The Body Shop Study Case

2587 WordsOct 6, 201211 Pages
Executive Summary The Body Shop International PLC has been facing a myriad of issues in the late 1990s. At its creation, the body shop has seen tremendous growth and success. The company thrived to bring a new revolutionary business model and was extremely successful. But after those successful years in the early 1990s, the competition became fierce as new entrants came and absorbed parts of the market. This led to declining sales and profits for the company as they were not able to differentiate themselves from the new competition. The founder of The Body Shop PLC, Anita Roddick, who was the previous Chief Executive Officer, decided to step down and handed over the position to Patrick Gournay. The new CEO implemented a new strategy and…show more content…
As a result, the company failed to maintain their niche brand image and the quality of products was perceived as mediocre. Anita Roddick, founder of The Body Shop International PLC, believes in social change and action, and skin care. Financial results were of the least concern to her. After persistent failures of trying to revitalize the company, she stepped down as Chief Executive Officer in 1998 and Patrick Gournay came on board instead. Even as management changed, problems continued in fiscal year 2001 because the revenue increased by 13% but pretax profit declined by 21%. Yet, Gournay was confident that a newly implemented strategy would produce improved results. The new strategy consisted of three principal objectives: “To enhance The Body Shop brand through focused product strategy and increased investment in stores; to achieve operational efficiencies in our supply chain by reducing product and inventory costs; and to reinforce stakeholder culture.” According to the newly implemented strategy, we will estimate The Body Shop’s future earnings and financial needs to come up with short term and long term plans for The Body Shop. Since Anita is a strong-willed decision-maker without patience for finance, we will make both technically and practically correct projections by doing sensitivity analysis. We will make a pro forma income statement and a pro forma balance sheet from
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