To The senior decision maker Tim Horton Inc.

To:The senior decision maker Tim Horton Inc.

From:Student’s name

Tim Horton`s Case Study Assignment

Submissiondate:

1.0Issues

TimHorton is a Canadian-based multinational fast food restaurant. Thecompany’s history can be traced back to the year 1964 when it wasfounded by a hockey legend, Miles G Horton and Ron Joyce (Schnarr &ampRowe, 2014). Internationally, the food chain is commonly referred toas Tim Hortons Cafe and Bake shop. Notably, the restaurantspecializes in the provision of home-style lunches, breakfasts, bakedgoods, and coffee. Tim Horton has over the years experiencedsubstantial growth. Its prolonged period of success can be attributedto the company’s commitment towards maintaining close relationshipswith the franchisees as well as the community where it carries outits operations. That has led to increased customer loyalty, a factorthat has made the restaurants to be one of the most widely recognizedconsumer brands in Canada.

Similarto any organization or business entity, the restaurant experiencesvarious challenges in its day to day operations. To start with,inconsistent economic growth has been a major setback as far asattaining its financial goals and ensuring aggressive growth isconcerned. Equally, increased competition from other firms both inCanada and the United States is also a challenge. The competitorsinclude companies such as McDonald’s, Starbucks Corporation andDunkin’ Donuts (Schnarr &amp Rowe, 2014). Additionally, constantchanges in consumer tastes and preferences are also serious problemsfacing the company. In this case, the restaurant has to prioritizeinnovations and keep pace with the technological advancements so thatthe variety of foods offered meet client requirements (Spitsberg,Verti, Brahmandam &amp Coulston, 2015).Meeting client requirements is essential in attaining customerservice satisfaction as well as ensuring that Tim Horton continues todominate the restaurant industry. The case study suggests that therestaurant industry experienced many challenges in 2014. Theseproblems were characterized by a decreased number of sales since theguests who visited restaurants remained the same both in Canada andthe United States (Schnarr &amp Rowe, 2014).

Inan effort of trying to expand its operations beyond borders, thecompany has made various decisions. On August 26th, 2014, TimHorton’s board of directors agreed G3 Capital to take over theownership of the restaurant (Schnarr &amp Rowe, 2014). Theacquisition would enable the company to conduct its operations inother new regions. Basically, the deal would help the company havemore than 18000 locations spread in 98 countries and theinternational sales would amount to $23 billion dollars (Schnarr &ampRowe, 2014).

2.0Analysis

Ideally,every organization is set up for profit making as well as maximizingshareholder value. However, various factors both from within andoutside the company may affect its operations. Therefore, this partof the analysis will focus on the key strategic issues and possiblealternative actions. Moreover, it will evaluate Tim Horton’sexternal and internal environments using the PESTLE worksheetanalysis. That entails macro-environmental segments which may affectthe industry.

2.1Key strategic issues and possible alternative actions.

Theyare the important aspects which should be taken into considerationfor a business to achieve its set objectives. For Tim Horton’scase, the key strategic issues include customer service satisfaction,organizational structure, products, marketing, human resourcemanagement and strategic partnerships.

2.1.1Customer service satisfaction

Withthe increased use of technology and highly competitive businessenvironments, the success of any company regardless of its line ofproduction largely depends on a robust business strategy (Spitsberget al, 2015).Therefore, Tim Horton’s executive team and employees should investin quality customer care. To achieve this, it should focus more ontop quality and fresh products for its clients. Previously, therestaurant only specialized on baked goods, coffee, and home-stylelunches. Today, the food chain has considerably diversified itsoperations such that it provides a full dinner menu and many morebaked products such as tea and other cold beverages (Schnarr &ampRowe, 2014). For the coffee to remain fresh, the restaurant makessure that it is served within 20 minutes after brewing, if the timeelapses before clients consume the coffee, it is disposed off.However, there is a need for the management in coordination withrelevant personnel to undertake business transformations so that thecompany can cope up with the emerging marketing trends. That is vitalin ensuring that the restaurant embraces modern technology inoffering better services and products which meet customer needs(Spitsberget al., 2015).

2.1.2Organizational structure and human resource management

Thatincludes how Tim Horton carries out its activities such as taskallocation, coordination, supervision for the purpose of attainingorganizational goals. According to Schnarr &amp Rowe, (2014), thecompany through its head office located in Oakville employed morethan 1800 staff members to perform various corporate functions in itsmanufacturing facilities distribution centers, main and regionaloffices. Also, the food chain had two regional offices in the UnitedStates and five in Canada. The employees play an integral part insupporting various facets of the business so that its operations runeffectively(Shafiee, Razminia &amp Zeymaran, 2016).Some of the functions they perform include training, research anddevelopment, marketing, purchasing, real estate acquisitions andfranchising. There is a need for the Tim Horton to improve employeeworking conditions, provide a suitable platform where the employeescan air their grievances and acknowledge their efforts through salaryincrement and job promotions.

2.1.3Marketing, product development and strategic alliances

Thecompany’s management deployed various strategies after consultativemeetings and discussions so that it can successfully expand itsUnited State’s presence and other foreign markets across the globe.A critical review of Tim Harton’s history and performance led to abetter understanding of how the organization works, consumerpreferences and mechanisms of achieving the same. The companysubstantially increased the number of stores to improve itsaccessibility to the customers. For instance, at the end of Augustthe year 2014, the food chain had a total of 3, 588 restaurants inCanada, 38 in the Gulf Cooperation Council and 859 in the UnitedStates (Schnarr &amp Rowe, 2014). It is important for the company toensure that they solve the above strategic issues in a way that theyare consistent with specific business goals. Failure to do so mightadversely affect business operations resulting in massive losses.Individuals and departments tasked with the responsibility ofdecision making and providing relevant guidelines should worktogether to minimize confusion and ensure increased output (Shafieeet al., 2016).

2.2PESTEL Analysis of Tim Horton’s external and internal segments

PESTELanalysis is an essential tool or framework that is used by companiesor marketers to analyze the macroeconomic environment, its factorsand how they affect the organization.

2.2.1Economic segment

Thecoffee industry is becoming a very lucrative business across theglobe. That has attracted more participants who compete for the samecustomers for their products. As it was previously noted, theindustry has got other significant leaders such as McDonald’s andStarbucks (Schnarr &amp Rowe, 2014). That has considerablyintensified the competition, all firms including Tim Horton arelooking for various ways to widen their client base, increase outputand overall profitability. Equally important, the hard economic timesexperienced by different countries have also affected the prices ofcoffee products in the international market (Anastase&amp Grigorut, 2016). Asa result, Tim Horton has to depend on the lower prices of itsproducts for it to remain competitive in the restaurant industry.That is detrimental to its profitability and overall growth(Mithas, Tafti &amp Mitchell, 2013).

Apartfrom that, the organization is experiencing pressure from itsinvestors. They do not support the initiative taken by the food chainto expand its operations to the United States. According to Broadway,(2014), the investors argue that the returns from the expansion intothe United States have been lower than previously anticipated. Thathas been due to the highly competitive market for fast foods inAmerica hence affecting the company’s ability to withstand thestiff competition from other firms in the same industry (Mithaset al., 2013).

2.2.2Technological segment

Thisaspect is also an integral part of the business since it provides aplatform where companies can improve the art of making their productsor facilitate their manufacturing processes. For any business entityto remain afloat and compete favorably with other firms, there is aneed for continuous research on innovations so that its operationscan be consistent with technology (Anastase&amp Grigorut, 2016).For that reason, technology enables Tim Horton to experience a steadyfinancial growth due to the production of quality goods which meetthe tastes and preferences of their consumers. To illustrate, somebeverages might require complicated processes for them to becomplete. However, with the help of technology, the productionprocess becomes much easier and faster consequently increasing thecompany’s output (Spitsberget al., 2015).

Areduction in the costs incurred during production will enableconsumers to purchase various products offered by the food chain ataffordable prices. That is evident from the case study conducted bySchnarr &amp Rowe, (2014). For example, breakfast sandwich costs$2.99 at Tim Hortons, $3.19 at McDonald’s restaurant and $ 3.95 atStarbucks. The same trend is repeated in the prices of medium coffeewhere it costs $1.52 at Tim Hortons, $ 1.54 at McDonald’s andfinally $1.85 at Starbucks. Therefore, technology is a strength thatcan be utilized by the organization to improve its reputation andpublic image.

2.2.3Legal segment

Rulesand other legal requirements are vital in ensuring that companiescomply with business ethics (Chan,Fung &amp Yau, 2016).That is beneficial to the organization in the long-run because itfacilitates the process of attaining their mission. Additionally,adhering to the legal requirements helps in protecting the cultureand reputation of the entity by providing a guideline to itsemployees so that they can make ethical decisions at work. That way,Tim Horton Inc. will be in a much better position to attract moreclients hence boosting the number of sales and profits. Also,compliance reduces labor turnover hence increasing productivity(Chan et al, 2016).Moreover, the organization will be in a position to attract moreinvestors, maintain its share price and protect the food chain fromtakeover.

3.0Recommendations

Fromthe case study, it is evident that Tim Horton is a company that isperforming well even on an international platform. For instance, thecompany registered total sales amounting to $1704065 in 2009,$1755244 in 2010, $2012170 in 2011, $2225659 in 2012 and $ 2265884 inthe year 2013 (Schnarr &amp Row, 2014). With the competitive natureof restaurant industry, the following recommendations are vital inensuring that the company continues to experience sustainable growthand increase its market share.

3.1Cost-cutting strategy

Firstly,the organization should focus on measures which will reduce itsoperations costs. In this case, it is crucial for Tim Horton toprioritize its key areas to avoid unnecessary wastage of resources.Secondly, the top management team in coordination with the employeesshould embrace a culture of ownership and accountability so that theassets of the company are utilized appropriately to achieve set goalsand objectives. Similarly, the managers should also plan and preparesubsequent financial budgets from scratch rather than the habit ofre-adjusting from the previous year’s spending. It is alsoimportant for the managers to evaluate the total expenses on anannual basis so that spending shifts to more profitable andhigh-yielding initiatives.

3.2Proper utilization of its strengths

Properutilization of a company’s strengths not only enables theorganization to perform well but also have a higher competitiveadvantage compared to other firms in the same industry. According toRichelieu &amp Korai, (2014), Tim Horton has a 27% share of dollarson the Canadian Quick Service Restaurants category. For that reason,it is crucial for the company to fully utilize its market share toincrease its client loyalty, improve its sales and revenue. The foodchain has an Iconic brand which has been recognized to be the leadingbrand name in the Canadian top brand list (Duguleană &ampDuguleană, 2014). Also, the organization should use its steadyfinancial gains to venture into more profitable foreign markets,invest in effective marketing strategies to improve sales and output.

3.3Work on sluggish United States expansion strategy

Asit was noted, the company’s investors do not support the initiativetaken by Tim Horton management to venture into United States marketsdue to low profitability. Hence, it is crucial for the organizationto come up with other appropriate strategies, for instance, openingup more stores to enhance its accessibility to customers. Besides, itshould conduct a thorough research on the type of fast foods that areprobably not common in the market so that it can differentiate itsproducts and services to avoid overlapping with the ones alreadyavailable. Moreover, the company should carry intensive publicationand advertisements to create customer awareness.

3.4Keep pace with emerging technologies

Therestaurant industry is extremely competitive with the presence ofother firms such as Starbucks and McDonalds’s. For Tim Hortons toremain relevant in the market and continue dominating with itsoutstanding but affordable products, it has to invest more oninnovation and technology(Junglas &amp Harris, 2013).That will help the company analyze market trends, the strategies usedby its competitors, customer preferences, and tastes so that thegoods produced are readily marketable, and they can satisfy the needsof different consumers.

References

Anastase,I. (., &amp Grigorut, C. (2016). The International Macro-Environmentof an Organization. OvidiusUniversity Annals, Series Economic Sciences,16(1),7-13.

Broadway,M. J. (2014). Lost in Translation? The Diffusion of Tim Hortons’Restaurants in the Great Lakes Borderlands. AmericanReview Of Canadian Studies,44(2),205-215. doi:10.1080/02722011.2014.914046

Chan,K., Fung, A., Fung, H., &amp Yau, J. (2016). A Citation Analysis ofBusiness Ethics Research: A Global Perspective. JournalOf Business Ethics,136(3),557-573. doi:10.1007/s10551-014-2533-9

Duguleană,L., &amp Duguleană, C. (2014). BRAND VALUATION METHODOLOGIES ANDPRACTICES. BulletinOf The Transilvania University Of Brasov. Series V: EconomicSciences,7(1),43-52.

JUNGLAS,I., &amp HARRIS, J. (2013). The Promise of Consumer Technologies inEmerging Markets. CommunicationsOf The ACM,56(5),84-90. doi:10.1145/2447976.2447995

Mithas,S., Tafti, A., &amp Mitchell, W. (2013). HOW A FIRM`S COMPETITIVEENVIRONMENT AND DIGITAL STRATEGIC POSTURE INFLUENCE DIGITAL BUSINESSSTRATEGY. MISQuarterly,37(2),511-536.

Richelieu,A., &amp Korai, B. (2014). The consumption experience of TimHortons’ coffee fans. QualitativeMarket Research: An International Journal,17(3),192-208. doi:10.1108/QMR-06-2012-0032

SchnarrK. Rowe W. TIMHORTONS INC..1st ed. London: Richard Ivey School of Business Foundation 2014.

Shafiee,H., Razminia, E., &amp Zeymaran, N. K. (2016). Investigating theRelationship between Organizational Structure Factors and PersonnelPerformance. InternationalJournal Of Management, Accounting &amp Economics,3(2),160-165.

Spitsberg,I., Verti, M. J., Brahmandam, S., &amp Coulston, G. W. (2015).Capitalizing on Emerging Technologies. ResearchTechnology Management,58(4),17-27. doi:10.5437/08956308X5804263

Appendix

PESTELAnalysis

Table1

Segment

Macro-environmental Factor

Opportunity or Threat?

Economic

Increased competition

Threat

Technological

Development of new machines and high technology equipment’s.

Opportunity

Legal

Business ethics and compliance

opportunity

Source:(Schnarr &amp Rowe, 2014).

Table2

EXHIBIT5: AVERAGE COST COMPARISON OF SELECT MENU ITEMS

(InCanadian dollars before tax as of August 28. 2014)

Tim Hortons

McDonald’s

Starbucks

Coffee(Medium)

$1.52

$1.54

$1.85

Lattle (Medium)

$2.69

$2.99

$3.85

Muffin

$1.29

$1.19

$2.00

Breakfast Sandwich

$2.99

$3.19

$3.95

Source:(Schnarr&amp Rowe, 2014).