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The Vermont Teddy Bear Co., Challenges Facing a New Ceo

Essay by   •  February 21, 2011  •  Research Paper  •  2,863 Words (12 Pages)  •  2,265 Views

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EXTERNAL FACTORS ANALYSIS SUMMARY

FOR VERMONT TEDDY BEAR COMPANY

EXTRERNAL FACTORS WEIGHT RATING WEIGHTED SCORE COMMENTS

OPPORTUNITIES

Bear Grams 2.0 5.0 1.0 Best Seller w/Instant Delivery

Distribution Methods .10 4.0 .40 Direct Market Strategy

Outsourcing Offshore .15 2.8 .42 To Cut Costs

Expansion to New Markets .05 1.5 .075 To develop over seas

Technological Advances .05 2.5 .125 Internet Distribution Method

THREATS

Disney-Patents/Logos/Trade-marks ..10 2.0 .20 Pooh-Grams

Competitors (flowers, gifts, collectibles) .15 2.0 .30 Variety offered by Competitors

Products & Services .10 2.0 .20 Costly & Expensive

Seasonal Market Demand of Product .10 3.0 .3 Sales high only on special occasions and holidays

TOTAL SCORES 1.00 3.02

I NTERNAL FACTOR ANALYSIS SUMMARY

FOR VERMONT TEDDY BEAR COMPANY

INTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE COMMENTS

STRENGTHS

Quality Product .10 4.2 .42 Catalog increases Sales

Close Retail Stores .10 3.0 .30 To cut losses

Effective Packing/Shipping System Change .05 5.0 .25 Decrease damage to Product, Air-filled Bags

Employee Training & Loyalty .10 4.0 .40 Dedicated and motivated workers

Shelbourne Factory Store .10 3.7 .37 Products for purchase and factory tours

WEAKNESSES

Insufficient Management Cover .20 1.5 .30 Numerous CEO changes

Financial Position .15 1.5 .225

High Debt

Customer Service .05 2.0 .10 Guarantee for Life--Costly

Decreasing Market share Prices .05 .20 .10 Five Years of Falling Stock Prices

Working Capital/ Loans on Shares .10 4.0 .40 To establish a working line of credit and working capital

TOTAL SCORES 1.00 2.84

After reading Case 22, 'The Vermont Teddy Bear Co., Inc.: Challenges Facing a new CEO" I produced both an EFAS (external factors analysis summary) table and an IFAS (internal factors analysis summary) table. Next I will describe the environmental and internal scanning processes. Also I will explain what some of the factors are that I used in both tables and why I chose those factors.

"Environmental scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the organization"(Wheelen & Hunger, 2006, p.10). This is the continuous process of monitoring external factors, events, situations, and projections of forecasts of trends. Environmental scanning consists of studying and interpreting sweeps of social, political, economic, and technological events in an effort to spot budding trends and conditions that could become driving forces. It involves time frames that are well beyond that next one to three years.

The purpose of environmental scanning "is to identify strategic factors - external and internal elements that will determine the future of the organization. The simplest way to conduct environmental scanning is through SWOT Analysis. SWOT is an acronym used to describe strengths, weaknesses, opportunities, and threats that are strategic factors for a specific organization. The external environment consists of variables (opportunities and threats) that are outside of the organization and not typically within the short-run control of top management" (Wheelen & Hunger, 2006, p.10-11). The immediate external environment includes competitors, suppliers, increasingly scarce resources, government agencies and their ever more numerous regulations, and customers whose preferences often shift for no reason. The remote external environment compromises economic and social conditions, political priorities, and technological advances, all of which must be anticipated, monitored, assessed and incorporated by strategic mangers into the strategic decision making process.

"The internal environment of an organization consists of variables (strengths and weaknesses) that are within the organization itself and are not usually with in the short-run control of top management. These variables form the context in which work is done. They include the corporation's culture, structure, and resources" (Wheelen & Hunger, 2006, p.11). It is critical when looking within an organization itself to identify internal strategic factors - critical strengths and weaknesses that are likely to determine whether a firm will be able to take advantage of opportunities while avoiding threats. This internal scanning is concerned with identifying and developing an organization's resources and competencies" (Wheelen & Hunger, 2006, p.106).

Each organization has its own unique resources and capabilities that provide the basis for its strategy and the primary source of its returns. Resources are an organization's assets and can be classified in three categories: physical capital-such as equipment, plant, and location; human capital- this would be employees and their skills; and organizational capital- this refers to culture and reputation. "Capabilities are how an organization exploits its resources. These consist of business process and routines that manage the interaction among resources to turn inputs into outputs. A competency is a cross-functional

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