Vermont Teddy Bear Company: Scanning the Environment develop EFAS & IFAS Tables

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For the External Factors Analysis Summary (EFAS), I used part of the Strategic Audit found in Appendix 1.A in Strategic Management and Business Policy Book as a resource, along with Table 4-5 as a guide, and from the readings of Scanning the Environment (Albright, 2004 Wheelen & Hunger, 2006). The external factors I looked at were advertising, number 1 central theme for selling, being able to sell All-American bears to foreign countries, determining who the other competitor's are, buying raw materials from aboard, Joan Martin's shares, other bear factory outlets, and property surrounding the factory (Wheelen &Hunger, 2006).

I consider each of these factors important for various reasons. Advertising is very important to a company, especially for the Vermont Teddy Bear Co., because radio is how they got there start and now with the computer-age, they are able to hit nation-wide, if not globally (Wheelen & Hunger, 2006). For instance, Vermont Teddy Bear Co.

uses the internet to conduct surveys using a Web application called Zoomerang, from MarketTools Inc., based in Mill Valley, California. Zoomerang assesses such variables as price, design, and bear names. Vermont Teddy Bear Co. has found a good correlation with how Zoomerang ranks customers' preferences and how the bears sell. The survey results also indicate the strength of demand for individual products (Horowitz, 2004). The Bear-Gram started the business, and the Bear-Gram will keep the business growing. The All-American made bear is something to be very proud of manufacturing. All hand stitched and costumed by an actual person, not a machine, and a 100% guarantee by the company (no matter what happens to your bear to repair it) is worth the cost to anyone willing to buy a quality bear (Wheelen & Hunger, 2006). See advertisement below:


All Vermont Teddy Bears are Guaranteed For Life. If anything ever happens to your Bear, you can send it to us here at the factory, and we will nurse him or her back to health at our Bear Hospital.

Every once in a while a tragedy will strike - a dog attack, a chance meeting with a lawn mower. When this happens, it is very easy to become upset, lose your cool, and maybe even freak out! But NEVER FEAR, health care is here, and we are not just talkin' any old health care, we are talkin' FREE, full coverage health care for your Bear's entire lifetime (Vermont Teddy Bear Co.).

The best Bears in the Universe

Every Bear sent through our Bear-Gram delivery service is designed, cut, sewn, and stuffed right here in at a time. That's why each of our Teddy Bears is unconditionally guaranteed for life!

The selling of this bear in foreign countries as Made-in-the-U.S.A. is a selling advantage to the company. This is a good way to advertise and spark interest possibly from foreign investors. The company's competitors are mostly businesses that personalize a gift. Personalized gifts, such as this one of a kind bear, are expected to cost more than say from somewhere like Target or Walmart. The buying of raw materials from foreign countries is a smart move. It is amazing on how much money a company can save compared to buying just United States products. Although this is partially deceiving to the buyers because it is not broadcasted but put into print stating some materials are from other countries. The bear is handcrafted in the United States by American people. Another factor was Joan Martin, who is approximately 82 years old in 2006. Joan does not play an active role in Vermont Teddy Bear Co., and owns a considerable amount of shares (35.5%). What happens when Joan deceases and these shares are handed down to family? This could be a potential serious concern in the near future. The main bear factory throughout the United States is called Build-A-Bear Workshop. These bears are picked out, stuffed, and clothed by the buyer. These bears on average cost approximately $30 compared to an average cost of $75 (plus shipping) for the Vermont Bear. The Build-A-Bear does not come with a guarantee (Build-A-Bear, 2006). Since the Vermont Bear Co. in Shelburne has become a tourist attraction with factory tours, the property surrounding the factory is an important factor. The Vermont Bear Co. bought the surrounding property so that no strip mall or other stores will be able to build near their factory. I found through my data analysis that Vermont Bear Co. is below the average firm's score of three (Wheelen & Hunger, 2006).

For the Internal Factor Analysis Summary (IFAS), I used Table 5-2 and the case readings from Strategic Management and Business Policy Book as a resource. The strength internal factors, I thought were important, were Research & Development (bears), Employer Relations, Home-Workers (independent sub-contractors), and the State-of-the-Art Technologies. The weakness internal factors, I thought were important, were the Distribution Channels, Financial Position, Global Position, Manufacturing Facilities, Inexperienced CEO, and Inexperienced Top Management (Wheelen & Hunger, 2006).

Vermont Bear Co. has many internal strength factors but there are four that I felt were crucial to the future of the company. The research and development of the bears is a continuous process. The Sales and Marketing department uses surveys to assess and decide on what new bears will be produced. New product is customer driven. They have very good relations with their employees. The company needs to keep this relationship in order to move forward in the future. Vermont Bear Co. hires Home-Workers (independent sub-contractors) who actually do the sewing of each bear individually. It is very important to keep these workers happy; this is the company's absolute resources. If these workers have problems, the whole company has problems. No Bears equals No Sales. The State-of-the-Art Technology the company has brought, installed, and using is keeping the company current. The Technical employees will be watching for new and improved software, machinery, etc. to enhance the company's capabilities. Technology equals cost savings in the long run (Wheelen & Hunger, 2006).

There were various weakness internal factors I found to be important to the company. The distribution channels need to be strengthened in the retail operations. Bear-Grams revenues are part of the retail operation at four stores, but the stores need to develop more innovative ideas to increase customer volume in the store. Vermont Bear Co. financial position is poor at best. They have no working capital, except for investors that take trade on stock options at very low prices that may hurt the company in the future. As for global positioning, there is none, except for the few orders and the raw materials bought from foreign countries. They need to find investors in the United Kingdom and Japan where surveys have suggested the bear product will sell. Vermont Bear Co. has only one manufacturing facility (in Shelburne) that does all the State-of-the-Art packing and shipping requirements. The need for another facility may be needed when the bear is sold nationally to keep expense down to a minimum for the customers. The inexperienced CEO and top management staff need training and the company needs to hire experienced management to turn this company around before making a profit. There are a lot of intellectual personnel in management positions with no experience. They gain investors, who they put on the Board of Directors, but have no relevant experience of running a company. I found through my data analysis that Vermont Bear Co. total weighted score is below the average firm's score of three (Wheelen & Hunger, 2006).

In conclusion, I believe Vermont Bear Co. has changes they need to make in order to become a profitable company again.


External Factors Weight Rating Score Comments


Radio & Internet Advertising 0.20 3.5 0.70 Customer able to order and get immediate response via internet or 800 telephone number

Bear-Grams 0.20 4.0 0.80 Up to 80% of the business

Selling World-Wide American Made 0.05 2.0 0.10 Able to Increase Sales

Expanding factories into United Kingdom and Japan 0.05 2.0 0.10 Need financial resources and corporate Infrastructure


Gift & Personal Business Competitors 0.15 2.0 0.30 Flower, Choc., Personalized Shops

Overseas Out-Sourcing of Raw Materials 0.10 2.0 0.20 Will customers understand - and still buy?

Joan Martin's Shares 0.05 2.0 0.10 Age 74, what happens when she dies?

Other Bear Factory Outlets 0.10 2.0 0.20 "Build A Bear" - Throughout the U.S.: Cheaper

Property Surrounding Factory 0.10 4.0 0.40 Bought property (no other retailer around factory)

TOTALS 1.00 2.90


Internal Factors Weight Rating Score Comments


Research & Development (Bears) 0.05 4.0 0.20 Constantly designing new bears and costumes

Employer Relations 0.10 4.0 0.40 Employees Satisfied

Home-Workers (subcontractors) 0.15 4.0 0.60 Firm very flexible concerning hours and holidays

State-of-the-Art Technologies 0.10 4.0 0.40 High-Tech Computer, Telephone, and Shipping systems (including multi-carriers for shipping)


Distribution Channels 0.10 3.0 0.30 Primarily Bear-Grams with retail @

Financial Position 0.25 1.0 0.25 Poor - Little to No Capital; Having to sell too much stock at low prices via financial resources

Global Position 0.05 2.0 0.10 Stuck in the U.S. (some bears shipped overseas)

Manufacturing Facilities 0.10 2.0 0.20 Only 1 manufacturing plant

Inexperienced CEO 0.05 2.5 0.125 No prior experience, just been financial officer

Inexperienced Top Management 0.05 2.5 0.125 One board member (Burns) that has had actual experience and is currently involved in operations

TOTALS 1.00 2.70


Wheelen T; & Hunger J D (2006). Strategic Management and Business Policy. Pearson Prentice Hall, Inc.

Albright, Kendra S; Environmental Scanning: Radar for Success, Information Management Journal, May/Jun2004, Vol. 38 Issue 3, p38-45; Retrieved from the World Wide Web on May 5, 2006 at

Horowitz, Alan; Zooming in on Customers, Sales & Marketing Management; Nov2004, Vol. 156, Issue 11; Retrieved from the World Wide Web on May 5, 2006 at

Vermont Teddy Bear Co.; Retrieved from the World Wide Web on May 6, 2006 at

Build-A-Bear Workshop; Retrieved from the World Wide Web on May 6, 2006 at