Title of Presentation (think of something clever)

Strategic Management AmazingRobert JulianRobert GroveMike ReidKate WillettStrategic Management Class Project1

Fluff-IT-Up

Our ViewpointLooking to purchase Build-A-BearProfitability of new acquisition Potential for growthReturn on investment

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Amazing Investors, Inc.

Mission & ObjectivesMissionAt Build-A-Bear Workshop, our mission is to bring the Teddy Bear to life. An American icon, the Teddy Bear brings to mind warm thoughts about our childhood, about friendship, about trust and comfort, and also about love. Build-A-Bear Workshop embodies those thoughts in how we run our business everyday.

2010 ObjectivesIncrease Store & Online TrafficImprove Product Offerings Across the BoardAdd Revenue From Experiential Product RangesZhu Zhu Pets to All Company Owned StoresIncrease Membership in BuildaBearville.comHelp to Engage Guests w/ BrandInfluence Additional PurchasesFocus On Strategic Cost ReductionsOpen 1 New-Format StoreRelocate 1 Store in North America & Open 2 New Locations in Europe

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Connecting In Our CommunitySince 1997Over 30 Million DonatedHuggable HeroesWorld Wildlife FundA Champion Fur Kids

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History5Founded 1997 Maxine Clark1st Location St. Louis - 1997$400,000 in Sales in 4 Months1999 Retail Success Attracts Venture Capitalists10 New Stores Open2001 - Retail Innovator of the Year2003 International Expansion2006 Acquire The Bear FactoryBegan Operating its Flagship Store in London2007 50 Million Bears Sold400 StoresMainly in Malls5 in MLB StadiumsEntered Video Game Market Nintendo DSTie-In Stuffed AnimalsShrek, The Cat in the Hat, Happy Feet, ect.Happy Meals at McDonalds2010Zhu Zhu PetsElectronic HamstersSimilar to WebkinzForbes 100 Best Companies To Work For

Business ModelSpecialty Teddy Bear Business

ObservationsHighly customizableproductsHighly interactiveexperienceHigh end marketMajority of stores in high end malls6

Current SituationNot in great shapeNegative operating income in fiscal 2010 and 1st quarter 2011Price per share declined by $24/share in past 3 yearsFailure to profit from Ridemakerz, LLC. InvestmentMajor restructuring of operationsAlso closed Friends 2B Made line (dolls)However, expanding verticallyZhu Zhu pets, Bearville.com 7

71: Product innovationLarger merchandise stores and limited edition products2: Individual product integration and marketingEach new product launch has unique marketing campaign and promotions/special offers3: Compel customers to return to storeIncrease incremental purchases4: Grow e-commerce salesIncrease engagement in virtual world5: Continue to develop new opportunities and revenue streams outside current store base8Expansion:5 Strategies for 2011

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Sales History9

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Key Performance MetricsPerformance MetricsDebt to Equity Ratio = 0Return on Average Equity (4th qt. 2010) = 5.52%0.06% in fiscal 2010Return on Average Equity (1st qt. 2011) = 21.59%

ObservationsOperates under no debtAllows them to stay alive in poor performanceRidemakerz, LCC. failure had huge impact10

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Industry DescriptionConsumer Services IndustrySells products directly to the consumer, as opposed to the capital goods industry, which manufactures goods for saleEx. Not un-processed wheatConsumer ServicesRetailGeneral RetailersSpecialty Retailers11

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Major competitorsApplause LLCThe Boyds Collection LTD.Enesco Group, Inc.Maine Bear FactoryRuss Berrie & CompanyTy, Inc.Vermont Teddy Bear Company12

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Product/Service DescriptionProductCustomizable teddy bearCustomizable stuffed animalsZhu Zhu PetsServicesExperience based shoppingGroup partiesOnline interactive games/services13

14Build-A-Bear Board of directorsBoard of Directors: 14 InsidersNamesAgeSinceCurrent PositionMaxine Clark622004Chairman of the Board, Chief Executive BearJohn Haugh482010President BearTina Klocke512009Chief Operations and Financial Bear, Treasurer, SecretaryDavid Finnegan48Chief Bearrister, General Counsel and International FranchisingTereas Kroll562010Chief Entertainment and Digital Marketing BearOutsidersPeter Coleman622009Lead Independent DirectorJames Gould622000DirectorWilliam Reisler542000DirectorMary Fiala592005DirectorLouis Mucci692004DirectorKatherine Savitt472009DirectorVirginia Kent562010DirectorBraden Leonard402011Director

Board of Directors StrengthsAccount of DirectorsDegree of IndependenceVarying Backgrounds

WeaknessChairman is also the CEOAge Variance 15

EFAS16External FactorsWeightRatingWeighted ScoreCommentsOpportunitiesChildren aged 8 to 11 spend 1-2 hours online daily0.103.20.32More Bearville.com usersInternational customized teddy bear market 0.204.10.82Great opportunity for company growthPartnerships with companies such as Disney0.254.51.125Partnerships allow for the creation of trademarked productsThreats"Make you own" teddy bear mall kiosks0.103.50.35Well positioned due to branding Several other online virtual worlds (i.e. Webkinz.com)0.0520.1Many other online competitorsCompete with huge toy retailers (i.e. Toys R' Us)0.303.91.17Customers may elect to purchase a ready made productTotal Scores1.003.88516

IFAS17Internal FactorsWeightRatingWeighted ScoreCommentsStrengths"Limited Edition" animals released monthly0.204.50.9Customers have a reason to keep coming back238 U.S. trademark registrations0.153.20.48Creates a very unique customer experienceAll store locations are leased0.103.50.35Some contain minimum annual sales termination provisionsExtensive training for all associates0.154.00.6Well-tuned bear-building process and great guest experienceWeaknessesAll international locations are franchised0.122.50.3Possibility of a different customer experience 80% of inventory is purchased by 3 vendors0.182.00.36Vendors' prices have a large impact on annual profitsExpensive specialty product0.103.00.3Some consumers could be unable to purchase productsTotal Scores13.29

SWOT Analysis18SWOTStrengths"Limited Edition" animals released monthly238 U.S. trademark registrationsAll store locations are leasedExtensive training for all associates

WeaknessesAll international locations are franchised80% of inventory is purchased by 3 vendorsExpensive specialty product

OpportunitiesChildren aged 8 to 11 spend 1-2 hours online dailyInternational customized teddy bear market Partnerships with companies such as Disney

Threats"Make you own" teddy bear mall kiosksSeveral other online virtual worlds (i.e. Webkinz.com)Compete with huge toy retailers (i.e. Toys R' Us)

Situational Analysis19Strategic FactorsWeightRatingWeighted ScoreShortIntermediateLongCommentS1 "Limited Edition" animals released monthly0.24.50.90XXKeeps customers coming backS2 Extensive training for all associates0.154.00.60XBest customer experienceW2 80% of inventory is purchased by 3 vendors0.252.00.50XPossible issue with cost of materialsO1 Partnerships with companies such as Disney0.154.50.68XMore options for consumersT1 Compete with huge toy retailers (i.e. Toys R' Us)

0.253.90.98XXCheaper, faster alternative availableTotal Score13.65

Problems/Decisions Economic recessionProduct relevancePublic vs. private ownershipInternational presence in growing economiesFocus on core competenciesReduced mall traffic

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Strategic Alternatives & Recommended StrategyCore CompetenciesChildrens HospitalMobile party unitsAdditional sales strategiesHost partiesAdditional trademarked bears/animalsExpand Bearville virtual world

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Mobile UnitsMobile Units$80,000 Initial Investment$300 Profit Margin Per Party2 Parties per WeekPay-Off Period 2.56 YearsAnnual Profitability - $31,200 per unit5 Year ROI 87.5% 10 Year ROI 275%Mobile UnitsAdd revenueCreate brand awarenessExpand party aspect of the companyControlAverage 2 parties per weekEmployees are educated & interactiveProduct quality is comparable to in-store product

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Expansion ofBearville.comImplementation5,000,000 InvestmentGoal of 20% Conversion rate2,000,000 Visitors per monthAverage ticket: $40.00Pay-Off Period 1 yearAnnual Profitability - $2,576,000Evaluation and ControlProjected 50 Million hours of brand engagementMore educational games to gain Parental ApprovalIntroduce different levels of MembershipUser information can be registeredand tracked

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Childrens HospitalInitial Investment $ 750,000.00 Furry Friends Sold Since Inception 90,000,000 Operating ExpensesYears in Operation 13 Franchise Fee $ 48,301.59 Average Number Sold Annually 6,923,077 Rent (Annual) $ 24,000.00 Total Number of Stores (C.O.&F) 407 SG&A $ 402,727.27 Average Number Sold Per Store 17,010 Store Preopening Costs $ 177,000.00 Average Price Per Friend$40 Annual Salary for Employees $ 80,000.00 Total Average Sales from Friends $ 680,400.68 Total Operating Expenses $ 732,028.86 Total Investment $ 1,482,028.86 Total Investment $ 1,482,028.86 Total Average Sales from Friends $ 680,400.68 5 Years10 YearsChildren's' '07-08 Inpatients 24,460 Investment Gain $ 963,971.14 $ 3,409,971.14 Average Price Per Friend $ 40 Total Investment $ 1,482,028.86 $ 1,482,028.86 Selling Average (Assumption)50%ROI-35%130%Average Annual Sales from Friends $ 489,200 Years to Break Even3.032424

To Buy or Not To Buy?Not to buy.Fad companyMinimal firm assetsNothing to liquidateLeased locationsAlready peakedMinimal potential to grow1 year negative net income2 year negative operating incomeDeclining stock price 3 years25

Thank You!!26