Founded in the 1980s by John Sortino, the Vermont Teddy Bear Company formed a niche in the manufacture and distribution of teddy bears with individualized outfits. The bears are sturdy (they come with a lifetime warranty), high quality, plush, and jointed, making them attractive to both collectors and those seeking a casual gift. Sortino marketed his product not only as toys for children, but also as an alternative to flowers and candy as gifts for special occasions (a feature which was made possible by customizing outfits for particular themes). The introduction of a toll-free order number and the use of "bear grams" helped the company see strong growth in the early 1990s, but Vermont Teddy Bears is now suffering from growing pains: it recently suffered its first loss in several years, and its costs are increasing at rates far outstripping its sales growth. This analysis considers factors which may influence the future direction of the company, and one possible scenario which may emerge along with the consequences to Vermont Teddy Bears.
The economy could play a significant role in Vermont Teddy Bear's future. If the economy suffers a downturn, consumers are less likely to pay the relatively high prices for the Vermont Teddy Bears since their disposable income will become more precious to them. Reasons that the economy might suffer a downturn would be an increase in interest rates generated by the Federal Reserve in an attempt to keep inflation low, or unexpected increases in fuel or raw material prices elsewhere in the economy. The approach of El Nino on the West Coast may also affect food prices in that region; since California is one of the nation's foremost agricultural states, this might also affect the economy adversely.
Another factor to be considered is the political environment. At this point, Vermont Teddy Bears has emphasized its American production as a way of encouraging a "buy American" attitude. This is ...