Tim Horton’s
The Quick Service Restaurant & Food Industry
Submitted by: Rezvi Zaman
Student Number: 500541529
Submitted to: Professor Anthony Power
Due Date: November 1st, 2015
Course Code: BUS800
1
Introduction
Tim Horton’s is a company that was founded in Canada in 1964. It operates in the restaurant
and food industry as a quick service type restaurant. It has grown over the years to become one of
Canada’s most successful companies and franchises, and continues to grow and expand even to this
day. Tim Horton’s dominates 64.7% of the Canadian restaurant industry and generates 42% of the
traffic in the quick service industry. Needless to say, Tim Horton’s is a leading figure in Canada’s
domestic scene. Furthermore, Tim Horton’s has portrayed consistent and steady growth in revenues
and sales, which is exceptional considering the number of years it has been in business and the
relative nature of the competitive restaurant industry. Although growth has been consistent, it has
slowed down in recent years when accounting for all Tim Horton’s locations. This aspect is
representative of Tim Horton’s main issue regarding growth of the company. The main issue that
requires attention is how to expand successfully into international markets while becoming
competitive overseas and staying competitive domestically.
Analysis
As mentioned above, Tim Horton’s main issue addresses its need for global expansion in
order to remain competitive. Tim Horton’s mission is “to deliver superior quality products and
services for our guests…” (2.2), and they have excelled thus far. Their main menu consists of
coffee, baked goods, and various breakfast, lunch and dinner options. They compete closely with
McDonald’s and Starbucks, but have a commanding 57% market share for breakfasts. The
restaurant and food industry is highly competitive which is why the 50 largest companies only
account for 20% of total revenue generated by the industry as shown by their dominant economic
features analysis (1.2). One of the reasons Tim Horton’s has been able to perform so well
domestically is its ability to innovate and differentiate products. Tim Horton’s originally started
with exceptional coffee and donuts. However, as the company grew, there was a need to add to its
menu to appeal to a growing customer base. Tim Horton’s proceeded to add breakfast options,
soups, baked goods, beverages and etc. (1.2). By adding some similar products (breakfast
sandwiches) as its competitors, and innovating others (nutella donuts), Tim Horton’s was able to
use product innovation as a driving force to success (1.4). In addition to innovation, Tim Horton’s
has taken advantage of sociocultural trends to attract consumers. Consumers have been demanding
healthier foods while younger generations have been shifting towards quick service restaurants to
match their quick paced lives. By capitalizing on these two trends, Tim Horton’s has been able to
attract a growing consumer base (1.1).
Tim Horton’s ability to take control of the market through its operating strengths is well
proven based on its history. However, Tim Horton’s success has been relatively limited to its
domestic market. Unfortunately, Tim Horton’s has not been able to perform nearly as well as its
strongest competitors on the global stage. Globalization has been a key driving force for many
international companies who have taken advantage of global markets to expand (1.4). Tim Horton’s
has also attempted to expand globally which is evidenced by its 4,546 total locations worldwide in
the strategic group map (1.5). However, when referring to the same map, it is clear that Tim
Horton’s worldwide locations pale in comparison to McDonald’s (35,429) and Starbucks (23,305)
(1.5). Tim Horton’s biggest challenge now is to avoid stagnating growths resulting from being
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complacent in the Canadian market. They must continue to try expanding into the US and overseas
as well in order to keep up with competition (1.6).
According to the financial analyses done, even while attempting to expand into foreign
markets, Tim Horton’s has been able to maintain a solid revenue growth percentage while
incrementally increasing sales and revenues each year for the past five years (2.1). This bodes well
for the company because it portrays consistency as well as the fact that domestic success alone can
help support the business while pursuing foreign expansion. It is also clear that Tim Horton’s
revenue and sales streams is limited if it continues to solely depend on domestic success. Its
competitors are able to take advantage of relatively stronger global presence. Tim Horton’s was,
however, able to focus on brand awareness and even opened 261 new locations in North America
(2.2). While expansion might be going slower than anticipated, Tim Horton’s has done a good job
in committing itself to expanding.
Tim Horton’s best opportunity for global expansion is now associated with the private equity
firm 3G Capital. The firm that acquired Tim Horton’s is renowned for its success with the Burger Kind
franchise, and by working together, it will allow Tim Horton’s to take advantage of existing
international expansion experience to aid their own attempts as evidenced by the SWOT analysis (2.3).
The best way for Tim Horton’s to create awareness for its brand would be through global
marketing. By advocating the strengths of its company, it would be able to enter foreign markets on a
strong note (2.4). The following are some alternatives and recommendations to follow for expansion.
Alternatives:
A) Focus on US and Canada only.
Tim Horton’s is already strong in Canada and northeastern United States. After gaining the success
that they have achieved in Canada, they can continue to expand in western Canada and build
towards southern United States. This will allow them to capitalize on markets they are familiar with
while ensuring they can reach demographics that they are already comfortable addressing.
However, the biggest disadvantage would be that Tim Horton’s would have to forego global
expansion and be limited to only North America. This would mean either abandoning the locations
they already have overseas, or just maintaining them. In addition to that, it would also allow their
major and minor competitors to all gain an advantage. Other companies will definitely look at
expanding overseas, and if Tim Horton’s refrains from doing so, they will be at a competitive
disadvantage.
B) Focus on Canada only.
This could prove to be very time consuming in the sense that Tim Horton’s would be abandoning
their existing US market as well as their overseas locations. This could result in major losses and
inefficient and unnecessary costs. Furthermore, this would definitely put a ceiling on Tim Horton’s
ability to succeed as an organization and also impact its brand. It will no longer be known as an
international company and would have to depend solely on its domestic market for sales. The
biggest problem with that is that while Tim Horton’s continues to depend on their Canadian market,
there will always be new restaurants opening and looking to steal customers in addition to others
that enter foreign markets and enter a new field of competitiveness. This is the safest option that
would allow Tim Horton’s to maximize its Canadian influence but it also takes no advantage of
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their new partnership with 3G Capital. 3G Capital is a firm with previous experience in
international expansion (Burger King), and by remaining in Canada only, the experience is wasted.
C) Use the merge with Burger King to expand
The final and likely option is to use existing experience from 3G Capital to continue global
expansion. As mentioned earlier, 3G Capital has existing experience in expanding overseas and
competing in foreign markets. By working with Tim Horton’s, this can become a mutually
beneficial relationship. This will help Tim Horton’s get over “the hump” of some unsuccessful
attempts and expansion will prove to be easier if working together. It is also possible that the
partnership could lead to dual locations (Wendy’s + Tim Horton’s) that would work well to
compliment each other. They would be able to support both franchises since each restaurant’s
market would get exposure to both restaurants and brands. The biggest downsides would include
and increase in competitors and time. Expanding internationally is a venture that will require lots of
time, effort and patience. It will take a while for Tim Horton’s to enter markets and then prove to be
competitive and successful. Furthermore, by partnering with Burger King and going global, Tim
Horton’s will also become more susceptible to more competitors. They will have a lot more
competition and will need to boost their current performance (innovation, consumer trend analysis)
in order to better compete.
Recommendation:
In my opinion, I believe that Tim Horton’s best cause of action will be to use the merger
with Burger King and the acquisition by 3G Capital to continue expanding overseas and pursuing
foreign markets. This will allow Tim Horton’s to avoid a ceiling for their success (which is bound
to happen if they restrict themselves to Canada or US only) and increase their level of
competitiveness relative to their major competitors like McDonald’s and Starbucks. Furthermore,
they will be able to increase brand awareness globally and create familiarity in potential consumers.
Although this is a process that will take a lot of time and commitment, Tim Horton’s will finally be
able to expand like they have needed to while supporting itself through domestic success. It will
definitely take lots of time, market research and preparation to not only enter foreign markets, but
also compete and succeed, but it will definitely produce fruits and create a more level stage for Tim
Horton’s on the international scene.
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Appendix A: External Assessment
1.1 Strategically Relevant Factors in the Macroenvironment (PESTEL Analysis)
Political/ Legal:
 Food businesses and restaurants (directing minds and employees) must comply with
government regulations regarding operations of the company (day to day activities, raw
materials & trade, health & safety standards)
 Since Tim Horton’s is trying to expand and grow internationally (in US especially), they
must be aware of international and foreign differences in regulatory laws
 Tim Horton’s faces increased competition when expanding into US and overseas
Economic:
 Food service industry traffic and growth rates are stagnating and growing slowly
 Higher inflation rates and higher minimum wage lead to higher costs for Tim Horton’s and
higher food pricing (which could result in less consumer traffic)
Sociocultural:
 Consumers demanding local and natural ingredients in addition to healthier food options
which has become a huge trend for restaurants to capitalize on
 Consumers are exploring ethnic options and younger generation shifting towards quick
service restaurants to match their lifestyles
Technological:
 Companies are now relying on mobile and digital technologies to interact with customers
(providing info, engagement, transactions) ex. CIBC Tim Horton’s card
 Social media has introduced a new platform to market and advertise restaurant menus,
experiences, promotions and food quality (ex. word of mouth, YELP)
 Restaurants that offer rewards and bonuses for loyalty are the norm (ex. Menchies)
Environmental:
 Insufficient data in the case
Conclusion:
Tim Horton’s has adapted well to current sociocultural trends seeing as they have been able to
consistently add options to their menu to meet and satisfy consumer trends (healthy options,
breakfast and lunch). They should incorporate more technological and innovative aspects that
would promote loyalty bonuses to not only draw and encourage customers, but also maintain them.
1.2 Dominant Economic Features Analysis
Scope of Competitive Rivalry:
 Tim Horton’s has huge market share control nationally in Canada, but the next step would
be to continue growing internationally on a successful level in order to compete with other
global franchises (McDonald’s)
 They haven’t been very successful in the US market yet (36 stores closed, only 6% of stores
McDonald’s has), but they will now get help from their acquisition firm 3G Capital to
promote brand awareness and growth
Number of buyers:
 Food industry is diverse enough to support all different types of buyers
 Tim Horton’s provides assorted products that appeal to people from different generations
and those who lead different lifestyles (on-the-go vs sit and dine)
 Younger generation tends to have more buyer power since they can influence and create
trends that requires adaptation on behalf of restaurants (dark roast coffee)
Product Innovation:
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
Tim Horton’s originally started with its signature coffee which sold very well due to the
emphasis on freshness (only served within 20 mins) (added to it; dark roast)
 The chain focused on continuous product innovation by adding to its menu based on
consumer preferences (baked goods, beverages, breakfast options, soups and etc.)
 Product innovation in food industry influenced almost entirely by customer trends and
continuous (recently, moving towards healthier food choices)
 Companies that are able to provide new products first are able to gain control of the market
and hold consumers (responding and interacting with customer desires)
Number of Rivals:
 Tim Horton’s operates in the food industry, but more specifically in the quick service
category and focuses primarily on coffee, assorted beverages, and baked goods while
incorporating breakfast and lunch options as well (dominates Canadian scene)
 Tim Horton’s competes mainly with Starbucks and McDonald’s regarding coffee and their
breakfast menu respectively (many competitors but few large ones)
 Tim Horton’s controls 57% market share for breakfast and generates 42% share of traffic for
fast food restaurants in Canada
 Restaurant industry is highly fragmented and the 50 largest companies combining for 20%
of total revenue (high number of smaller food businesses)
Conclusion:
The industry is very big and highly competitive between big and small businesses. Tim Horton’s
has control of the majority of the market in Canada and continues to innovate and grow to
accommodate consumer desires and trends with competitors. The next step for Tim Horton’s would
be to develop in the industry on a global level to increase its international presence in foreign
countries.
1.3 Industry’s Competitive Forces: Porter’s Five Forces
Threat of Substitutes – High:
 There are various substitute products (coffee, donuts, tea) & competing restaurants in the
industry (Dunkin Donuts, Starbucks, McDonald’s)
 Growth of chains in breakfast (and/or lunch) category for quick service restaurants
Bargaining Power of Suppliers – Low:
 Tim Hortons gets coffee from the world’s coffee producing regions (South America)
 Suppliers in this industry do not have much bargaining power since all major restaurants
have multiple options when choosing which suppliers to deal with
Bargaining Power of Buyers – High:
 Tim Hortons is in a very competitive industry that must cater to customer desires
(sandwiches, Dark Roast blend, soups)
 Must adapt to consumer trends (healthy/quick/fresh/ethnic foods) (not adapting means
losing market share)
Threat of New Entrants – High:
 Only capital required for franchisees of same company and competing restaurants (barrier to
entry = not high)
 Increased competition in “quick service” industry as menu expands (McDonald’s,
Starbucks, Dunkin’ Donuts) to address new consumer trends and steal market share
Rivalry Among Competitors – High:
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

Companies competing directly (multiple coffee restaurants) & indirectly (breakfast
consumers) trying to gain advantage of market
Each restaurant has distinctions that cater to different tastes in the industry
Conclusion:
Overall, high industry growth and revenue suggests that while breaking into the industry and market
is hard (but doable), it is highly competitive and based greatly on customer needs and desires. The
industry is highly attractive and surrounded by strong competitive parties but restaurants, like Tim
Hortons, that are able to provide quick service and preferential food, will continue to perform
strongly among the competition.
1.4 Driving Forces
Increasing Globalization
 Numerous franchises are looking to capitalize on the international market and expand their
operations and brand globally (Tim Horton’s venture into US & Europe)
 Innovative technology and trade between countries allow companies to interact with
consumers on a global scale and reach markets previously unplanned for
Changes in Societal Concerns, Attitudes and Lifestyles
 Healthy living and focus on organic and fresh ingredients in food has become a lifestyle
 People are more conscientious of the food that they put into their (and their children’s) body
 Tim Horton’s (and many other fast food restaurants) have proven to be flexible in adding
menu options and changing current items to appeal to healthy eaters (salads)
Product Differentiation & Innovation
 Product innovation is what allows companies like Tim Horton’s to stay relevant (nutella
donuts) while drawing consumers and continuously growing (create own trends)
 Product differentiation is influenced greatly by main competitors (McDonald’s & Starbucks)
because it is important to see what works similarly and how to differentiate the company’s
brand (known for baked goods, added dark roast blend)
 Adding customizable options (assorted bagels) appeals to consumers
Conclusion:
Tim Horton’s can successfully expand into international market if they are able to emphasize on
product differentiation and innovation overseas (exotic products). Changing social trends has a huge
impact as a driving force seeing as Tim Horton’s operates in an industry where reacting to customer
needs is key.
1.5 Strategic Group Map Analysis
 This group map expresses Tim Horton’s need to expand & presence on a global level
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Strategic Group Map: Quick Service Restaurant Industry
High
Starbucks
Relative
Price
McDonald's
Tim Horton's
Low
-10000
0
10000
20000
30000
Number of Total Global Stores
40000
50000
Conclusion:
Although Tim Horton’s has performed exceptionally well in Canadian markets, McDonald’s and
Starbucks have a significant advantage on an international scale. The best place to be (as a quick
service company) is low or medium regarding relative price and with a higher number of total
global stores for companies aiming for higher international success.
1.6 Framework for Competitor Analysis
Tim Horton’s
McDonald’s
Starbucks
Dunkin Donuts
Competitor’s
Position
- Established in Canada
& looking to expand
globally
- Established on global
level with lots of
success
- Established in US with
growing global presence
- Established in
US with potential
to expand
globally
Competitive
Advantage
- Focus on coffee, baked
goods and breakfast
options with
continuously expanding
menu
- Focus on lunch and
dinner items with low
relative prices and
expanding menu
(McCafe)
- Focus on assorted drinks
and baked goods with
emphasis on customizable
menu items
- Focus on coffee
and huge variety
of donuts and
baked goods
Objectives
- Build on domestic
success by continuing to
expand globally while
remaining competitive
- Maintain global
success while
addressing sociocultural
changes in consumer
lifestyles & eating
habits
- Build on domestic success
with increasing global
presence
- Provide
consistent service
to consumers
while
aggressively
expanding
globally
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Overall
Capabilities
Strengths:
-strong existing market -provides innovative and
appealing menu options
Weaknesses:
-limited global presence
-bigger lunch and dinner
markets needed to
expand
Strengths:
-strong global market
-provides various menu
options at affordable
prices
Weaknesses:
-must adapt menu better
to address change in
eating habits towards
healthy eating
Strengths:
-strong existing market
-provides customizable &
unique menu options
Weaknesses:
-prices are relatively higher
-limited global presence
Strengths:
-strong US market
-provides variety
of specialty
products
Weaknesses:
-very limited
global presence
-limited menu
items
Conclusion:
Tim Horton’s has successfully taken advantage of its strengths to succeed thus far. It is now
important for Tim Horton’s to address its few weaknesses in order to successfully keep growing. A
couple of Tim Horton’s competitors (Starbucks, Dunkin’ Donuts) also have a limited global
presence so it is key for them to get a quick start before their competitors.
1.7 Industry Key Success Factors
Location:
 Fast food restaurants are able to capitalize on premium, dense locations (university,
downtown, residential, convenient areas)
 Some restaurants enter partnerships to control and target bigger markets (Wendy’s & Tim
Horton’s)
Low Costs and Pricing:
 Fast food restaurants maintain relatively lower prices since they don’t offer the level of
service as many fine dining establishments (quick food, quick service)
 Fast food restaurants tend to have lower operating and production costs resulting in lower
prices which bodes well for their target market (young adults, students)
Marketing:
 Many fast food restaurants use social media interaction (twitter, facebook) to generate
conversation, in addition to television and billboards to promote new items or promotions
 Loyalty programs allow restaurants to reward loyal customers while establishing a
relationship with them (CIBC Tim Horton’s card, Starbucks mobile app)
Conclusion:
Tim Horton’s has successfully taken advantage of many key factors applicable to their industry in
order to dominate the Canadian market and expand overseas. Furthermore, Tim Horton’s current
and future strategic plan depends on being able to build their brand in foreign markets
1.8 Overall Industry Outlook:
 Overall, Tim Horton’s has successfully controlled Canadian fast food markets and it has a
positive outlook concerning its strategic focus on further expanding internationally
 The restaurant industry in North America continues to grow each year (# of stores &
revenue) which allows for huge growth potential and possible customers
 Tim Horton’s has incorporated key success factors and driving forces to appeal to
consumers and remain profitable
 Barriers to entry are relatively weak in this competitive industry, however the market is still
dominated mostly by the bigger brands (Starbucks, Tim Horton’s, McDonald’s)
 Staying relevant in this fickle industry requires innovation, flexibility and consistency
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Appendix A: Internal Assessment
2.1 Financial Analysis
Performance
Indicators
2009
2010
2011
2012
2013
Total Revenues
$2,438,853
$2,536,495
$2,852,966
$3,120,504
$3,255,533
Revenue
Growth (%)
N/A
4.00%
12.48%
9.38%
4.33%
Sales
$1,704,065
$1,755,244
$2,012,170
$2,225,659
$2,265,884
Current Ratio
N/A
N/A
N/A
1.31
0.98
Debt/Equity
Ratio
N/A
N/A
N/A
0.92
2.20
Dividends per
Common Share
$0.40
$0.52
$0.68
$0.84
$1.04
Tim Horton's Revenue & Sales Analysis
$3,500,000
Year End Totals
$3,000,000
$2,500,000
$2,000,000
Revenue
Sales
$1,500,000
$1,000,000
$500,000
$0
2009
2010
2011
2012
2013
Year
10
Tim Horton's Revenue Growth
14.00%
12.48%
% of Revenue Growth
12.00%
10.00%
9.38%
Revenue
Growth (%)
8.00%
6.00%
4.00%
4.33%
4.00%
2.00%
0.00%
2010
2011
2012
2013
Year
Analysis:
 Consistent and steady growth in both sales and revenue for the last five years
 Revenue growth percentage has fluctuated in recent years but Tim Horton’s has been able to
sustain a positive growth percentage
 Recent lower growth percentages possibly due to heavy debt financing to pursue global
expansion
 Dividends/share has continued to grow which shows management’s focus on shareholders
and the belief that growth of company can be maintained
 The current ratio suggests that Tim Horton’s was in a better position the previous year since
a ratio less than 1 means that current liabilities are greater than current assets (1.31 vs 0.98)
 This is due to an increase in current liabilities along with a decrease in current assets, but it
could also be representative of Tim Horton’s confidence in investing in future expansion
 The debt/equity ratio portrays Tim Horton’s liabilities relative to value of its stock/equity
 A higher ratio indicates higher risk, but also that the company is aggressively trying to
finance its own growth (through the accumulation of temporary debt)
 Tim Horton’s commitment to global expansion is indicated by change from previous year(s)
Conclusion:
The chart and graph both show that Tim Horton’s has been able to generate sales and revenue
consistently (despite increase in liabilities relative to assets and equity). The indication that Tim
Horton’s is trying to expand its company by taking on temporary debt, while can be worrying for
investors, is supported by its continuous strong domestic presence and increasing revenue.
Increasing sales and revenue is also representative of Tim Horton’s ability to stay innovative and
appealing in a strong and competitive industry.
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2.2 Quantitative and Qualitative Analysis
Current Strategic Objectives:
 Tim Horton’s main goal is to enter international markets & compete for market control
 Increasing sales through marketing, investing in and building new markets, growing
innovatively, and leveraging their franchise system are core ideas for the “new era”
Vision: “To be a quality leader in everything we do”
Mission: “To deliver superior quality products and services for our guests and communities through
leadership, innovation and partnerships”
Business Objectives:
 Create above-market-average total shareholder returns through core ideas for future
 Projected 11-13% annual growth rate from 2015-2018
 Opening 800 new locations in North America & GCC (primarily US & western Canada)
 Operating income of $50 million in US
Competitive Approach:
Functional Strategies:
 To provide continuous product innovation in order to appeal to growing consumer tastes
 To establish itself as part of the Canadian culture via marketing and community involvement
 To use the experience and assistance of Burger King (and 3G Capital) to expand overseas
Business Strategies:
 To increase control over fast food industry and compete globally (3G Capital influence)
 To provide consumers with satisfying and convenient products and services while
encouraging consumer loyalty
Key Performance Indicators:
Increasing Yearly Sales and Revenues
 Tim Horton’s grew overall revenues and sales incrementally every year since 2009
 Tim Horton’s had 22nd consecutive year of same store sales growth (North America)
Increase in Brand Awareness and Growth
 Tim Horton’s was able to expand further into the GCC and western Europe
 Tim Horton’s was able to open 261 new locations in North America
 Tim Horton’s lacks in global revenue compared to major competitors (object of focus)
 Growth opportunities available in western Canada, Quebec and major urban markets
Conclusion:
By aligning all aspects of their strategies, objectives, and current strengths in the industry, Tim
Horton’s can take the next step in creating a stronger global presence by using influences and
indicators from what has made them successful in Canada.
2.3 SWOT Analysis
Strengths:
 Tim Horton’s has been part of Canada’s restaurant industry since 1967 and is now a symbol
of Canadian culture itself
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


It currently dominates Canada’s fast food industry in areas of coffee, breakfast options, &
baked goods
Appeals to diverse groups of consumers (students, young adults, healthy eaters and etc.)
Steady and consistent incremental growth of company and sales over the years
Weaknesses:
 Very (if not entirely) dependant on Canadian market and consumers
 Unable to successfully implement itself in international scene as strong competitor (like
McDonald’s)
 Main competitors have been able to take advantage of US market to establish themselves
early on
Opportunities:
 New Ownership by 3G Capital, which partially owns Burger King, can help Tim Horton’s
expand internationally based on personal and previous experience
 Opportunities to grow in the US are plentiful for Tim Horton’s but growing overseas in the
GCC or around Europe are harder to come by
 Tim Horton’s faces regular opportunities to innovate new menu items that might appeal to
consumers
 Introduce stronger loyalty rewards programs (ex. buy 10 coffees, get one free)
Threats:
 The food industry is highly competitive with relatively weak barriers to entry
 Tim Horton’s faces strong domestic competition from Starbucks and McDonald’s and will
face tougher competition trying to enter successfully into international markets
 Stagnant growth and possible ceiling in Canadian market if not supported by global
expansion
Conclusion:
It is of high importance that Tim Horton’s starts focusing more on opportunities and weaknesses in
order to add to its strengths. Tim Horton’s can no longer only on its strengths to be successful and
must focus on taking advantage of opportunities to expand on a global scale and compete in foreign
markets. This will allow Tim Horton’s to minimize the risk from the threats they face while turning
weaknesses and opportunities into strengths
2.4 Value Chain Analysis
Primary Activities
Inbound Logistics
-Tim Horton’s imports coffee from coffee producing regions
-Tim Horton’s Coffee Partnership
Marketing and
Sales
-Tim Horton’s associated with Canadian culture
-Rewards programs in place for customers (Roll up the Rim to Win)
-Marketing done through social media, tv and billboards
-Tim Horton’s known for low, competitive prices
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Outbound
Logistics
-3 manufacturing facilities, 6 warehouse distribution centres
-50,000 to 60,000 cartons of baked goods shipped worldwide
Operations
-Tim Horton’s known for product innovation and keeping up with
current trends regarding eating habits and choices
-Tim Horton’s must maintain quality control since they are working
with food and serving customers (20 mins coffee limit)
Support Activities
Infrastructure
-Recent acquisition by 3G Capital to help expand globally
-Current financing overseas growth by taking on temp. debt
-Menu items created with focus on customer preferences
Procurement
-Inventory management of all distribution centres and warehouses
-Integrating all facets of supply chain and coordinating operations
Human Resources
Management
-Hiring, training and promoting workers while developing skills that
will be necessary in line of work
Conclusion:
Tim Horton’s value chain allows it to efficiently deal with its resources while operating strongly in
day-to-day activities. Primary activities include dealing with production and distribution along with
actual operations and sustenance of the company, whereas the support activities work towards
building a strong foundation to support company operations.
2.5 Representative Weighted Competitive Strength Assessment
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Tim Horton’s
Key Success Factors
Importance
Weight
McDonald’s
Starbucks
Strength
Rating
Weighted
Score
Strength
Rating
Weighted
Score
Strength
Rating
Weighted
Score
1. Price
0.15
10
1.5
8
1.2
6
0.9
2. Quality
0.10
7
0.7
8
0.8
9
0.9
3. Brand Awareness
0.15
8
1.2
10
1.5
9
1.35
4. Marketing
0.10
8
0.8
8
0.8
8
0.8
5. Customer Service
0.10
7
0.7
6
0.6
9
0.9
6. Product Innovation
0.15
8
1.2
7
1.05
9
1.2
7. Global Market Share
0.15
6
0.9
10
1.5
8
1.2
8. Addressing Trends
0.10
9
0.9
7
0.7
8
0.8
Overall Rating & Sum
of Weights
1.00
7.9
8.15
8.05
Conclusion:
The Competitive Strength Assessment shows that Tim Horton’s must focus on brand awareness,
product innovation and increasing their global market share. While Tim Horton’s is strong in other
categories, these categories are representative of global competitiveness and success, and should be
focused on heavily for Tim Horton’s to grow further.
2.6 Strategic Issue/Problem
The main strategic issue that requires managerial attention is how to expand successfully into
international markets while becoming competitive overseas and staying competitive domestically
2.7 Supporting facts for the issue that requires managerial attention
 Food industry growth rates are stagnating and it is imperative for companies that are mostly
domestically situated to expand internationally so they aren’t limited by domestic growth
rates (1.1)
 Tim Horton’s faces lots of domestic competition, and would fare better if they had a global
market to support its domestic market (1.2)
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Tim Horton’s must compete with other companies that have international success using their
experience with product innovation and existing knowledge of consumers in different
markets (1.4)
Tim Horton’s can use strong marketing and their low pricing to create a strong foreign
market (1.7)
Financial analysis indicates that Tim Horton’s has already begun preparing for expanding
overseas based on increase in debt/liabilities to finance its own growth (2.1)
Tim Horton’s must also grow domestically (western Canada) while growing globally since
it is possible that they may reach a ceiling in Canada if market becomes too saturated (2.2)
Tim Horton’s depends too much on domestic success whereas competitors able to take
advantage of domestic and international success (2.3)
Tim Horton’s acquisition by 3G Capital was meant to help expand globally based on their
previous experience with Burger King (2.4)
Tim Horton’s is limited without strong global presence and will only be competitive
domestically (2.5)
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