External Factors
In order to determine the external Factors that face the Vermont Teddy Bear Company the use of the Five Forces model of Porter is needed. This model is an outside-in business tactic tool that is used to make a study of the value of an industry structure. The Competitive Forces study is made by the identification of 5 basic competitive forces:
∙ The entry of competitors- The Teddy bear manufacturing business will can be entered easily as many consumers are not particular to name brands. However quality is a factor as many of these toys are for children and therefore have to be able to withstand the constraints of child play and the ability to withstand the test of time in order to become heirlooms.
∙ The threat of substitutes- for many Teddy bear collections, a trademark is used in order to distinguish one brand from another. The Steiff Company uses a button on the ear of its products. Some trademarks are services used in order to market their bears. An example of this type of trademark would be a “Bear gram” which is only available from the Vermont Teddy Bear Company. Other trademarks can be as simple as the features of the bears themselves.
∙ The bargaining power of buyers- Depending on the markets in which the company chooses to use will develop the bargaining power of the markets. For collectible bear the volume of product may be limited in order to fuel demand for the products and raise prices.
∙ The bargaining power of suppliers- Depending on the market, the sellers can differ. Many companies’ chose to produce high volume low quality bears and sellers consist of discount shops and markets. Other companies with higher quality and higher priced bears will focus more on prestique department stores or antique stores as sellers.
∙ The rivalry among the existing players – There is much competition and Rivalry within the competition As the Teddy Bear industry is very popular industry that can be approached in different ways. Some companies chose to manufacture bears for Children toys, others are produced for gifts, etc and other selections are created to be collectibles. .
The External factors, which contributed to the downfall of the Teddy Bear Company, consisted of other companies who produced bears or other similar plush items. The largest competitor was Steiff Company. Steiff specialized in bears that are manufactured in Germany and the Far East. These bears are high quality and but are not individually customized. The Stieff bears have a trademark is a button sewn in to the ear of each bear. These bears range from $50 for a 6 inch tall to several thousands dollars for the life size bears. Their markets include discount stores and supermarkets to high-end specialty shops and antique stores.
The next company that competed was Gund Company. The Gund Company uses the Internet in order to market its product. Gund products include a wide range of plush animals that are not restricted to bears only.
Teddy Bear Factory is the only other American manufacturer of teddy bears. This company is a major competitor in the San Francisco area; however, their market is strictly regional.
The North American Bear Company manufactures all of its bears in the Orient, where labor costs are cheaper. This company is focuses more on global markets such as Europe, Japan and the United States. Their line of bears differs from The Vermont Bears by having shorter limbs and noses.
Applause Enterprises, Inc, is a smaller competitor, who mostly focuses on small plush versions of Sesame Street, Star wars, Muppets, and Disney characters.
Internal Factors
In order to determine the internal factors that face the Vermont Teddy Bear Company, The PEST Analysis will be used. This model uses the four factors that face the internal factors such as: Political, Economic, Social and Technological. These factors apply to the company’s customers, Employees, Investors, Vendors and Community.
The customers are the groundwork of the company. The ability to meet customer expectations is the backbone of the business culture. With quest for superior customer service the company will be able to produce a high quality product that will meet the customers’ needs and demands.
The companies’ employees are the internal customers. The idea that the employees should be treated with the same attention as the customers will produce a highly efficient work environment. This treatment will create a sense of pride, partnership, team spirit, and personal commitment in every employee.
Our investors provide capital with the expectations that the will be repaid with interest. The companies financial strength will be enable the promise the investors to be accomplished.
The vendors are a partnership that allows the company to understand the customers’ wants and the ability to provide the services to customers in a location and price that they want.
The community requires that company work within ethical, legal and environmental guidelines. The company will support associations and individuals that have comparable morals in order to contribute to future generations. This requires a balance between working with the community and developing capability of the company.
References
Chapman, A. (2001). Pest Market Analysis Tool. Retrieved February 23, 2005 from
SWOT Analysis. Retrieved February 23, 2005 from
Wheelen, Thomas L. and Hunger, J. David (2004). Strategic Management and Business Policy. Upper Saddle River, New Jersey: Pearson Education, Inc.