Page 2: Stakeholders
Traditional economic theory suggests that the primary reason for a company’s existence is to expand its profitable business. Assessing the company’s performance becomes simply a question of comparing profit levels with forecasts and targets. The owners’ prime objective is to maximise their wealth. The Body Shop, however, has been at the forefront of a growing number of companies who recognise that there are a number of different groups in society with an interest in its performance. These different groups, or stakeholders, may have different priorities. The way the business operates affects them and their expectations may influence the way a company sets its objectives and how it seeks to achieve them.
The Body Shop believes that it should be open and honest in its business dealings and first committed itself in 1991 to an active programme of ethical auditing. This has come to include:
- a social audit
- an environmental audit
- an animal protection audit.
The Body Shop directly employs 2,500 staff at the Headquarters in Littlehampton and all company-owned facilities and shops in the UK. The employees’ aspirations include job security and diversity, a fair income, promotion and training opportunities. Workers’ rights, including a safe, healthy working atmosphere, fair wage rates and no discrimination on the grounds of race, gender, creed or sexual orientation are set out in The Body Shop Trading Charter. Senior managers must run the organisation in such a way as to satisfy the different groups of stakeholders. This may not be easy and conflicts of interest may develop. Priorities may have to be agreed and compromises made. The managers’ jobs may be made harder as the different stakeholders’ objectives may change over time according to how the firm is performing.
The Body Shop is a multi-local business, built on franchising. Although the firm owns a number of shops, 1,300 of the 1,500 outlets are franchised. This has allowed the phenomenal growth rates of the firm over the last 21 years. Franchisees have the benefit of an easily recognised, proven product and brand name, guaranteed supplies, training and advice and the use of the company livery. Franchisees own their businesses and are dependant on them for income. This will, therefore, affect their objectives.