Peak Experiences and Strategic IT Alignment At Vermont Teddy Bear - Case Study Example

PEAK EXPERIENCES AND STRATEGIC IT ALIGNMENT AT VERMONT TEDDY BEAR [Insert Affiliation] Introduction The current corporate environment is challenging due to increased substitutes and rivalry that has made it necessary for companies to create a SCA (sustained competitive advantage) to survive. Vermont Teddy Bear (VBT) understands this very well and is striving to create SCA through an efficient and effective management of its information system to match the demands of its dynamic customers and offer customer-tailored products that are unsurpassed. However, resource inadequacy and the hard economic times have made it extremely hard for VTB to attain this and smoothen the peaks. This case study analyses VTB’s application of strategic management, particularly incorporation of apposite IT strategies into the business model, and functional level strategies as well as the requisite changes that the management must incorporate into its business model to survive the stiff competition in the gifts sector. Q1. Description of VTB’s business model Founded in 1981 by John Sortino, VTB has undergone several challenges including a bankruptcy threat in 1990, but still survived to provide gift delivery services. The company’s product line is composed of three major products: Calyx Flowers categorized under gifts, Bears (posh dolls), and PajamaGrams in the apparel class (Lewis & Gogan, 2011). With these products, the company has been striving to obtain a share of a market often dominated by rivals. The company’s customers make gift orders through web, mail, retail store, and phone as the predominant channels. Each of the aforementioned channels is supported by its unique software. However, the company is considering using a single multifaceted software that will enable it to manage all orders from its clients and monitor the demand as a way of reducing redundancies in production or running out of stock during peak seasons. As the company is committed towards meeting the divergent tastes and preferences of its customers, it allows its customers to select ensigns and outfits from a list of alternatives. Their choices are incorporated into the process of designing the bears. To uphold its value proposition, VTB produces purchases raw materials and fabrics from vendors from different locations. According to Austin, Nolan, and ODonnell (2012), the purchasing of raw materials from different vendors allows the manufacturer to use the best accessible quality and circumvent snags resulting from suppliers’ failures to uphold integrity. Whereas the inputs used in designing and producing the bears are amassed from various vendors, the production of bears is centralized, taking place at the Shelburne campus. Additionally, the company provides pajamas at a low cost. They are sold at bulk merchandisers and other outlets including department stores. Similarly, the Calyx Flowers offered by VTB have high-value display for astute clients who attach importance to long vase life. According to Gogan and Lewis (2011), “VTB purchases directly from growers and coordinates with shippers such as UPS to ensure that highly perishable fresh cut flowers would be refrigerated and given special care en route (pg. 63). Rather than simply protecting the flowers from wastage, this also protects them from the unhappiness caused traditional middlemen who delayed delivery. VTB’s target market is men aged between 20-64 years. This group of persons, which presently constitutes 59.0% of US’s population, has a high disposable income and is likely to spend on VTB’s products as they purchase gifts for their girlfriends and spouses (Lewis & Gogan, 2011). On the financial aspect, the company generates most of its sales revenues on or around valentine day, mothers’ day, and Christmas season. Most of the revenues are ploughed back to fund developmental or brand extension plans enabling the company to endure without debt financing which is often expensive (Austin et al., 2012). Q2. Strength of VTB’s operational capabilities Apparently, the strength of VTB’s operational capabilities lies in its information systems. The company’s IS is a spiderweb consisting of four different packages connected by a middleware. This middleware, which Stetzel calls a black box, is strange to the company’s IS staff. The staff hardly has knowledge on how the black box operates (Lewis & Gogan, 2011). This presents a weakness and a threat to the company’s success. Moreover, operational downfalls in VTB have also been caused by the inadequate staff due to regular layoffs in the IT department. The layoffs reduced the personnel in the IT department to a level that was sufficient to handle improvements in IT and bring in the direly required innovativeness. While Stetzel, the CIO, hired 2 people to strengthen the IT department thus bringing their total to 9, their expertise in technology is inadequate as indicated in the table below: Most of the employees had an experience of less than 10 years, with 4 of the employees admitting that tenure at VTB was the starting point. With such limited experience, the efficiency of VTB’s IT department is plummet hindering company’s ability to meet the needs of the present tech-savvy generation of consumers (Barney & Clark, 2012). What’s more, lack of adequate and experienced staff that can comprehend and manipulate the functioning of the black box has made it difficult for VTB to maintain an unwavering and reliable e-commerce podium during peak seasons. Meeting the demand has been grim due to pitiable assessment of demand and supply. Companies which cannot accurately forecast the demand loose revenues and potentially harm its standing, a scenario that VTB often finds itself in. Similarly, the company’s marketing strategies are poorly supported as a result of an IT staff that cannot accurately assess the needs and demands of online customers and its failure to incorporate technology into VTB’s business strategies. The poor customer awareness further indicates the ramifications of having a website with a poor usability and lucidity as asserted by Hillard (2010). Q3. Strength of VTB’s information systems VTB’s information systems are fairly weak considering the ostensible fact that the information systems cannot provide adequate information to manage customers and demand. Employees tasked the responsibility of receiving, recording, and interpreting customer information are not only few, but are also inexperienced. The misalliance between demand and supply often experienced by VTB is attributable to this weak information system. Moreover, troubleshooting takes unnecessary long hours leaving little time for development of meaningful packages that can help the company contain the ever growing competition. Moreover, the linkages between the various databases within the company’s departments are poor encumbering the easy flow and effective interpretation of the minute information obtained (Barney & Clark, 2012). Consequently, as a member of VTB’s Board of Directors, I would raise concern over the absence of an IT architecture document describing the functioning of various applications in VTB including supply-chain applications and financial monitoring applications, the configuration of the company’s network, the working of VTB’s servers and the overall flow of data within and without the organization’s information systems (Lewis & Gogan, 2011). This is a matter of concern since it makes it hard to initiate and manage changes as well as control production, procurement and marketing (Hillard, 2010). Moreover, while the possession of software information by a few individuals is helpful in password management and supportive in recovery mechanisms, it raises a concern since the departure of a ‘siloed’ individual will imply loss of company’s information. Q4. Actionable and cost effective advice In view of the prevailing analysis, Bob Stetzel should develop a CRM (customer relationship management) package for VTB. Developing the CRM package is cost-effective and its presence in VTB will enable the company to serve customers in its products lines (flowers, pajamas, and bears) via its various channels. Moreover, the CRM package is more realistic as it will enable the company to keep in constant touch with the customers thus learning their changing needs, preferences, and tastes without the need of enlarging the workforces (Austin et al., 2012). While cutting the wage bill, this move will help the company to learn the characteristics that customers require in the flowers, pajamas, and bears thus selecting suppliers who can adequately deliver (Barney & Clark, 2012). Conclusion The above elucidation candidly and comprehensively indicates that despite having a competitive product suiting the needs of consumers, VTB’s business strategy is weakened by its poor IT personnel. VTB’s information strategy infrastructure is scrawny leading to a mismatch between supply and demand. Running out of stock in certain products whereas other products are in excess is common in the company. To avert this, the company needs to formulate and implement a CRM package that will help it manage customers and production activities. References Austin, R. D., Nolan, R. L., & ODonnell, S. (2012). Harder than I thought: Adventures of a twenty-first century leader. Boston, MA: Harvard Business Review Press. Barney, J. B., & Clark, D. N. (2007). Resource-based theory: Creating and sustaining competitive advantage. Oxford: Oxford University Press. Hillard, R. (2010). Information-driven business: How to manage data and information for maximum advantage. Hoboken, NJ: John Wiley & Sons. Lewis, M. O. and Gogan, L.J. (2011). Peak Experiences and Strategic IT Alignment At Vermont Teddy Bear. Journal of Information Technology Teaching Cases 1, 61-70. Doi: 10.1057/jittc.2011.6. Read More