The Vermont Teddy Bear Co., Inc.: Challenges Facing a New CEO

The Vermont Teddy Bear Co., Inc.: Challenges Facing a New CEO

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The Vermont Teddy Bear Co., Inc.: Challenges Facing a New CEO


Vermont Teddy Bear Company was founded in 1981 by John Sorinto selling hand sewn bears out of a pushcart in the streets of Burlington, Vermont. Since this time, the company's focus has been to design, manufacture, and direct market the best teddy bears made in America using quality American materials and labor.
Until 1994, Vermont Teddy Bear experienced a great deal of success and profitability.
Problems arose in 1995. Since 1995, the company has had two CEOs. It changed its name to The Great American Teddy Bear Company and then changed it back to The Vermont Teddy Bear Company when customers got confused. The Vermont Teddy Bear Company had been known for its Bear-Gram delivery service. In 1996, the company decided to shift emphasis away from Bear-Grams to other distribution channels. By 1998, the company decided to renew its emphasis on Bear-Grams. Vermont Teddy had always been proud of the fact that its teddy bears were made in America with American materials and craftsmanship. In 1998, the company changed this philosophy by exploring the offshore sourcing of materials, outfits, and manufacturing in an effort to lower costs.
In October 1997, Elisabeth Robert assumed the title of President and Chief Executive Officer and began to cut costs and position the company for future growth.

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According to Robert, their competitors were the people who sold chocolates, flowers, and greeting cards. They target the last minute shopper who wants almost instant delivery. Gift purchases accounted for more the 90% of the Company's sales.


The external factors to consider include:
1. Larger manufacturing facility
2. Bear Grams
3. Retail stores
4. Distribution Methods
5. Disney /Patents, Trademarks, and licenses
6. Competitors (chocolates, flowers, and greeting cards)
7. Production and Service
8. Made in America
Bear Grams was the reason the company became successful. They tried to change their way of doing business by relying on retail sales. Retail stores are needed to be in the consumer minds but this strategy failed. The company needs to stay focused on Bear Grams. The Vermont Bear Co. needs to stay consistent on it Distribution Methods by staying with the delivery service and retail stores and producing new way to distribute by using the internet. Walt Disney was infringing on its trademark by say Pooh-Grams. This was very similar to Bear-Grams in name and logo. Vermont Teddy entered into an agreement to resolve its dispute with Walt Disney. This action protected Vermont Teddy from infringement and also showed other companies that they would take any action necessary to protect their company. They need to focus on competitors such as chocolates, flowers, and greeting cards not toy manufactures. They need to show that their bear are more than just toy but gifts for all occasions. Small Village Teddy Bear Common was a way to reinvent the way they sell bears. Vermont Teddy Bear made old-fashioned, jointed teddy bears ranging from 11 to 72 inches tall, in 6 standard color selections giving them production and service options to offer to customers. The made in America label was a selling point for the company. They learned from customers that the price was more important. This saved money and allowed them to compete evenly with other companies. The company should position itself towards broader markets for teddy bears, such as candy and chocolate stores, clothing stores with the picture of the Vermont teddy bear logo on it and other gift products. It will increase the company growth substantially. In our modern age the online ordering service can be very important to expose and sale the bears and also through TV ads and customer service representatives. Customers usually learn about the company primarily through direct response radio, TV and catalog advertising.

The goal of the internal scanning process is to turn data into information in which decisions about the future of the company can be made. In order to do this we must collect and review data that will allow us to describe: 1) levels of performance, 2) trends in performance levels, and 3) comparisons with other institutions.
Planning for the future of Vermont Teddy Bear Co. Inc it is important that we consider conditions/trends in the internal environment of the company that may impact the future success of the company. These conditions/trends involve financial resources, human resources, the quality of products and services provided the efficiency of internal processes, student and stakeholder satisfaction, and the company culture. Specification of these factors will allow us to:
1) Identify their potential impact on the market;
2) assess the probability that they will continue;
3) categorize them as strengths or challenges;
4) rank them in terms of importance;
5) Develop plans to take advantage of the strengths and respond to the challenges.

Other factors to consider include:
1) Financial measures - including alternative measures of profitability. How do we look to shareholders?
2) Customer perspective - including customer satisfaction, customer retention, and new customer acquisition. How do customers see us?
3) Internal processes - critical internal processes. What must we excel at?
4) Learning and growth perspective - identifies the infrastructure needed to create a long-term growth and improvement. How can we continue to improve and create value?

As of June 30, 1998 there were 5,183,733 shares of the company's common stock outstanding help by 1,553 shareholders. Approximately 2,551,300 shares or approximately 49.2% of the stock was owned beneficially by the current directors and officers of the company. Eliminating unprofitable marketing ventures was very important in reducing cost. They cut the sponsorship of a NASCAR circuit race car and driver. Changing the CEO helped the company to grow and refocus on important issues. Refocusing on Bear-Grams which are how they began and how it still produced in the market. Vermont Teddy Bear employees were known as the "Bear People" a term that expressed management's appreciation and respect for their dedication. Relations between employees and management were favorable. The biggest mistake was changing to The Great American Teddy Bear Co. in an attempt to broaden brand appeal and take advantage of national and international distribution opportunities. The customers became confused and allowed Disney to enter the personalized teddy bear gift market. The confusion contributed to a decrease in Bear-Gram sales.


Inside Vermont Teddy Bear Company, retrieved October 15, 2005 from

The Vermont teddy bear company, information site, retrieved October 15, 2005

Wheelen, Hunger, (2002) Strategic Management and Business Policy. Prentice Hall, 2002.
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