trade since more raw materials can be found for inclusion in the best-selling products (The Body Shop Values Reporting, 2003). And the supply of raw materials would be cheaper and more stable. So the supply chain management in the Body Shop performs in a cost-effective way and better than its competitors. In addition, the Body Shop sets up guidelines to ensure its supplier to be compliance with ethical policies in purchasing decisions. The unique ethical consideration builds a very good image to its publics. Comparing with other competitor, the sustainable trading relationships with suppliers is the crucially important competence of the Body Shop and becomes a source of competitive advantage.4.2 Outbound logisticsFor the outbound logistics, the Body Shop distributed its products through both franchised and company-owned stores. So an important part of the Body Shop value chain is a large network of numerous franchises all over the world. Abroad franchises use the Body Shop's brand name and sell high quality body care products to the valued customer. Over three-quarters of The Body Shop stores are franchised and it accounts for the majority of both sales and profits in business. It is a successful model in spreading its business quickly in Europe and US by franchising their stores (Hill and Jones, 1999). But extensive franchising also gets the Body Shop into problems. The franchising has grown too fast and lacked of strategic communications with the company head. Recent result of Social Audit also reflects that a substantial number of franchisees do not strongly relate themselves to Body Shop's campaigns on human rights and environmental protection (Fenn, 2003). Though the social and environment issues are conveyed effectively but the equally important sales volume and marketing tactics fail in reaching the expected objectives these years. The most challenging thing for the Body Shop is how to balance its ethical principles and reasonable revenues for its franchises.4.3. MarketingAnother key component of the value chain of the Body Shop was masterful sales promotion through selected media which is not in the conventional way. Competition in cosmetics...

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