Current Strategies: The Vermont Teddy Bear Co., Inc., which was founded in 1981, was on a path of growth and profitability till 1994, when the company changed its trajectory on the premise that a new direction will result in accelerated growth. This, in hindsight, was a serious mistake as the company's new strategy resulted in a situation where expenses, funded by debt, were far higher than an increase in sales. Pre-1994, the company's focus had been on designing, manufacturing, and direct marketing teddy bears, made exclusively with American materials in America. An analysis of its products and services, however, reveals that in all likelihood, the
             popularity of the company's products was more due to the fact that Vermont teddy bears were old-fashioned, handmade, jointed, and made available in several sizes and popular color selections. Also, the company provided more than 100 different bear outfits that allowed customers to personalize their personal or gifted teddy bear. Several other touches such as Bear-Grams, Bear Counselors (company sales representatives), and bears with definitive personalities such as "Shredder, the Snowboarder Bear," or Sortino's original creation "Bearcho," helped the company create added value through a differentiated customer experience of the very act of
             buying a bear, even as a gift. It is, therefore, puzzling that the company decided to change a proven, successful strategy post-1994, deciding to give up what it was known for. Indeed, the shift of emphasis away from the highly popular, cost effective Bear-Gram delivery service channel (which also helped promote its retail presence in department stores such as Macy's and Neiman Marcus) to the far more expensive route of opening its own retail stores and expanding catalogue sales, without apparently even test marketing its higher effectiveness, is bewildering. More important, the company seems to have decided to incur high expansion costs, funded by
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