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Case Study-Vernont

JC Pearl M. Daniel March 6, 2009
Management 72 Ms. Cynthia Cabanag

The Vermont Teddy Bear Co., Inc.
(A Strategic Audit, Case Data: As of June 1998)

OBJECTIVES:

1. To regain the company’s position in the gift and personal communications business
2. To generate sales that could cover enough related expenses
3. To strengthen its Bear-Gram business segment
4. To support the overall strategy of the business that is growth strategy
5. To have a positive income for the next years

I. Current Situation

A. Current Performance
▪ Incurring losses for two consecutive years since 1997
▪ Closing of its retail stores in other parts of the United States
▪ Contracting a sale-leaseback transaction of its factory headquarters and some of its other properties
▪ Incurring large amounts of debt to support its losses
▪ Declining sales due to market saturation resulting to a negative earnings per share

B. Strategic Posture

1. Mission
o From its founding in the early 1980s until 1998, the company’s focus has been to design and manufacture the best teddy bears made in America, using American materials and labor
o The company’s major philosophy was modified significantly in 1998 with the company’s decision to explore the offshore sourcing of materials and manufacturing alternatives in an effort to lower the company’s cost of goods sold and to broaden its available sources of supply

2. Objectives
o To provide its customers with a tangible expression of their best feelings for their families, friends, and associates
o To facilitate, communicate, and participate in caring events and special occasions that celebrate and enrich its customers’ life experiences
o To produce products that represent unmatchable craftsmanship balanced with optimal quality and value
o To continue to be the stewards of a uniquely American...