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Last Updated: Friday, 17 March 2006, 16:21 GMT
Taking over an ethical business
Analysis
By Chris Bones
principal, Henley Management College

Today's multinationals clearly think ethical business will mean big profits for them in the future.

Body Shop store in London
Body Shop staff will be used to a British style of management

First Unilever lapped up Ben and Jerry's ice cream, then Cadbury Schweppes snapped up Green and Black's chocolate. Now L'Oreal has added Body Shop to its portfolio.

But while these deals may look great to the management team on paper, the mammoth challenge of retaining the value of these businesses starts before the ink on the contracts has dried.

From my time managing mergers at Cadbury Schweppes and planning the company's acquisition of Green and Black's, I know that there are some crucial decisions to be made that will ensure the success or demise of The Body Shop.

From my experience, here are some of the key issues that L'Oreal needs to address if it is to make a success of its new acquisition:

1) Stay true to the reasons for the deal.

L'Oreal's chairman and CEO Lindsay Owen-Jones says he has bought Body Shop because he thinks it can add something to his business that it hasn't got, and by implication, couldn't develop itself.

If the new management start to interfere, or water down the distinctive Body Shop identity, then they won't just lose a powerful brand, they will lose its loyal customers.

Chris Bones, principal of Henley Management College
If it were me, I would keep L'Oreal products out of Body Shop stores
Chris Bones

2) Respect the Body Shop customer.

Body Shop has carved out a niche as an alternative to cosmetics giants like L'Oreal, so its customers will be suspicious of the merger.

L'Oreal's bosses have said Body Shop will offer them a new way of distributing their products. If they are going to keep Body Shop distinctive, then this is potentially damaging for both brands.

If it were me, I would keep L'Oreal products out of Body Shop stores - at least for the foreseeable future.

3) Get over the Roddick factor.

Even in her scaled down role over the past few years, Anita Roddick has remained a fierce guardian angel for the founding values of Body Shop.

She is an ambassador for the brand and a constant reminder to the management team that it must stay true to its ethical roots.

Going forward, L'Oreal should learn from the third sector (or charity arena) and appoint a new role model who can advise the Body Shop management team and the L'Oreal board on how to maintain the values which have been in the business for the past 30 years.

4) Let Body Shop managers do what they do best.

Being part of L'Oreal will mean learning to be part of a multinational giant. But L'Oreal must make sure that its welcoming hand of support doesn't turn into a strangling grip.

The Body Shop management team must retain the autonomy which has let them grow the store into one of the UK's great entrepreneurial success stories and most distinctive brands.

Treat it like just another division of L'Oreal and it will act like just another division and fail to live up to the future its new owners envisage for it.

Anita Roddick
Anita Roddick has guarded Body Shop's ethical values

5) L'entente cordiale?

Eighty per cent of mergers fail to deliver the planned value to the acquirer because of the difficulty of blending corporate cultures.

This deal has added spice because it sees a French company acquiring a UK business.

Modern business may be global, but our studies here at Henley Management College show management styles differ vastly from culture to culture and can undermine corporate success.

French and British management teams mix like oil and water.

While L'Oreal must pick out managers who cannot live with the principle of the deal, they must respect the British way of business, which is at the heart of The Body Shop.




SEE ALSO:
Body Shop agrees L'Oreal takeover
17 Mar 06 |  Business
L'Oreal scenting Body Shop offer
23 Feb 06 |  Business
Anita Roddick's new wealth agenda
15 Dec 05 |  Business
Body Shop beats High Street blues
28 Apr 05 |  Business
Body Shop begins turnaround
30 Apr 03 |  Business
The end of Anita's heyday
12 Feb 02 |  Business


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