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Mgt 485 - Vermont Teddy Bear Co Inc Case Study

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Essay title: Mgt 485 - Vermont Teddy Bear Co Inc Case Study

The Vermont Teddy Bear Co. Inc. Case Study

The Vermont Teddy Bear Co., Inc was founded in 1981 by John Sorinto. The premise of the company settled on the sale of hand sewn bears. The focus of the company since that time has been the design, manufacturing, and direct marketing of highest quality teddy bears made in the United States using quality U.S. materials and labor. Until 1994, Vermont Teddy Bear experienced a great deal of success and profitability. The use of virtual teams to replace traditional face-to-face work groups is being driven by five trends: flatter organizational structures with increasing cross-functional management needs, tumultuous environments requiring more inter-organizational teamwork, increase in the autonomy of employees when it comes to the decision making process, greater knowledge base requirements stemming from an increase in the focus on service and an increase in the globalization of trade and corporate activity.

A company or organization that wishes to obtain or sustain success must regularly evaluate all aspects of the business and industry to determine strengths and weaknesses. “Environmental scanning involves monitoring, collecting and evaluating information in order to understand the current trends in the societal and task environments. The information is then used to forecast whether these trends will continue or whether others will take their place.” (Wheelen, T. and Hunger, J. 2006) A company must monitor both the internal and external factors in the industry or environment it works within to provide a realistic look at the future success of the company. A company that does not complete an analysis of the factors that will contribute to success and/or failure will see reaction based decisions being made. The reaction based decisions generally result in added failure to the company as it jumps from one strategy to another trying to come up with a formula for success.

External Factors Analysis Summary (EFAS)

A firm such as the Vermont Teddy Bear Co., Inc must be able to successfully identify external factors and weigh the importance of each factor. The best way to identify and prioritize those external factors that will determine the success or identify weaknesses within an organization is to develop an issues priority matrix. The issues priority matrix analyzes developments by the following: (Wheelen and Hunger, 2006)

• Identify a number of likely trends emerging in the societal and task environments.

• Assess the probability of these trends actually occurring, from low to medium to high.

• Attempt to ascertain the likely impact (from low to high) of each of these trends on the corporation being examined.

The components of the external analysis are scanning, monitoring, forecasting and assessing. During the scanning phase a company works to identify early signs of environmental changes and trends. While scanning one detects the meaning of the observations of changes and trends. Monitoring targets the development projections and based on changes and trends. Finally forecasting works toward determining timing and importance of changes and trends for a company’s strategies and management.

Internal Factor Analysis Summary (IFAS)

The IFAS will identify the strengths and weaknesses so that an analysis of how well the management within a company responds to factors in relation to perceived relevant importance within the company. Many strategists use the value, rareness, imitability and organization (VRIO) to determine the level of importance or the factors determined to be perceived strengths.

The tables below list both the external and internal factors that have a direct affect on the Vermont Teddy Bear Company.

External Factor Analysis Summary (EFAS)

External Strategic Factors:

Weight Rating Weighted Score Comments


Number of competitors .20 5 1 There are few competitors who specialize in the same type of product as the company.

Bargaining power of buyers .10 3 .3 Due to the limited number of competitors and collectibles of the item, a higher profit margin per capita can be seen.

Westernization of new countries .05 1 .05 As more countries around the globe are introduced to the bears and trade boarders are opened up there will be more opportunity for growth of manufacturing and distribution.

Demographic prefer higher quality .15 4 .6 The

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