The Vermont Teddy Bear Co., Inc.: Challenges Facing a New Ceo (ifas and Efas Tables Included)

In your text read Case 27, "The Vermont Teddy Bear Co., Inc.: Challenges Facing a New CEO" (pages 27-1 through 27-22). Using the case, your readings, the Cybrary and the Internet, develop both an EFAS (External Factors Analysis Summary) Table and an IFAS (Internal Factors Analysis Summary) Table. It is important that you submit with your tables a description of both your environmental and internal scanning process, including what factors you considered and why.

* Explain the strategic management process within the global environment.

* Conduct various environmental analyses as they relate to an organization.

* Describe the role of corporate governance in strategic decision making.

The Vermont Teddy Bear Co., Inc.: Challenges Facing a New CEO (IFAS and EFAS tables included)

Introduction

The Vermont Teddy Bear Company (VTBC) was founded in 1981 by John Sorinto. Unfortunately, for John, the company became too big for him to oversee since he was an entrepreneur. However, he gracefully stepped down in 1995 and supported the hiring of a new CEO that would lead the company into its future success (Vincelette, p. 27-3). One thing that has remained is the companies focus. The Vermont Teddy Bear's "...focus has been to design, manufacture, and direct market the best teddy bears made in America using quality American materials and labor." (p. 27-1) In fact, "American made with American materials" is the basis of the company's mission statement.

In the year following the change of CEO, VTBC tried changing its name to 'The Great American Teddy Bear Company". However, this tactic failed when customers grew confused. As a result, the Vermont Teddy Bear Company name was reinstated. Again, trying to reinvent themselves, the company decided to change their current distribution method in 1996. The decision they made was to shift away from the company's signature Bear - Grams, which was very successful, but not creating growth. In its place, they wanted to go into retail stores and expand their catalog (Vincelette, p. 27-3). This, too, proved to be less than a success and eventually Bear-Grams were once again their focal means of distribution and strategic marketing.

Finally, in 1997, Chief Executive Officer R. Patrick Burns stepped down and Elisabeth Roberts, Chief Financial Officer, became the new President and CEO. Roberts vision for the future of the company included cutting cost (Vincelette, p. 27-4). Forced to look at their materials from a purely financial view, something had to be done. The answer Roberts sought was "...offshore sourcing of materials, outfits and manufacturing..." (p. 27-4). Thus, Vermont Bear Labels now read, "Made in America, of domestic and foreign materials" (p. 27-6).

Elisabeth Roberts also believed that Vermont Teddy Bear was not simply a "stuffed animal" market, or merely a "toy". Rather, she defined the competition as being those businesses that "...sold chocolates, flowers, and greeting cards. They target the last minute shopper who wants almost instant delivery." (p. 27 -4) Knowing that their competition went beyond toys, they were able to market their product in several areas and the success of that is seen in sales.

Environmental Scanning

The purpose of environmental scanning is to assess those elements surrounding your company and market. A SWOT analysis identifies strategic factors, which are the company's strengths, weaknesses, opportunities and threats, that will determine its future (Wheelen, p. 9). Specifically, it involves monitoring, evaluating and sharing the "...information from the external and internal environments..." with "...key people within the corporation." (p. 52).

Knowing your external environment makes you aware of your company's opportunities and threats. Knowing the internal environment teaches you about the company's strengths and weaknesses. A way to measure these factors is by creating a EFAS (External Factor Analysis Summary) or IFAS (Internal Factory Analysis Summary) table. Scores on these tables inform a company how well they are "...responding to current and expected factors..." in their respective environments (Wheelen, p. 101).

External Factor Analysis Summary Table

Opportunities/Weight/Rating/Weighted Score/Comments

Bear Market/.20/3.50/.70/Remains profitable

Retail Stores/.10/2.0/.20/Created new awareness

Offshore sourcing/.15/4.0/.60/Allowed increased profits and reduced prices

"Edgier" look/.20/4.5/.90/Expanded market

Small Village /.10/2.0/.20/Opened Teddy Bear market to Common guided tours in a "Bear" town

Threats

Choc., Flowers etc./.20/4.0/.80/Well positioned

Disney Pooh-Gram/.10/4.5/.45/Bargained to share

2 CEO's in 4 years/.05/4.5/.225/Company growth and cost cutting

Total Scores/1.00/-/4.075

When creating the EFAS Table I found Bear-Grams, Retail Stores, Offshore sourcing, Creating an "edgier" look and the small Teddy Bear Common to be opportunities that were created by scanning the external environment of VTBC. Following are my reasons:

1.<Tab/>The Bear Market is so big, that there's no recorded number of how many are sold a day throughout the entire market. Despite the huge market, Vermont Teddy Bear Company has remained as a front runner and their bear is as recognizable as the President it was named for, Theodore Roosevelt.

2.<Tab/>Retail stores did offer a new chance for expansion and growth. It allowed customers to purchase the product by sight, rather than over the phone. It also brought a visual awareness that was missing in the radio ads.

3.<Tab/>Offshore sourcing was a great opportunity for the company to expand its product line and cut costs. This enabled them to contract with foreign and domestic markets, which increases production and profitability. What they sacrificed was the all American label and