External factors affected the Vermont Teddy Bear will be accessed using PEST analysis. Political-legal forces acting upon the Vermont Teddy Bear allocate power and provide constraining and protecting laws and regulations. The company does not influenced greatly by political changes. Legal changes had a greater impact on the company caused by changing international situation and increased competition, high taxes and corporate expenses the main changes took place at the end of the 1990s when European market altered parameters of international competition and enforced a period of reassessment. In spite of the fact that the Vermont Teddy Bear is a national company, these changes affected its sales and profitability. Environmental changes suggest that the opening up of the market and the resultant increased competition has widened the perspective of the planning framework with profound implications. The threat was that the removal of physical barriers and the new-found freedom of movement around the European market have increased international expansion and in so doing raise the degree of European trade. According to the case study, in 2000 the Vermont Teddy Bear had a decline in its operations. Failure in investment activities at the end of 1990s led to declining of financial situation and crisis (Stacey 1996).
The social environment includes general forces that do not directly touch on the short-run activities of the organization but that can, and often do, influence its long-run decisions. For instance, “in 1998, the company changed this philosophy by exploring the offshore sourcing of materials, outfits, and manufacturing in an effort to lower costs” (Vincelette et al). Economic forces regulate the exchange of materials, money, energy, and information (Chaffy et al 2000). This environment proposes great challenges for the Vermont Teddy Bear influenced by customers’ loyalty and trust. Speaking about the nature competition it