The Vermont Teddy Bear Company, Inc. (VTB) is currently a firm that has a lot of unrealized potential. In order to reach this higher potential, VTB must find a niche in the industry that will allow it to use its strengths, decrease its weaknesses, explore current opportunities, and counteract threats.

Strengths. The VTB name and “Made In America” trademark combine to form the company’s most important strengths. The VTB name has long been recognized as one of the top producers of teddy bears in the United States. The current wave a national patriotism in the United States has made the “Made In America” trademark a much more valuable asset to the company during the previous five months.

Weaknesses. In 1998, VTB lost an important source of product differentiation when it began offshore sourcing of raw materials. With this move the company began to look more like every other gift producer in the market and potential for setting themselves apart was lost. The high seasonality of the VTB product line is another current weakness of the company. This weakness causes sales, profits, and employment needs to fluctuate greatly from quarter to quarter during the fiscal yea

Over time, VTB should look to get involved in backward integration so that it can have more control over the raw materials it receives. This move would a profitable one over time because VTB would receive better quality materials at cheaper prices. Backward integration should not be the initial course of action because it will take the company some time to develop its competitive position after switching to “All-American” teddy bears (to be discussed later). Even though this move may reduce strategic flexibility, this should not be a major concern because the company should already be trying to become more strategically focused.

Marketing. VTB should initially start off with a large marketing campaign promoting its new “All-American” product. Over time the marketing should become more focused on maintaining current customers and on the less-seasonal, less-price sensitive collectibles market in general. Since a great deal of advertising for VTB products is through word-of-mouth from satisfied customers, there will be no need for a large marketing campaign to attract new customers. Finally, the collectibles market is important to the overall success of the new strategies and therefore should be targeted in upcoming promotional campaigns.

In order for the recommended business strategy of product differentiation to work effectively, economies of scale must be reached in production and an increasingly focused marketing campaign must be used.

Using Strengths. The potentially increased cost of materials could eventually be offset by economies of scale in production due to the

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