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Organizational culture of a Body Shop

Organizational culture of a Body Shop and L’Oreal

Every organization has its own culture and it could be different organization to organization or business to business. Culture of an organization depends on its employees, customers, stakeholders, and its supplier’s various factors such as beliefs, unique values, norms, behaviors assumptions, and attitudes. Every organization follow their own culture and as it is varied company to company, so there has a different opinion about the implementation of organizational culture. Some organization organized their culture based on employee satisfaction (Gabriel, 2015). To achieve the organizational goal they try to maintain the satisfaction level of their employees, which motivated the employees to be trustworthy to the organization. On the other hand, some organization organized their culture based on customer satisfaction. To achieve the organizational goal they give high priority on customer satisfaction.

Organizational culture of a Body Shop and L’Oreal

Body Shop and L’Oreal, these two organization practices different culture which is described below:

Organizational culture of Body Shop

The Body Shop is a recognized brand that focuses on produce ethical beauty and cosmetic products.

  • Maintain good quality product and services

For high brand loyalty, they always try to maintain good quality products and services. They also make an attempt to protect the planet, support various community trade, motivates self-esteem, take actions for human rights, and stay away from animal testing. They implement the traditional profit-driven business in a better way through focusing on values (Sierk, Dvora Yanow & Ida, 2011).

  • Focus on social ingredients

For a better society, they focus on social ingredients or ecological features and motivate their employees, consumer, and external stakeholders. They follow the differentiated business strategies by offering unique products and services (brand image, quality, features) to its customers (Byles, 2001).

  • Focus on niche segments

To sustain in the market and for growth, they are focusing on niche segments. The most important thing is that every product of this organization has its own story with ideas, human rights, and environmental factors (Joseph, 2019).

Organizational culture of L’Oreal

L’Oreal has to endorse an excellent marketing strategy which leads them to acquire the organization. It helps them to expand the business and lead the market. It is also worlds recognized brand which ensures a premium quality product. Customers are the first priority for this organization so, they always try to achieve their objectives by offering the best quality product. They are also focusing on employee development of their organization through following various steps such as training and education, which helps the employee to be more efficient. They are also arranging a rewards ceremony to motivate the employees. For a better life, they also providing schemes to their employees.

These two organizations have a strong point as they never compromise the quality of their products and ensure better services, which lead them to achieve the objectives. But there has some advantage and challenges which they have to face for their culture, which is described below:

  • Brand image: The Body Shop and L’Oreal are the organization, which gain their customer’s trust and become the world’s recognized brand. They have the reputation of giving better products and services, so they have to maintain all these things to hold their brand image. To sustain and expand their business they always are careful about their business policies which also lead them to be profitable and achieve more customer’s loyalty (Joseph, 2019).
  • Customer satisfaction: Body Shop and L’Oreal always give priority to satisfying their customer by ensuring the best quality products and services. Through the best products, they already gain the customer’s loyalty, which helps them to expand their business in different countries (Byles, 2001).
  • Competitive market: In this competitive market it is more difficult to survive without the best business policy. Completion will be tough as Body Shop and L’Oreal have operated the business in the same field. Both the organization have their own loyal customer so in this competitive market, it is much easier for them to lead the market (Joseph, 2019).

Discuss factors that L’Oreal would have considered before deciding to acquire Body Shop

In behind there have various reasons to acquire the company, which may include expanding a business, increase the share in the market, reduce the cost, diversified, fame, or so on. Acquisitions mean to purchase one of the companies most shares or to be the owner of that company which gives the power to control the business by another company (Kocemba, 2017).

Body shop started their cosmetics business as an ethical alternative in a traditional way which is appreciable. They always maintain business ethics by avoiding animal testing and chemical use. By following their business ethics they gain customer satisfaction which leads them to hold the best position in the market. They also arranged a campaign based on ethical issues like a trade fair, human rights, a safe environment, and development (Quinn, 2017).

On the other hand, L’Oreal also has its own brand image and continuing their business with reputation. But they already faced various disputations and accusations matter. They always concern about their reputation so any controversies will have an impact on their business operations. Through acquiring the business of body shop, they try to reduce the controversies or disputation of their organization and have the opportunity to utilize the reputation of Body shop (Paden, 2018).

Both companies have benefited through acquisition. Because L’Oreal has excellent expertise and Body shops have international market knowledge about culture and values. L’Oreal promised to continue the business ethics of Body shop in terms and conditions at the time of acquisition. Body shop always against animal testing and mostly conscious about social, so L’Oreal uses this thought of their own self, which leads them to be in a reputed position in the market. It means that L’Oreal is also supporting the nature with the work activities of a Body shop and also draw the attention that they admire Body shops values, brand name, and popularity in the market (Michael Reed, 2003).

To consider all the factors L’Oreal decided to acquire the Body shop. Combining both the organization it benefited for the L’Oreal to have the power to control the business under the terms and conditions. They now have their expertise, knowledge, and supply chain which access the outlets of a Body shop.

L’Oreal has an excellent business strategy which leads them to acquire the Body shop. Because Behind the acquisition there have various reasons. As body shop always have ethical business strategy, so after the acquisition, L’Oreal gain the trust of the customers who had doubt on their products and services. In the competitive market, customer changes their choice. Body shop uses natural ingredients and concern about environmental issues so it was a better opportunity to acquire the Body shop and reduce the switching brand and keep them with their brand because the customer is much more aware of and support the social activities. L’Oreal also prevents its goodwill by combining its business with the Body shop. Considering all the issues they organized a well-presented business structure through which they acquire the Body shop and able to reduce the weakness and threats of their organization (Quinn, 2017).

Factors that had an effect on the L’Oreal acquisition of Body Shop resulting it the failure

The core values of the operation of the body shop consist of support community trade fairs, stay away from animal testing, initiate self-esteem, and conscious about the environment. Following the mission, they ethically operate their business. Avoiding animal test is the strength point of Body shop which was lead to change the European law in the case of cosmetics and animal testing. They operate in 33 countries with the 2600 brands. Because of ethical business policy, they achieved the loyalty of customers but after the acquisition, they felt frustrated. This was the moment when the attraction was lost and losses most customer loyalty. There have some reasons for which both of the companies hampered and the decision to take over failed badly. The factors that had affected the L’Oreal acquisition of Body Shop resulting it the failures are:

  • Losses customer loyalty: L’Oreal who is always concern about their reputation but was facing various controversies are decided to acquire the Body shop to prevent their organization with the goodwill of the Body shop. After acquisition loyal customer of body shop gets very disappointed as a result body shop losses their loyal customer. Their performances were declining at that time and at the same time they were losing their identity and the core values (J.Hustedde, 2002).
  • Lack of community: Though L’Oreal acquires or takes over the Body shop surprisingly they have to lack in their community. Their ideology is different from each other. If the founder of body shop were alive could manage this to not affect the company. Because in this competitive market expert of other industries noticed that these two brands do not have any common ground to work together which may because in their operations (Paden, 2018).
  • Loss of originality: After the acquisition, Body shop losses its appeal and just a name like others band names in the market. Body shop which practices ethical business policy was acquired by a giant company, as a result, it loses its originality. It was also lost its core values (J.Hustedde, 2002).
  • Controversies of L’Oreal: It is one of the weakest points for any organization which may lead an organization to go down in these competitive market. L’Oreal made the well-planned strategy to acquire the Body shop to overcome this controversy, But unfortunately, their plan did not work well as they thought off. In addition to acquiring the market large share, the corporate competition also got fierce. So these competitive markets did not take the takeover in a positive way. For this reason L’Oreal was unable to adjust to these situations (Paden, 2018).

As the competitive market and the customer did not take the acquisition in a positive way, so it is going hard for both companies to operate their business smoothly as they planned for.

Reflection Report

To writing these reports I have to go through different journals and articles, which are available on the internet. It helps me a lot to write this report. Moreover, I have learned a lot through this report.

Now I have much more knowledge about the macro-environment factors such as environmental factors, legal factors, ethical factors, and Social factors. And also their practices in the organizations.

It helps me to learn the practices of the culture in the same kind of organization. L’Oreal and Body shop, these two organization operates their business in the same field but the culture is different from each other. A body shop is operating its business in an ethical way, on the other hand, L’Oreal operates their business in an unethical way. Body shop always followed its mission through stay away from animal testing, conscious about the environment, and arranges different campaigns. They always use natural ingredients as a reason they gain customer loyalty.  On the other hand, L’Oreal was focusing on employee development and betterment through training, rewards, and appraisals. But both the organization does not compromise the quality of the products.

In this report, it also helps me to learn the factors or reason behind the acquisition. L’Oreal which was facing controversies were losing customer trust. And for unethical practices in these competitive markets, their business was failing down. For that reason to sustain in the market, they take the decision with a well-organized plan to take over the Body shop. To reduce controversies and to gain customer trust and hold customers’ brand loyalty, L’Oreal acquires the body shop. But after acquisition body shop was losing its identity and the core values and most importantly, the consumer did not take it in a positive way who were loyal to them. The positive side of this acquisition for L’Oreal is they take over the Body shop under the terms and conditions, and would like to continue the ethical business practices which reduce the controversies. It also helps them to gain customer trust and stop them from switching the brand. Both companies have a strong point such as expertise, knowledge about culture, supply chain, business policy, core values, and strengthen unity, and so on. By combining all the strengths it will be easier for them to hold the leading position in the market. But as the acquisition made a negative impact on the market L’Oreal was unable to adjust to the market. To maintain a strong reputation for their organization they made different strategies in spite of criticizing acquisition.

References

Byles, A. E., 2001. Organizational culture and performance. Journal of Managerial Issues, Volume 3, pp. 512-527.

Gabriel, K. (2015). Organizational Development, Organizational Culture, and Organizational Change. SSRN Electronic Journal, 12(4), 29-32. DOI: 10.2139/ssrn.2686104

Ghatak, S., Healey, N., & Jackson, P. (2002). The macroeconomic environment. London: Weidenfeld and Nicolson.

J.Hustedde, R., 2002. Factors affecting equity capital acquisition: The demand side. Journal of Business Venturing, 7(5), pp. 363-374.

Joseph, O. O., 2019. Organizational Culture and Performance: Evidence From Microfinance Institutions. Journal of Business Strategies, 4(1), pp. 52-64.

KILNER, A., 2017. The Growing Impact of the Macro Environment. Holistic Marketing Management Journal, 7(4), pp. 10-19.

Kocemba, A., 2017. What to consider before buying a business. Journal of Business, 2(1), pp. 01-10.

Michael Reed, M. A. B., 2003. Factors Affecting International Mergers and Acquisitions. International Food and Agribusiness Management Review, 6(4), pp. 64-79.

Paden, R., 2018. Factors Influencing Merger & Acquisition. Journal of Business, 6(1), pp. 01-12.

Quinn, M., 2017. How to Decide Whether Your Business Should Build or Buy. Journal of Business, 4(2), pp. 01-06.

Sierk, Y., Dvora Yanow, Y., & Ida, S. (2011). Organizational Culture. Cheltenham: Edward Elgar Pub.

Written by

Md. Shadequr Rahaman

Email: [email protected]

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