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In 1981, John Sorinto began selling hand sewn teddy bears out of a cart in Burlington, Vermont. He began doing this after playing with his son and noticing that the majority of stuffed animals were manufactured in other countries. He figured that teddy bears were an American tradition, and therefore, some quality teddy bears should be made in the United States. This was how the Vermont Teddy Bear Company was founded ().
During the first fourteen years, Vermont Teddy Bear experienced continued growth and success. However, in 1995, they began to have some troubles as they experienced changes in leadership and an identity crisis. One of the things that drove the success of Vermont Teddy Bear in the earlier years was its Bear-Gram service. Customers could call a toll-free telephone number and place a special order for a bear similar to how people might send someone flowers for a special occasion. Additionally, Vermont Teddy Bear had used only quality American materials and craftsmanship in their bears. Vermont Teddy Bear¡¦s main focus had been ¡§to design, manufacture, and direct market the best teddy bears made in America using quality American materials and labor¡¨ (). But, in 1996, the new leadership at Vermont Teddy Bear decided that it would be cost-effective to use some foreign materials in their bears, and they also began to move towards retail sales and limit their focus on the Bear-Grams ().
2. Organizational Environment
In order to plan for future success of the Vermont Teddy Bear Company, we need to be able to analyze the external and internal environmental trends of the organization. These trends might include customer service, human resources, production and manufacturing, financial resources, product quality and craftsmanship, stakeholders opinions and the organizations culture. By categorizing and placing values on these factors allows us to rank them to show company performance, probability of success, and market potential.
3. Strategic Management Process
In most corporations, top management must initiate and manage the strategic management process. To do this, they often request that the different divisions within the organization propose their own strategic plans (Wheelen, et al. p. 36). This allows top management to compile and evaluate these proposals in order to create an overall corporate strategy. When considering the Vermont Teddy Bear Company, it seems that the most appropriate scenario would be for a top-down approach to strategy planning.
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4. Synthesis of External Factors-EFAS
The External Factors Analysis Summary table is a method that can be used to organize the organization¡¦s external factors into generally accepted categories of opportunities and threats as well as to analyze how well a particular company¡¦s management (rating) is responding to these specific factors in light of the perceived importance (weight) of these factors to the company (Wheelen, et al., p. 73).
External Factors Weight Rating Weighted Score Comments
1 2 3 4 5
X American Manufacturing .20 4.1 .82 Tradition
X Larger production facilities .05 2.0 .10 Diverted attention
X Retail outlets .05 2.0 .10 Diverted Att.
X Radio advertising .20 5.0 2.0 Past success
X Direct Marketing .15 4.4 .66 Past success
X Competition .10 4.0 .40 Popular occasions
X Foreign Marketing .05 1.5 .08 Lack of funds
X Patents and Trademarks .10 2.5 .25 Increasing with new products
X Other companies .10 4.0 .40 Popular occasions
Total Scores 1.00 4.81
In review of the external factors, more weight was given to those that had more success or negative impact in past or probable future occurrences. For example, it was stated in the case study that the competition was 1-800-FLOWERS and similar type businesses. Additionally, other stuffed toy products such as Ty Beannie Babies were considered to be a valued threat. American tradition is always valued in the United States, so the ¡§made in America¡¨ idea was also weighted considerably. Foreign marketing was never much of a possibility due to the lack of financial resources, so therefore, it was not heavily weighted. The lack of success in the retail store marketing also caused for a lower weighted score.
Overall, the weighted score shows that the things that had made the Vermont Teddy Bear Company successful are the things that they need to maintain focus on. The score also dictates that the things that they tried to do in order to decrease costs were not contributing factors towards the success of the Vermont Teddy Bear Company.
5. Synthesis of Internal Factors-IFAS
IFAS is a summary of the analysis of the internal factors that have been observed and evaluated in a particular organization. Additionally, IFAS is a method for organizing the internal organizational factors into categories of strengths and weaknesses in order to determine how well a company¡¦s management is responding to the factors in light of the perceived importance of the factors to the company (Wheelen, et al. p. 101).
Internal Factors Weight Rating Weighted Score Comments
1 2 3 4 5
X Human Resources .10 3.5 .35 Advice for management
X Quality products .25 4.5 1.13 Reputation
X Partnerships .10 3.5 .35 Increased market
X Expanding Market .10 3.9 .39 Increased Market
X Change in company philosophy .10 3.8 .38 Loss of identity and focus
X Financial resources .10 3.5 .35 Less than competitors
X Product diversity .15 3.5 .53 Only bears, but changing options
X Global positioning .10 2.3 .23 Lack of expansion
Total Scores 1.00 3.71
In review of the internal factors, more weight was given to those factors that seemed to hold greater potential for successful business expansion and operation in the future. Obviously, the reputation of the Vermont Teddy Bear Company is crucial towards their continued success as their name reminds consumers and investors of quality products that have been built on American tradition. The expanding stuffed toy market is also a great strength, even though there are other competitors, the market is continually expanding. However, the possibility of global expansion is scored lower, as there are not adequate financial resources available to allow for the possibilities. Therefore, financial resources deserved more attention as a weakness. Additionally, The Vermont Teddy Bear Company sells teddy bears. While they manufacture and market a superior quality product, they don¡¦t have other products to create diversity for themselves. If the teddy bear market were to become saturated or decline for other reasons, the Vermont Teddy Bear Company would be in trouble.
6. Corporate Governance
Corporate governance refers to the relationship among shareholders, top management and a board of directors (Wheelen, et al. p. 26). For the Vermont Teddy Bear Company, these three groups need to work together and have relationships that share common goals. For example, boards of directors are becoming more involved in evaluating and reshaping strategies. Shareholders are requiring that top management personnel have more shareholder stake in the organizations themselves in order to promote the managers motivation toward further success. The senior management has multiple tasks that must be accomplished in order to meet the objectives of the organization. To do this, they typically divide tasks between themselves to apply various skill levels and expertise in areas possessed by different managers.
After analyzing many of the important factors and characteristics of the Vermont Teddy Bear Company, it seems clear that they need to maintain focus and identity. They need to continue planning with the things that have made them successful, and not try to change things that are already working. The Vermont Teddy Bear Company also needs to evaluate other internal and market trends that can become a threat, and create objectives to deal with those factors. The analyses can be done to show the factors that are not likely to contribute towards the successful attainment of the corporate objectives, and this allows an organization to focus more of their attention towards those factors that are identified as probable areas to achieve those objectives.
www.vermontteddybear.com. (n.d.). Retrieved Oct. 20, 2005
Wheelen, T., & Hunger, J. (2004). Strategic management and business policy. 9th ed. Upper Saddle River, NJ: Pearson Prentice Hall.