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The Body Shop International BY Nenchenl 2345 I Body Shop International PLC 2001 Case Study Solution – Introduction to Financial Modeling first question that usually proposed for this case study is in regards to the revenue issue; What was the cause of the lack of growth in revenue during the late 90’s? The 2nd question deals with the rapid growth in 2001; What was the cause of the rapid increase in sales in 2001 and what were the negative impacts of the rapid growth. Issues surrounding the lack of growth in revenue:

In the early to mid 90’s, the revenue growth for Body Shop was at least 20% each year. But by the late 1990’s, the revenue growth fell to 8%. Body Shop was able to grow at a fast pace early in the decade because of the lack of competition. But by the end of the decade, the competition grew fierce. Another reason for the slow growth in the late 90’s was the over expansion in the previous years. Almost every mall in America (and shopping street in Britain) had a Body Shop. How would the Body Shop forecast earnings so they would not be blind-sided by another decline in 01ST?

Financial Forecasting This case study is very simple and straight-forward. It usually is one of the first cases presented in class, as it is the first case in the book because it is the easiest. Because of the lack of revenue growth, Anita Roddick (founder of the Body Shop) was forced to step-down from the CEO position. The fresh management team, assembled by the new CEO Patrick Gournay, was able to increase revenue by 13% in their first year (2001). However, in their attempt to grow the revenue, they lost 21% in their 01ST.

The major reason why this occurred was because ofa lack of forecasting through the use of financial modeling. Key Aspects of the Body Shop Case Study (based on implied assumptions) 1 . Because the hybrid method of financial forecasting is used, the cost of goods sold as a percent of sales should be addressed in your analysis. For example, the COS % of sales 42% in 1999, 39. 7% in 2000, 39. 8% in 2001, and you need to provide a forecast for 2002 – 2004. The COS % of Sales in the 3 year forecast should never go above 42% because of the current market onditions, and at best should increase to 41% in 2004.

To be conservative, the 2002 and 2003 %s should average 40. 25%. (Another way to handle this is to do a sensitivity analysis; say the % was 35 for all 3 years, then do it again at 37, 40, 42 and 45 and show how this impacts the bottom line. Then choose the best estimate) 2. Revenue should grow 10- 15% in 2002 – 2004. 3. Working capital should keep increasing over the forecasted time period. 4. At least 1 major competitor will go bankrupt, and another will be acquired by a company that is not the Body Shop.

Staffing Business

Assignment: Staffing Your New BusinessSmall business owners often have to assume more than one role when starting their businesses. In a sense, a small business owner has to be a “jack of all trades”, living up to the meaning of the figure of speech, where one is versatile at many tasks. Likewise, employees of a small business start-up, may be faced with the same situation.
For this Assignment, refer to Chapter 18, “Human Resource Management: Small Business Considerations” in your Entrepreneurial Small Business textbook. Hiring and developing employees can be challenging for owners and managers of a small business venture, especially when these employees may be working in two or more operational areas. For example, one employee may be responsible for both marketing and sales, while another employee may be responsible for information technology management and office administration.
Imagine you are the owner of a small business venture, and are ready to hire your employees. Initially, the employees you hire will have to assume more than one role.
In your 2- to 3-page paper, be sure to address the following:
What roles would need to be filled for the business? Which roles might best be combined?
What skills/attributes would you look for when recruiting employees?
How would you assess the strengths and skills of each employee in order to assign the specific roles and responsibilities?
Should you set up specific time allocations/expectations for each employee (e.g. an employee is responsible for marketing 60% of the time, and sales the remaining 40%)? If so, how would you monitor the percentages?
What do you think are the advantages of using this approach in this setting? Disadvantages?
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