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In current times, all the business is putting more emphasis on the various strategic models in order to determine and implement the strategic objectives effectively. Porter’s generic strategies, PESTEL, Balanced scorecard etc. are the significant models that are help the business to determine execute and gauge the strategic objectives effectively. PESTEL model helps the business to drive the changes in the organization’s strategic objectives. In addition, this report will be based on the evaluation of current strategic position of The Body Shop (TBS). It is one of leading British retailer company and its headquarter is situated in London UK (TBS, 2024). Apart from this, the report will highlight the application of various models that helps the business to implement and measure the strategic objectives.
Shop (TBS) employs a differentiation strategy, focusing on natural, innovative skincare and beauty products to attract customers and enhance brand image. This approach leverages innovation, research, and development to deliver high-quality, cruelty-free, and predominantly vegan products, aligning with consumer preferences for sustainable options. For instance, products like Edelweiss and Vitamin C Glow Revealing Serum exemplify TBS's commitment to unique offerings. This strategy not only attracts customers but also strengthens brand loyalty, leading to increased sales and profitability.
It is crucial for every business to have the effective strategic goals and objectives in order to build the positive brand position within the market and gain competitive advantages. This model is consisting of four strategies such as cost leadership, differentiation, cost focus and differentiation focus (Islami et al. 2020). As per the latest annual report, the current strategy of TBS is based on the differentiation. This strategy involves making the products and services different from and attractive as well as unique from the competitors to provide better services to the customers. According to this strategy, TBS is more emphasis on manufacturing the natural and innovative skin and beauty care products for the customers in comparison to its competitors (Natura & Co, 2022). To implement the differentiation strategy the chosen business is majorly focuses on innovation, good research and development. This organization also has capability to deliver the high quality of skin and beauty care products to the customers.
The products of TBS are cruelty free and 93% vegan. This organization has differentiation strategy because it produces the innovative skincare and beauty products in order to protect people’s health and environment. For example, the innovative and natural products of the chosen organization include Edelweiss, Vitamin C Glow Revealing Serum etc. The key reason behind implement the differentiation strategy by the selected business is attracting more customers and improves the brand image within the competitive market. At the present time, the most of customers are put emphasis on purchasing the sustainable or natural skincare and beauty products for the safety of their health (Ali & Anwar, 2021). Manufacturing the different and innovative beauty products is advantageous for TBS because it helps in gaining the competitive advantage and increase the market share in comparison to its competitors. To market and aware the customers about the natural products, this organization is also advertise the products with the help of social media platforms. Implementation of differentiation strategy is beneficial for the business because it helps in building brand loyalty, increase sales; attract more customers which ultimately positively impact the profitability and productivity of the business.
PESTEL (political, economic, social, technological, environmental and legal) framework has significant impact on the overall impact on overall operation of the business. The Body Shop also implements this framework in order to drive the changes in its strategic choices.
Political factors: The political factors include regulation and legislation, trade policies, tax policies, public sentiment and government relations as well as lobbying and advocacy. Further, brexit decision of political authority also has significant influence on firm’s operations.
Economic factors: Earlier, due to COVID-19 purchasing power of the customers have been decreased to the significant level. Now, economic condition of the country is stable which further helps in enticing more customers. However, fluctuations in exchange rate impacts company’s operations to the large extent (The Body Shop PESTEL Analysis, 2024).
Social factors: Currently, significant changes have been assessed in taste and preferences of the customers. Now, customers give more priority to the natural or organic products over others.
Technological factors: For enhancing customer experience, now companies are placing more emphasis on using artificial intelligence. Further, social media marketing is also widely used for enhancing customer base.
Legal factors: In terms of regulation and legislation, government legislate several regulations that directly affects the skincare and cosmetic sector. It is crucial for the chosen business to implement the rules and regulations regarding labelling, product safety and advertising (Ganatra et al. 2021).
Environmental factors: As an organization committed to ethical practices, The Body Shop need to follow with minimum legal standards and strive to exceed them which its align with its brand values.
In addition, economic factors are consisting of consumer spending, exchange rate, inflation rates, taxation, economic growth and interest rates.
Figure 1: Inflation rate of the UK
Inflation rate of the country has direct influence on the overall operation and efficiency of the business. Higher inflation rate increase the cost of raw materials that impacting the cost of manufacturing goods which ultimately reduce the organization’s profit margins. From the above figure it has been determine that the current inflation rate of the UK is 4% which is lower as compare to precedent months (Clark, 2024). Lower inflation rate decrease the cost of raw materials which helps in attract the customers to make the purchase. Along with this, socio-cultural factors include customer attitude towards sustainability, demographic changes, beauty standards, lifestyle trends, gender perspectives etc. The lifestyles of consumers can massively impacts the kinds of skincare and beauty products they buy. For example, a rise in wellness and health trends increase the demand for beauty and skincare products with organic and natural ingredients.
Furthermore, e-commerce, digital marketing, data analytics, machine learning and artificial intelligence as well as automation are the crucial technological factors that have massive impact on the overall operation and effectiveness of the business. In current time, most of companies are focus on various social media channels, influencer partnership, and search engine marketing etc., to market the products in competitive market and attract the customers (Lv & Li, 2021). TBS also use Instagram and Facebook to advertise its skincare and beauty products within the market. The environmental factors include sustainable sourcing, climate change, eco-friendly packaging, energy use, waste management and supply chain sustainability. In order to protect the environment TBS emphasizing on scrutinize the environmental practice of its suppliers. In the context of legal, it is crucial for the every business to obey all the lawful rules and regulations to operate the business successfully and effectively. The personal and cosmetic care products are subject to stringent safety regulations and guidelines that different from country to country. Compliance with these guidelines is crucial for TBS to maintain customer trust and avoid legal penalties.
Apart from this, technological and environmental are the major macro environmental factors that are widely driven by TBS to execute the recent changes to its current strategy. The current strategy of the chosen business is to make different skincare and beauty products over competitors to gain competitive advantages. This organization makes natural products by using vegan resources for the protection of the customer’s health and environment. With the help of latest and updated technology this organization manufactures the natural beauty products. Technological factor play an immersive role in implementing the any changes in the current strategy of the business by determining the needs and preferences of the products. At the present time, the customers are likely to purchase the sustainable and natural skin and beauty care products to it is healthy for the body of people and it also has minimum allergic reactions (Islami et al. 2020). This organization implements this strategy because it helps in reduce the impact of the environment and also helps in attracting more customers which ultimately positively impacts the profitability and productivity of the business.
Balanced scorecard (BSC) is a performance management and strategic planning framework that is used by governments, organizations and non-profit companies to support the day to day activities with the business mission, vision and values. Adaption of this strategic framework is beneficial for the organization because it assist in visualizing the cause and effect, drive accountability, enhance strategic communication and enhance organizational alignment which ultimately positively impacts the overall operation and efficiency. This model is consisting of four perspectives such as customer, finance, internal process and learning as well as growth (Delen et al. 2020). To evaluate and measure the differentiation strategy TBS also focuses on BSC framework.
In addition, BSC plays a crucial role in directing the efforts and resources as well as drive the business performance. This model helps in driving the performance of business by cascading the metrics and objectives. BSC facilitates flawing the metrics and objectives by breaking down the high-level goals into actionable and specific objectives for different organizational level (Amrina & Shiami, 2024). Adaption of this strategic framework is useful for TBS because it helps in achieving the broader organizational goals, fostering accountability and shares the understanding of strategic priorities at each phase. Apart from this, with the help of BSC, TBS is successfully implementing its differentiation strategy. It is considered as one of the significant strategic management performance that helps the chosen organization to determine and enhance its internal operations to assist its external results. To implement and measure the differentiation strategy, TBS is focusing on all the perspectives of BSC.
| Perspectives | Business objectives |
| Financial |
|
| Customer |
|
| Internal process |
|
| Learning and growth |
|
In the context of customer perspective, TBS implement the differentiation strategy to provide innovative and unique skin and beauty care products to enhance their experience and increase the satisfaction. With the help of BSC the chosen business is measuring the success of natural beauty products within the markets. The main motive of the organization is to provide innovative and sustainable products to increase customer’s satisfaction and enhance the experience (Prasetyo, 2023). If the customers have good and positive experience from the natural beauty products of TBS then they influence to make the repeat purchase which helps in increase the loyalty and brand image. In terms of financial the key strategic objectives of TBS are to increase profits, increase revenue and decrease operating costs. To protect and safety of health, the customers are likely to purchase the natural skincare and beauty products which are made of vegan resources.
If the business is provide unique products to the customers over competitors then it helps in increase profitability and sales. To measure the success of differentiation strategy in the context of financial perspective TBS adapt various metrics such as gross profit margin, return on sales etc. In this perspective of BSC model the company is easily determine the weak areas which negatively impacts the profitability and cost of the products then they take corrective actions in order to improve them (Lv & Li, 2021).
In the context of internal process, it is crucial for the business to put emphasis on enhancing information service and improve offering selection. In this, TBS is measuring is performance of the current strategy by comparing with the competitors. Effective offering selection of the products helps the business to gain the competitive and attract more customers over the opponents. In the context of learning and growth, BSC plays a crucial role in evaluating and implementing the differentiation strategy.
To measure the performance of the business it is crucial for TBS to conduct the training and development for employees in order to increase their knowledge and enhance the satisfaction. Moreover, adaption of BSC is not an easy task for the business it have various limitations from that management face several challenges. This framework is not provides the sufficient practical guidance for deployment from that the business is incapable to implement its strategies effectively.
The customers are likely to purchase the natural and sustainable products because it helps in protecting the environment and health of the people. So to improve the brand image and gain the competitive advantage TBS launched the ‘fully integrated sustainability plan’. The current strategy of the chosen organization is also based on the sustainability. To provide better services and improve their experience this organization provides the innovative and unique skin and beauty care products to them (Fortunati, Martiniello & Morea, 2020). Based on the current strategy, it can be said that TBS has implement its fully integrated sustainable plan into its corporate and business strategy. The business and corporate strategy of TBS is aligning with its sustainability goals and objectives.
One of the core principles of the chosen business is constantly enhance the environmental impact of the business practices and sites. Along with this, to improve the efficiency by protecting the environment this organization is specifically emphasis on developing carbon reduction plan that helps them to progress towards business-wide environmental management systems and net zero carbon emission (Bom, Ribeiro & Marto, 2020). For example, TBS has major focus towards the sustainability and to safeguard the environment this organization is working towards net zero. To limit the global warming and tackle the climate emergency TBS committed to become a net zero. In this sustainability strategy, the chosen organization is reducing all the direct and indirect greenhouse gas emission that is connected with its franchises and business by 90% in contrast to 2020 (TBS, 2022). Making the planning regarding carbon reduction is comprehensive process for all the business because it needs various business wide approaches to understand and evaluate the best method to move forward. This organization makes the long-term sustainability plan that is align with its corporate and business strategy as well as also help the business to gain the competitive advantage and increase the profitability. The key goal sustainable objective of TBS will to reduce the carbon connected with its products (comprising packaging upstream transportation, ingredients etc) by 42% in 2030.
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For example, TBS is also making the carbon reduction plan to reduce the gas emission and produce the natural products in order to protect the environment and secure the safety of customer’s health. Development of this plan is beneficial for the business because it provide the complete information into the major carbon intensive parts of the business such as producing products and transporting them to customers. TBS had cross-functional functional workshops across procurement, sustainability, research and development, freight, brand and finance team to notify the carbon reduction plan in comprehensive way. Apart from this, the key aim of this organization is to make the products with high quality at the time creating the positive change for communities and planet in all over the world (Tiscini, Martiniello & Lombardi, 2022). For the growth and development as well as protect the environment TBS is also focusing towards net zero and reduce the waste production. This organization has committed to eco-friendly packaging of the products by the recycling and reusing the resources.
Conclusion
From the report it has been summarized that according to the porter’s generic strategies the current strategy of TBS is based on the differentiation that distinguishes its products with the competitors. The current strategy of this organization is to produce the natural beauty products with vegan’s resources in order to enhance the health of customers. The external factors have significant impact on the overall efficiency and operation of the TBS. To implement the recent changes in the strategy, TBS is putting major emphasis on environmental and technological factors. BSC also helps in measuring the effectiveness of the strategy by considering all perspectives. The chosen organization is integrated its sustainable plan into its business and corporate strategy.
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