Case study 3 cis - Grade: A PDF

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California State University Domi nguezHi l l s College of Business Administration and Public Policy Carson, CA 90747  (310) 243-3548  FAX (310) 516-3664

Name: Date:

_______ _________________

Grade: _______________

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Case #: ____3_______

Case Name: ___Vermont Teddy Bear_____________

1) How would you describe VTB's business model (the products and services it sells, target market's to whom it sells them, the value proposition it offers, and its financial model)? Vermont Teddy Bear (VTB) was founded in 1981 by John Sortino. The company provides gift delivery services for three different products: Teddy Bears (plush toys), PajamaGrams (apparel), and Calyx Flowers (gifts). The company is based on an e-commerce business model, and all orders are processed through four different channels (retail, mail, phone, web orders) that use different software. When ordering bears, customers can choose how to design their bear by selecting the colors and outfits from a menu of options. All bears are produced on the Shelburne campus, and the fabrics and raw materials used to design the outfits are purchased from outside vendors. For pajamas, the majority of VTB’s sales are through department stores, mass merchandisers, and other outlets. Lastly, Calyx Flowers offers high-end floral arrangements for customers that appreciate the long “vase life” of flowers. It purchases directly from growers, and coordinates with shippers to ensure that the highly perishable cut flowers are refrigerated, and extra cared for during transit. The main target market of VTB is men between the ages of 20 to 64 buying for wives or girlfriends as a gift. 2) How strong are VTB's operational capabilities, given their chosen business model? What challenges do they face during so-called "peak experiences"? The strength of VTB’s operational capabilities is primarily driven by their Information Systems (IS), which are all connected through a black box that they do not know how to operate. There are several operational downfalls in VTB primarily due to their IS. Recently, there has been several employee lay-offs in the IT department, which has led to a decrease in improvements in their systems. The company has

California State University Domi nguezHi l l s College of Business Administration and Public Policy Carson, CA 90747  (310) 243-3548  FAX (310) 516-3664

decided to use different applications instead of using a single ERP system, which in turn would make their operations smoother. They chose to do this in order to be cost-efficient and to focus on the specific need of each department, so every office utilizes an alternate application. All the applications are connected by middleware that they do not fully understand how to operate, and are afraid to change it in fear of the whole system crashing. This affects their operational capabilities as a business because it is not as strong as it should be for their business model. Some of the challenges VTB faces during “peak experiences” is that it will not be able to complete all orders or be able to implement improvements to their system due to the high volume of orders that need to be processed. Some of the IT related issues are the ones associated with the different applications that are being used. If an application crashes, it will put a halt in completing orders and could result in the products not being delivered on time. The lack of staffing and the lack of IS improvements puts VTB at a disadvantage against their competitor’s whore more than likely have a more sophisticated IS infrastructure. 3) How strong are VTB's information systems, given their strategic and operational needs? If you were a member of the VTB Board of Directors, what concerns would you have about the IT architecture? Vermont Teddy Bears information systems operates on a mediocre level. VTB is a struggling e-commerce company. One of the main dilemmas is their middleware information system, which occasionally brings production to a complete halt. Having to temporarily stop production significantly hinders VTB in numerous ways. Although the veteran IT department understand the operational needs of VTB each individual functions as a “siloed,” implying that each technician specializes in one area rather than the entire IT infrastructure. Stizel mentioned that the core transaction processing infrastructure was pretty strong for meeting the operational needs of a company this size. Examples of this are password managements and recovery mechanisms of incomplete orders to complete transactions. In an e-commerce operation, some consumers never complete their transactions for a variety of reasons, but utilizing a device to resume partial transactions will increase sales overall. Despite knowing in advance when VTB’s peak season periods are, the IT system limitations cause slowdowns in processing illustrating the inefficiency in the overall

California State University Domi nguezHi l l s College of Business Administration and Public Policy Carson, CA 90747  (310) 243-3548  FAX (310) 516-3664

IT architecture. The biggest concern for the Board of Directors should be the lack of an IT document detailing and inventory of each of the systems. Also, when the company lost many IT employees, they lost the knowledge that was saved on middleware. On the other hand, one of the main concerns is the ability for IT architecture to expand. As a midsize company, VTB’s determination in complete remodel to their IT system might require additional capital which the company is unable to provide since the crash reserves are quite limited at this point. Furthermore, a newly designed IT architecture requires a competent department made up of new IT employees or training the current staff. In either instance, VTB would need a substantial amount of capital for each situation. 4) At a time when "cash reserves were quite limited," Bob Stetzel wants "an efficient, well organized enterprise IT architecture that could serve as a robust platform for the company's changing business requirements." Given your analysis in response to the previous questions, and any other aspects you consider important to this case, what specific, actionable, and cost-effective advice can you suggest?...