Tim Hortons
Case Synopsis
The case covers the evolution of Tim Hortons from its acquisition by U.S. fast food chain Wendy's to its divestiture and reincarnation under Canadian ownership, and its new expansion challenges. While sketching in some detail the challenges and rewards of Tim Hortons' evolution, the case is ultimately an exploration of the growth challenge facing any successful Canadian business.
That challenge can be expressed in a number of ways:
• How to expand from a relatively small, dispersed Canadian market into the larger, more competitive and diverse U.S. market?
• How to continentalize - i.e. North Americanize - a national consumer company?
• What and where to expand, so as to benefit from the similarities of some U.S. border regions with Canadian climate and culture?
The case charts Tim Hortons' attempts to find an answer to this challenge.
Educational Objectives
The case is replete with significant management issues related to the expansion challenge, and each one can be a subject for additional research using the web references cited in the case or for class presentations and discussions.
Teaching Plan
Issues in the Case
1. Expansion by being acquired
The case poses the question who benefited from the acquisition-Wendy's or Tim's-and suggests that whatever the answer, it would become clear from the company's performance after it returned to Canadian ownership, following its divestiture by the U.S. acquirer.
2. The competitive environment for "fast foods"
Fast food succeeded in reducing outside home dining to a routine activity and raised consumer restaurant spending to nearly 50 per cent of disposable income at a time of enormous social and demographic change. But the future looks less rosy and in particular cites an aging population and the rise of in-home fast food as major threats.
3. Marketing vs. Supply Chain Management
The case also underlines a major weapon in Tim's arsenal of competitive strengths-the "always fresh" ability to keep "fresh today" donuts stocked in every outlet. This is a significant achievement in supply & distribution chain management. But is it also an impediment to expansion?
4. Expansion by partnering with complementers (e.g. Wal-Mart)
Is this a viable approach to meeting competition? Or does it pose risks that are outside the control of the company, such as the ability of the complementers to ensure a top-notch customer experience?
5. Technology
How can a food service chain like Tim's gain a competitive advantage from technology? The case mentions cash cards, but also notes that these are easily matched by competitors like Starbuck's, Second Cup and MacDonald's. Are there any other applications of technology that would yield sustainable advantage? (e.g. Customer Relations Management, Employee Resources Management, Supply Chain Management, Global Positioning Systems, Web 2.0, SMS texting, RSS feeds, etc.?)
Strategic Analysis
The case can also be used for an exercise in analyzing company competitive advantages using (i) Michael Porter's 5 forces model and (ii) drilling down into the company's ability to create and sustain an appealing value proposition. Two other competitors are mentioned in the case-Dunkin Donuts and Krispy Creme. Students can be assigned to examine the value proposition of each company and compare it to that of Tim Horton's.
In this connection, students should be asked to compare company goals, the company's product /market focus, its "value proposition" to attract and retain customers and the core value adding activities and how they are performed.
An excellent guide is Crossan, Fry and Killing (2002-5th edition) Strategic Analysis and Action, Prentice Hall
Additional Factors
The case focuses on Tim's "Always Fresh" performance. But Tim's has also added another feature in its low cost small meals, usually consisting of soup and sandwich and similar choices. Apart from being an alternative fare to burgers and fries, these choices appeal in particular to an aging demographic, as is readily evident from a visit to any Tim's in off peak hours.
Finally, a point the case does not comment upon: the company's success in identifying its goals with those of the communities in which it does business. Perhaps only Canadian Tire has succeeded as well in building local presence across Canada. By building on the halo of values surrounding hot drinks and comfort food, Tim's has succeeded in becoming a valued member of every community served by its franchises. Its presence alongside Canadian troops in Kandahar is a symbol of its commitment and its success in achieving status as "a little bit of home" in the Canadian market.
Questions for Discussion
1. Who benefited from the acquisition, both in the short and long term, Wendy's or Tim Hortons? How and why?
2. How can national companies compete stratetically on both sides of the border, especially given the nature of American advertising markets versus the national nature of the Canadian advertising market?
3. Is Tim Hortons' company supply chain (the three-channel distribution system) based on a regional warehouse distribution structure an impediement to future continental expansion?
4. As a wholly Canadian icon, can Tim Hortons capitalize on this iconic status south of the border? How much value does Canadiana have beyond the borders of "The Timbit Nation"?
Relevant Courses
This case is suitable for class discussion materials and for courses in international management, international business dealing with corporate strategy as well as business-government relations, either at the advanced undergraduate or graduate level.
Useful Links from PNA
- A Capital Story - Exploding the Myths Around Foreign Investment in Canada
- Agri-Food Investment - Winning in North America
- Commentary on "The Case Against Continental Deep Integration"
- Enhancing Competitiveness in Canada, Mexico and the United States
- Integrative Trade, Industry Supply Chains and Trade Policy: A Background Note
- Potential for Further Integration of Agri-Food Markets in Canada in the United States
Suggested Bibliography
Austen, Ian (2007). "Northern Overexposure." The New York Times, September 8, Section C; Column 0; Pg. 1.
Barnes, Angela (2007). "Analysts expect Tim Hortons to deliver a batch of profits," The Globe and Mail, October 26, Pg. B13.
Beam, Alex (2008). "Canada's holey icon: Our eyes glaze over." The Boston Globe, April 12, Pg. D8.
Beltrame, Julian (2008). "Holey price flap! Even doughnut, coffee from Tims costs more here." The Chronicle Herald, June 12.
Buist, Ron (2003). Tales from under the rim: the marketing of Tim Hortons. Goss Lane Editions.
Dobrota, Alex (2006). "Would move home be sweeter for Tims?; Analysts see benefits, despite U.S. growth." The Globe and Mail, July 6, Pg. B4.
Griffiths, Rudyard (2006). "Timbit Nation? Say it ain't so, eh." The Toronto Star, July 23, Pg. A17.
Hartley, Matt (2007). "Tim Hortons sets up shop in Wal-Mart." The Globe and Mail, September 14, Pg. B5.
Joyce, Ron (2006). Always Fresh: The untold story of Tim Hortons by the man who created a Canadian Empire. Harper Collins Canada.
Porter, Michael E. (1980). Competitive Strategy: Techniques for Anlayzing Industries and Competitors. Free Press.
Powell, Naomi (2008). "Hortons misses target; Rolling ahead with aggressive expansion plans." The Hamilton Spectator, May 3, Pg. A18.
Shaw, Hollie (2007). "Horton sees some U.S. shops go stale; Store sales poor." National Post's Financial Post, May 29, Pg. FP1.
Strobel, Mike (2007). "Ah, nothin' like a hot cuppa from Timmy's, but across the border sales are growing cold. Let's take a closer lok at this sacrilege." The Toronto Sun, July 6, Pg. 6.
Viswanathan, Leela (2007). "On Tim Hortons and Transnationalism: Negotiating Canadianness and the Role of Activist/Research," in Luin Goldrign and Sailaja Krishnamurti, eds., Organizing the transnational: labour, politics and social change. Vancouver, BC: UBC Press.
Whitman, Janet (2008). "Tim Hortons' Toughest Foe; With 2,100 stores in the region, New England is Dunkin' Donuts turf." National Post's Financial Post, February 23; Pg. FP3.
Won, Shirley (2007). "Winning mix fuels Tim's growth; Loyal customers, innovative products, expansion spell long-term run, analysts say." The Globe and Mail, October 8, Pg. B8.
Suggested Web Resources
Canadian Restaurant and Foodservices Association (CRFA): http://www.crfa.ca/.
Tim Hortons: http://www.timhortons.com/.
Wendy's: http://www.wendys.com.
Note: PNA is committed to encouraging intelligent discourse among our members. Comments are moderated by PNA, in accordance with the PNA Comment Policy. PNA does not necessarily endorse any of the views posted below.
5 Comments
Thanks for sharing. I just readout interesting website’s your informative topic. I appreciate your thought about US planing. It’s really so useful for all especially for me because I want to get knowledge of every kind. I just want to say that your describing sense is so nice and easy to understandable therefore, I appreciate and love it. Thanks again.
_________________
icnd training
Canada.com: Tim Hortons strikes gold; opens at Fort Knox
(10/12/2009)
Tim Hortons has broken into Fort Knox. The iconic Canadian coffee and doughnut chain, announced Tuesday the opening of a franchise at the American landmark.
Read more: http://www.canada.com/news/Hortons+strikes+gold+opens+Fort+Knox/2095941/...
CTV: Harper says tax policy helped repatriate the Timbit
The repatriation of the Timbit was held up by Prime Minister Stephen Harper and Tim Hortons executives Wednesday as a shining example of low corporate tax rates luring business to Canada.
Read more: http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090923/tim_hortons...
Financial Times: New frontiers top the menu
(Excerpt) As Tim Hortons is well aware, Canada’s corporate history is littered with retailers that have had their fingers burnt trying to repeat success at home in the US and beyond. But the chain’s management believes its expansion plans, which include catering to local tastes and focusing on convenience, will stand it in good stead. “There is no question that it is a Canadian company,” says Don Schroeder, chief executive. “Is it a business that is transferable? Absolutely.”
Read more: http://www.ft.com/cms/s/0/e278b726-9277-11de-b63b-00144feabdc0.html
Each Teaching Note is geared towards a variety of disciplines and can benefit from feedback by instructors.
Please help enhance this Teaching Note - to share with the community how you've used this resource and what teaching methods were most effective, we invite you to become a member of Portal for North America.
