Scanning the Environment

EFAS (External Factor Analysis Summary)

External Weight Rating Wtd Comments

Strategic Factors Scores

Opportunities

U.S. toy market increasing 3% year .15 5 0.75 Good market trend

Booming collection market .05 3 0.15 Future investment returns

Product recognition .15 4 0.60 International Opportunity

Efficient technology .10 3 0.30 Up to date technology needed

Direct Mail .05 2 0.10 Accounted for 9.2% of Sales

Threats

New Entrants .05 3 0.15 Unrestricted entry by competition

Winnie the Pooh (Existing Competitors) .20 4 0.80 Bear-Gram trade mark

Product Advancement .05 3 0.15 Questionable

Foreign Competition .10 4 0.40 Steiff, Asian companies

Legal Requirements .10 3 0.40 Internet business: User Privacy

TOTAL SCORES 1.00 3.80

IFAS (Internal Factor Analysis Summary)

Internal Weight Rating Wtd Comments

Strategic Factors Scores

Strengths

Brand name .10 4 0.40 Well Known

Favorable employee relation .10 4 0.40 Stimulates individual growth

Increase catalog sales .05 2 0.10 Increase profits

New Management .15 4 0.60 Eliminated unprofitable ventures

Product Quality .10 5 0.50 Craftsmanship

Weaknesses

Dependence on common carrier .05 3 0.15 Unreliability of shipment and cost

No dividends to stock holders .05 2 0.10 Limited stock holders

Bad lease agreements still in place .20 5 1.00 Balloon Payment at the end

Inconsistent sales .10 3 0.30 Highly Seasoned

Retail Stores .10 4 0.40 Low Profitability

TOTAL SCORES 1.00 3.95

From the time of its inception in 1981, the Vermont Teddy Bear Company had done superbly under the leadership of John Sortino, the founder of the great hand sewn teddy bears.

The journey embarked on the idea of making teddy bears using the quality American materials, and labor. Through out its first decade of progress, the company had focused on designing, manufacturing, and direct marketing of its great product, by using the American materials and craftsmanship.

It was not until 1995, when the company had started experiencing serious problems in terms of its profitability, and sustainability. This was evident as two of its CEOs had resigned from their seats in the next few years.

On June 20th, 1995, the company’s founder John Sortino had stepped down when he recognized that the future success of the company depends, rather, on its smooth transition, from the entrepreneurial venture to the professionally managed organization. Following his resignation, the new CEO of the Vermont Teddy Bear Company, R Patrick Burns, took over the charge, in a hope to fix the problems, Sortino had left them with. Amidst the company’s deteriorating performance, in October, 1997, Burns, too, had resigned from his post, which was then taken over by the former CFO of the company, Elisabeth Robert. Since then, Ms Robert has been making strives to get the company back on track.

The strategic decisions of a firm competing in the global marketplace are becoming increasingly complex. In such a firm, managers can no longer view global operations as a set of independent decisions, but rather consider the various products, country environments, and strategic options, as rather intertwined.