Tim Hortons Harvard Case Solution & Analysis

Tim Hortons Case Solution

Problem identification

The main issue with Tim Horton was that it was almost synonymous with the Canadian identity, its brand name and products were far less known globally. In order to stay competitive in the market and improve growth rates, international expansion was necessary. As a result, Tim Horton was acquired by G3 capital that owned more than 50% shares of Burger King. Burger King’s global experience could provide guidance for Tim Horton about how to operate and be successful in the international markets. Therefore, acquisition and global reach were the main issues that had to be resolved.
Similarly, inconsistent economic growth was another issue prevailing with Tim Horton and as a result, increased competition and consumer tastes were evolving domestically and in the international markets as well. Making menu innovation more important became the first priority.
The company required having clear set competitive advantages, which were not present at the moment and with the help of Burger King and smart strategic planning for the future, it was necessary for Tim Horton to become successful in the market.
The whole restaurant industry was facing severe challenges and as Tim Horton was also a giant player in the industry the organization was facing immense challenges. The number of visits to restaurants was declining in the United States and Canada in 2014, and it was predicted that the industry would grow on a limited growth rate of 1% for the next few years.
Furthermore in July 2014, the wholesale food prices rose by 7.1% while menu prices rose only by 2.4%, which is stated as very low in the restaurant industry.
Food and labor cost were also on the rise as well as the largest general cost categories for restaurants with each approximately one-third of every sales dollar. In the end, occupancy cost was only 5% and net profits after tax rose to 6%.

1. Situational analysis.

Strengths (internal analysis):

As Tim Horton uses a franchisee model and as 99.5% of outlets are franchised owned, therefore Tim Horton became the biggest fast food service restaurant chain in Canada. Tim Horton’s specialty was in coffee, baked foods, breakfast items and home style lunches. Similarly, Tim Horton was the fourth largest public limited company in the North America and its main focus was on market capitalization.
The stores were located almost all around the world including 3588 restaurants in Canada, 859 in the United States and 38 in the GCC countries, which sums at approximately 4546 restaurants across the globe which is a major strength. In addition, Tim Horton is still on the verge of expanding its global footprint more.
Legendary coffee is one of the major products of Tim Horton which competes in the market with several giants such as Starbucks and Mc Donalds .It was so popular in the market that the company changed the mind sets of the customers by creating forums and reviewing about coffee.
Weaknesses (internal analysis):The major issue with Tim Horton is that it has low recognition in the international market, which is not a good sign for the business because international markets have huge growth potential.
Opportunities:Opportunities arise as the company plans to get acquired. This would improve Tim Horton’s standard operating procedures as now it would be working with other companies and lot of knowledge could be transferred on both ends. Similarly,threats are also arising for Tim Horton as if it does not expand to the international markets, then there is a possibility that its growth rates remain stagnant and would not be able to compete in the marketplace........................

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