Body Shop in China Essay Example

In 2007, 25 multinational cosmetics companies tested 33 brand name lipsticks and discovered that one-third of the samples exceeded the limit of lead allowed in confectionery. L'Oreal and Christian Dior were among the brands tested.

Table 1 displays imports and exports of cosmetic products in America. Table 2 shows an increasing percentage of color cosmetics in Hong Kong. From these tables, it can be observed that the cosmetic market is expanding rapidly.The Body Shop has divided its target market into six main regions: Americas, Europe, Middle East & Africa, UK & Republic of Ireland, and Asia Pacific (including Australia and New Zealand). China has potential for market growth due to its population of 2 billion and high demand for cosmetics. In 2005, China's cosmetic market sales increased by 18.19%, with consumers spending USD $10.3 billion, an increase of 11% from 2004 and 68% from five years prior. Estimates suggest an annual average growth rate of 7% between 2002-2007, with the majority coming from skin care and color cosmetic products. Skin care products alone are forecasted to account for 40% of the growth with a 20% increase rate. Cosmetic retail sales in China are projected to reach $17 billion by 2010 (Chinabgao 2006). Despite initial skepticism when L'Oreal acquired The Body Shop in March 2006 for IJS$I .billion, the company has performed better than expected under its new ownership. However, criticisms remain due to L'Oreal's practice of testing on a small number of ingredients compared to The Body Shop's anti-animal testing stance.

The Body Shop's consolidated net sales grew by 9% up to E290 million for the six months leading up to December 2006, with strong

sales in the UK, Norway, and Japan. There are numerous competitors in the cosmetics market, including beauty cosmetics, bio cosmetics, and professional cosmetics. Clara (2012) notes that due to an increased emphasis on appearance, especially among college, senior high school, and university students who attend events such as nightclubs and parties, the cosmetics market is very innovative. There are many direct competitors in this market, including L'Oreal Paris, Estee Lauder, Clinique, and Loccitaine. According to Du Yuping (2008), The Body Shop's biggest competition comes from lesser-known Japanese or Korean brands such as Missha and the Face Shop who also target young customers with their focus on natural ingredients. Although The Body Shop has an advantage in product quality, it struggles with pricing when compared to its competitors.In essence, the Body Shop faces a challenge in increasing its market share due to strong competitors and stable market share distribution. An analysis of the macro-environment, using PEST factors (political, economic, social, and technological), is crucial in identifying factors that could impact organizational strategies. Regulations under the Consumer Goods Safety Ordinance categorize cosmetic products as consumer goods and require adherence to safety standards and appropriate labeling. Breaches of these requirements result in penalties of up to $100,000 fine and one year imprisonment on first conviction and up to $500,000 fine and two years imprisonment on subsequent convictions. Dame Anita Roddick's success factors are also a key consideration.According to Solymossy (2000), success can be measured by sales growth, income, employment trends, and satisfaction. To achieve success, it is crucial to consider how the business model will thrive in the marketplace and assess its strengths and opportunities. Additionally, innovation is

always important as it has been a defining characteristic of entrepreneurs, as stated by Baghai, Coley, and White (2000). Innovations have been proven to increase a business's performance. The following are sources of information: http://www.thebodyshop.com.hk/en/image/values-campaigns/VALUES_REPORT_2014_INVALLC020.pdf, https://learn.uberflip.com/uploading-a-pdf, http://chrgj.org/wp-content/uploads/2012/10/Living-Under-Drones.pdf, and http://www.loreal-finance.com/eng/annual-report.