Assignment #1: Entrepreneurial Leadership Claudia Aslin Nikhil Nayak BUS 508 October 23, 2011

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A person who organizes, operates and assumes the risk of a business venture is defined as an entrepreneur. To a lot of people these individuals are crazy to be willing to sacrifice their financial well being on a series of ideas. I can relate to this small niche of crazy people. Within the following pages I will compare two well known and successful entrepreneurs, Anita Roddick and Jeffrey Hollender, by revealing their business practices. In doing so I will also be explaining how these practices affected consumer response to the products and how the organization used their newfound power. Lastly, I will be discussing whether or not profits have impacted the organizations ethical responsibilities and which entrepreneurs leadership style I identify with most. The first organization that Id like to discuss has been a favorite of mine for some time, The Body Shop. I knew that The Body Shop had some interests in social responsibility since they have no problem reminding you of them while youre in their stores however I was surprised at the extent of their involvement. The Body Shop was started in the 1970s by an English woman named Anita Roddick. Anita Roddick has her company based on her personal belief system. She explains in one of her books, Business as Usual that it was two simple ideas that steamed from one concept; truths rather than hype. Anita made this concept the guiding factor in all the decision making aspects of The Body Shop organization. From here Anita was able to set a foundation that lead to an enterprise of almost two-thousand stores internationally. From truth over hype, Anita decided all products to be sold in her store were never to be tested on animals or contain ingredients that were tested on animals and that any involvement with third world distribution or production would follow Fair Trade like guidelines (Roddick). Roddick came from an average middle class family, was well educated, married a man who was financial stable and worked in organizations, like the United Nations, that allowed her the luxury of travel. All these circumstance combine to create a greater world view. With all these understandings Anita was able to grasp a deeper meaning to her work than just the bottom line. Anita Roddicks business ethics are rooted with the ideals of social responsibility. Social responsibility is simply defined as an obligation that an organization or an individual has to act in a way that will directly benefit society. This obligation can be considered passive by avoiding alleged harmful work or active by conducting works that progress communal goals. One example

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of this is her belief that products should not be tested on animals. The Body Shops practices of refusing to use ingredients or products tested on animals created the frontiers of Ethical Consumerism. As defined by [Link], ethical consumerism is the intentional purchase of products and services that the customer considers to be made ethically. In addition to her work strengthening ethical consumerism she created an organization for impoverished children in Eastern Europe known as Children on the Edge in 1990. This organization was created in response to Anitas observation of the horrible living conditions in the orphanages in Romania. Using the same ambition she had to expand The Body Shop into an international corporation, Anita pushed Children on the Edge into new territory in 1994, Albania and Bosnia. Since this expansion Children on the Edge has continued to grow and in 2004 became an independent charity (Children on the Edge). Contentions have been made against Anita and her organization during her last years as sole owner of The Body Shop, when Anita decided to sell the company to the Nestle organization, under the LOreal label. These critics argued that both of these multinational corporations violated not only the standards that Anita placed on the Body Shop, but conducted practices much of the world condoned (i.e. animal testing). How could a woman with such a social conscious allow such a merger? Simply put, the business of business is business. Claims have also been made that Anita Roddicks charitable contributions did not start until the eleventh year of running The Body Shop. Whether or not these claims are valid nothing can refute the clear impact that organizations like Children on the Edge have done to create awareness and to improve the standard of living for children however I think that they do stand to prove that Anitas main motives for her company were profit oriented. In todays business culture I feel that an organization must not only create social responsible programs, like Anita has with Children on the Edge, but must be forged in the fire of those ideals like Seventh Generation. According to [Link], Jeff Hollender created seventh Generation in 1988. Jeff decided that he would create an organization that not only was rooted in ethical responsibility, but would be on the wave that created a shift in operational attitudes and environmental responsibility for all corporations. Jeff Hollender decided that Seventh Generation would restore the environment through recycling, reusing and reducing resources. In addition, Jeff declared that his company would also follow stricter guidelines than Fair Trade ideals by

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keeping in mind that he wants to develop a just and equitable world. By doing all these he was hoping to instill a sense of ethical consumerism within the clientele and the community so that every purchase made was a conscious effort to do all the above. A middle class American creating middle class American jobs based on a movement, the Green Movement, that was barely in its infancy at the time of the founding of this company. Jeffs organization promotes sustainability and environmental responsibility. Provide a product that works and does no harm to people, the environment or animals in the process. Even Anita Roddick couldnt argue with these ideals. What is also hard to wag a finger at is an organization that believes in a system that is larger than them, the idea that everything is interconnected and that a drop in the bucket matters. In addition to this type of rhetoric, Seventh Generation donates ten percent of its pretax profits to organizations working to make the same kinds of changes. Also, Seventh Generation requests that employees volunteer locally and aims to complete one thousand hours of community service by the end of each year (Hollender). Selecting a person to model my business strategies, from the two people I have selected, is a difficult task. The simplest selection would be Anita Roddick, because profits still exist and others directly benefit from her charitable contributions. Its hard to find fault against an organization which creates a profit, provides jobs and is returning goods and services to the less fortunate. There is an appealing nature to organizations that make claims to philanthropic endeavors. Based on the information provided, and my interpretation of these people, it would appear as though Anita Roddick was thoughtful and concerned about societal constructs. Without the proper research one would have reached this same conclusion however in selling The Body Shop to a company who tests on animals and has been criticized for not following world trade regulations she proved to the world that her main motive for the company was profits. Jeff Hollender, on the other hand I feel is a more socially conscious individual. Mr. Hollender is well known for his attacks on corporate greed claiming that the customer should always be an organizations main priority and profits are the fortunate side effect of maintaining that priority. A point to be made here is that organizations that go beyond regular business practices, like The Body Shop and its involvement in community outreach groups does not intrinsically mean organizations that choose not to participate are bad. Organizations may be social conscious

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by enforcing federal regulations and going beyond what is asked within those regulatory guidelines. A significant number of studies have shown no negative influence on shareholder results from CSR, but rather a slightly positive correlation with improved shareholder (Carpenter & Eiderdown, pg3). Critics may argue that these actions are just means to emboss a more appealing nature for the public or watchdog groups and to avoid attention from regulatory agencies. This point pushes me towards Jeff Hollender and the Seventh Generation Organization even more. The idea that a public corporation acts on the ideals of one person is impossible, since its true vested interest is serving the shareholders. That is the whole essence of a public corporation, to protect its self by being incorporated, but since Seventh Generation is privately owned we avoid this conflict of interests. Allowing the goals set by Jeff Hollender to remain the main focus of the organization they are able to continue to act ethically and socially responsible without the fear of having to impress the shareholders. That means any form of social activism conducted is directly correlated to his moral intentions. If this is true then there is no way that Anitas publically traded company can act altruistically and is inherently self-serving. Since both of these businesses are over twenty years old what resources are available to me to start a business with the same structure and ideals? The Small Business Administration (SBA) and SCORE offer plenty of outlets to research and connect with individuals from these fields. According to [Link], SCORE conducts webinars about varying topics that affect different industries or aspects of industries. These webinars are generally conducted by leading professionals from that industry and contain first hand information from some who have learned the hard way. Others contain topical information about consumer based information about a specific industry ([Link]). Aside from simple things like webinars and connecting with professionals within the industry, for free through SCORE, the SBA offers online guides to point me in the right direction. Whether I need to be directed towards loans and grants or information about the regulatory standards for my specific industry within my state, clearly a necessity for any organization that would produce a product. Lastly, being able to go to a location like a local SBA office appeals to me. This is the type of experience that makes owning my own business appealing. As important as the internet is with its vast amount of knowledge and access to information with a click of a button, nothing

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beats the personal interaction with another individual that has invested the same amount of time and effort I am about to embark into doing. In conclusion, I have decided that Jeff Hollender and the Seventh Generation represent what should be the keynotes for a socially responsible organization simply because it was created with that in mind. Anita Roddick and The Body Shop may have also acted socially responsible, but it appeared as an after thought. With a growing consumer market that requires companies to act ethically and environmentally, Seventh generation provides a sound springboard for these goals. Jeff Hollender regulated that the highest paid executives of his company would never exceed fourteen times more pay than the lowest paid individual. This is a steep contrast to organizations like the oil industry or better yet the financial institutions that accepted bailout money. Society demands much more out of organizations. They not only require, but demand that people stop acting like profiteering executives and start acting like social activists by using profits from their business and returning it to the community is a positive way. We are a far cry from the days of yesteryear and the idea of squeezing the last penny out of the consumer. This paradigm shift has created the modern executive movement to benefit the workforce, society and the local communities at large by contributing to different forms of economic development.

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References Carpenter, M., Bauer, T. & Eiderdown, B. (2010). Principles of Management v1.1. Arlington, NY: Flat World Knowledge.

Children on the Edge. (2011) Retrieved on Oct 16, 2011 from [Link] Hollender, J. Seventh Generation Conscientiousness Report 2.0. Retrieved on Oct 17, 2011 from [Link]

Roddick, A. (2005) Business as Unusual. Anita Roddick Books