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Tim Hortons- Case Study and Analysis Alen Alexander Mathew, Dhruv Pateliya, Jasmeen Kaur, Manan Shah, Ishneet Singh and Vinitha Varghese Business and Project Management, Vancouver Community College MGMT 1003: Principles of Management Laurel Xiao July 19, 2020

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Abstract Tim Hortons (1964) is a quick-service restaurant chain, uniquely famous for coffee and doughnuts. In this research paper, the company's management is analysed based on PESTEL, SWOT, strategic management, decision-making process, organizational structure, and motivating employees and customers. TH statistically rules 57% of Canada's fast-food chain with its staple food products and quick service stands. It uses the corporate strategy of growth- concentration and horizontal integration, and the business strategy of cost leadership and differentiation, which has helped it achieve a sharp brand image. Its technology is one of the essential ways of being competitive in a highly competitive market. The Decision-making process includes how decisions regarding their franchise and CSR initiative, like children's foundation & environmental stewardship, contribute to improving its public image. Tim Hortons follows a centralized structure with various vital features. Employees and consumers at Tim Horton get visibility of their future, and that becomes a motivating factor. Other factors include- coffee break sessions, distribution leadership essential programs, and supply chain passport programs. All in all, the organization is looked at through the lenses of various management concepts, studying what has contributed to its success and what are the factors that need more attention. Keywords: Tim Hortons, PESTEL, SWOT, Strategic Management, Organizational Structure, CSR, Motivating factor

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About Tim Hortons Mission "To deliver superior quality products and services for our guests and communities through leadership, innovation, and partnerships." Vision "Our vision is to be the quality leader in everything we do." Goals -Establish a leadership position in sustainability that reflects our commitment to doing the right thing. -Understand stakeholder perspectives on any given issue and consider their views in decisionmaking. -Minimize the potentially negative impacts of franchisee operations -Create positive change that benefits individuals, communities, the planet, and our business Critics The mission statement of TH shows that the company gives its customers utmost importance. Franchises are also designed in a way that customers feel the traditions that are embed in TH. TH has remained true to its mission of contributing to the community by programs that support the society as a whole. However, the lack of innovative products to improve the market share is considered as one of the main criticisms faced by Tim Hortons. Moreover, inefficient franchisee management is also regarded as a vital concern since the disputes have reported to arise between several franchisees of TH. The goals of TH are designed as to accommodate future changes. In my opinion, the traditions associated with TH should also be included in the goals as help to build a personal and gradual relationship between the company and its customers.

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PESTEL Analysis Economic Factors The economic factors that are of concern to Tim Hortons include the cost of living, interest rates, wage rate, inflation, exchange rate, growth of the economy, and the working hours. These are very elemental factors because they tend to determine the financial bag weight for Tim Hortons. For instance, with a high inflation rate and high wage rates, there will be a high expenditure for Tim Hortons, and the food prices will also tend to go up (Saltzman, 2018). Resultantly, the customer traffic at Tim Hortons will go down significantly, which will mean that the turnover rates for the company will also shrink to a great extent. Another factor in the economic lane that would be beyond the control of Tim Hortons would be an atmosphere of inflation. Inflation would mean that the economy grows negatively and that the people will not have money to spend on secondary products like fast foods. Likewise, people tend to spend on only what they need fundamentally rather than spend on what they can do without. This would mean a great fall in the performance output of supply chains until stability is achieved back in the country of operation. Technological Factors Companies in different industrial lines are relying on mobile and digital technologies to interact with their customers in aspects of providing information, engagements, and transactions; a good example of this is the CIBC Tim Horton's card (Cepel et al., 2018). Social media has also brought a new platform where organizations can advertise their menus, experiences, promotions and food quality. Today, Tim Hortons would not need to use a lot of finances that they would have used before to market their products, as, with social media, they can have all their products marketed to the target audience. The challenge comes in that everyone has the opportunity of advertising. Therefore, even the competing firms will have the opportunities of marketing

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what they have to offer. This brings a position where the company who uses the best out of media elements will end up having the advantage. The use of, for instance, CIBC Tim Horton's card has been of great importance in promoting the organization. A lot of customers use the card because of the redeemable points and cash, making them want to come back to buy more from the supply chains. The cards have created a community of "the Tim Hortons Society" who share the advantage of the Double-Double Visa Card. The card has also created value for the customer's money, and worth for the Tim Hortons services. SWOT Analysis Strengths Tim Horton has a very significant presence and brand image in Canada. The firm has, for a long time, focused on customer trends placing a lot of stress on good and fast service to customers. The company has established itself as a fast-food restaurant chain that specializes in doughnuts, coffee, and a lot of other fast food products. It holds the position of the largest quick-service restaurant in Canada. Tim Horton had 4,846 restaurants in 14 countries as per December 31, 2018 (Tim, Hortons, n.d). The company holds 57% of the hot breakfast sandwich market in Canada. Weaknesses The greatest weakness of Tim Hortons is that it has a less established market outside the base country, Canada. Compared to other joints, Tim Hortons is very limited when it comes to the beverages; they offer with the likes of competing Starbucks offering a variety of options. As of 2010, there were numerous joints opened in the North East of the United States that had to be closed due to non-functionality. The current ratio, a quick ratio of the company, was not up to the mark, and the growth in 2013 was below the target of 2 to 4 percent in Canada and 3 to 5 percent in the U.S.A.

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Opportunities One of the most significant opportunities that Tim Hortons has in the contemporary world is exploiting modern technological advancements in different aspects. For one, they have the social media platforms to make the best use of when it comes to marketing. With social media, Tim Hortons can get a cheap and effective channel of marketing their products to the target audience. And since the brand Tim Hortons is positively a big one, immersing a huge followership will not be something to struggle for. In the operation aspects too, Tim Hortons can make use of their financial capability to bring forth machinery and devices that will aid in quality production. Threats The biggest threats to Tim Hortons revolve around the economic conditions of the states and the people. In such a time as now, when the world is at the grip of a pandemic, many people's financial capability is strained. Therefore, there are a lot of people who could afford a luxury like fast foods at Tim Hortons, but at the moment, they do not have the purchasing power. On the same lane, with the increased competition being faced by Tim Hortons, workers might tend to ask for higher wages if they have to stay in the company (Saltzman, 2018). In return, this would mean that Tim Hortons would have to increase food prices to balance the financial bag; resultantly, the customer traffic at the organization would go down. Strategic Management Corporate Strategy Tim Hortons has always focused on the corporate strategy of 'growth,' expanding itself through 'concertation', and 'horizontal integration'. Concertation. Starting from a single shop selling coffee and doughnuts, it has expanded over 4846 restaurants in 14 countries as of 2018, making it the worlds' third-largest quick-service restaurant company. TH has made itself visible by opening restaurants at the location of daily

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use, such as offices, health care locations, educational institutions, sporting venues, gas stations, etc. It has always adapted itself to the consumers' changing tastes and constantly developed its menu. In the 1970s to 1980s, muffins, croissants, soups, etc. were added. It included sandwiches, bagels, flavoured cappuccino, bacon, etc. in the 1990s to 2000s. The menu has remained thriving to increase order size either by adding new innovative products or by providing varieties in the same product. Horizontal Integration. In 1992, it merged with Wendy's International Inc. But in 2006, it became a separate corporation as Tim Horton Donut Limited (TDL). Its growth took a high fly when it was merged with Burger King Worldwide Inc. in 2014 by 3G Capital Partners, who put both under Restaurants Brands International (RBI). It got not only the monetary assistance but also the 14000 locations of Burger King (BK) to expand itself. Together, they make about 23 billion sakes over 18000 restaurants in 100 countries. The collaboration started giving a tough competition to McDonald's for providing breakfast and coffee. Business Strategy Tim Hortons has achieved success through the business strategy of 'cost leadership' and 'differentiation'. Cost Leadership. The cost is a crucial factor behind TH's sales. It has cut down its operating expenses by reducing employment overlap. By enjoying the economies of scale, outsourcing, and internal distribution, it has been able to provide quality products at affordable prices. For example, the price of muffin (2014) at: TH - $1.29 McCafé - $1.90 Starbucks - $2

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Differentiation. It enjoyed a distinct brand image with its motto of 'always fresh.' "And without fresh coffee and products, Tim Hortons would not have been able to differentiate itself from what could be purchased in corner stores and gas bars." (Joyce and Thompson, "Always Fresh", 2006, pp. 115-117). Moreover, the company has been very responsive to consumer demand. "It has differentiated itself by listening and responding to its consumers and penetrating into an expansive niche market." (Weatherly, 2016, p.32). Many customers buy products at affordable prices. TH not only offers the cost-benefit but also has a good brand image. Together these factors, boost the sales. Fig.2 Customer review on TH products

Note: (Retrieved from https://www.tripadvisor.in/) Organizational Structure Tim Hortons is mainly owned by RBI (Restaurants Brand International) and managed by an investment firm 3G Capital owned by Brazilian billionaire Jorge Paulo Leman. RBI has more than eight major and several other minor subsidiaries like Tim Horton, Popeyes, and Burger King. Restaurants Brand International RBI is the fifth largest operator of fast-food restaurants in the world. With headquarters in Toronto, Canada, the majority (51%) of the shares are owned by 3G capital. It has a total of

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25,744 locations and total revenue of 5.5 billion worldwide. Subsidiaries of RBI are Tim Horton, Burger King and Popeyes. Features of Tim Horton's Organizational Structure Global Centralization. Tim Horton basically follows a centralized organizational structure in which the major decisions are being taken by the core management hierarchy. Since the acquisition by RBI, almost all key positions are being managed by RBI themselves. Functional Groups. Almost all organizations that have a global presence has a functional group which implements their work in the firm. Tim Horton, too has function-based groups to carry out their operations worldwide. Tim Horton has an Executive Vice President (EVP) for Supply Chain, EVP for HR, and an EVP for Tim Hortons USA. Geographical Structure. Since Tim Hortons operations are global in nature, the organizational structure is divided into various geographical divisions. This feature helps the organization to adapt strategies and techniques in order to cope with their competition. North America, Europe, and Asia. Evaluation of Tim Hortons organizational structure Tim Hortons continues to expand on a very progressive rate with new franchises all over the world. For a company that aspires to grow globally, a decentralized structure might encourage innovation and flexibility to environmental demands. However, in my opinion, considering the size of TH, they would benefit more by having a centralized system that will ensure uniformity between franchises. Having a functional structure increases the productivity among workers as tasks are not overlapped. Another advantage would be clear lines of management that build accountability among employees. TH has a geographical structure that allows improved corporate communication among franchisees and the central office. However, it is often observed that because the

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organization is centralized, TH regional divisions often take too much time to adapt to market trends. Figure 1. Corporate Structure for Tim Hortons, 2018

Note. Reprinted from Cogmap. Tim Horton corporate structure. (2018, September 15). Retrieved from file:///C:/Users/user/Desktop/Tim%20Hortons%20Corporate%20Structure%20Organization %20Chart%20_%20Cogmap%20Org%20Chart%20Wiki.html

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Recommendations I believe that the easiest way to create an efficient organizational structure for Tim Horton is by designing one which suits its requirements. Doing this allows to create a management structure that best matches the needs of the company's business model, rather than one that best suits the needs of their current staffing levels. TH could experiment by implementing product-based division, which would improve their product development. In the past years, Tim Hortons is seen to provide increasing importance to global expansion over customer satisfaction. This can prove fatal to TH in the long run. To sustain, it is essential that the employees at TH outlets are trained adequately to keep up with customer requirements. Decision Making Franchisee management With over 4900 units worldwide, Tim Hortons must have a very strong franchisee ownership strategy. According to (Tim Hortons: Frequently Asked Questions, n.d.) every restaurant owner is entitled to establish their employment policies and is responsible for managing the restaurant. The owner can also decide the optional products the restaurant will have, based on the local demand. However, the franchisees are only allowed to buy the merchandising supplies and raw materials either from TH or from its authorized suppliers. From 2002, TH follows a centralized baking system (called 'always fresh' doughnuts) in which designated warehouses mass-produce the products for franchises within a particular locality. By following this strategy, TH was able to eliminate the differences in size and shape of the donuts as well as the lack of availability of skilled bakers in franchises. Corporate Social Responsibility Tim Hortons offers a lot more than just good coffee and donuts. The wide range of community initiatives put forward by TH contributes to its global success. The CSR of TH is

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based on its commitment towards Communities (E.g., TH Coffee Partnership & TH Children's Foundation), Planet (E.g. Environmental Stewardship & Supply Chain) and Individuals (E.g. Increasing nutritional value and food safety). Children's Foundation. Tim Hortons Foundation Camps supports kids from disadvantaged circumstances between the ages of 12 to 16, at the time in their lives when they are determining who they will become as adults (Who We Are: Tim Hortons® Foundation Camps, 2020). The main goal is to build skills such as leadership and responsibility that will help the children thrive through difficulties in their life. Through this foundation, TH addresses the issue of unequal opportunities provided to children due to differences in economic backgrounds. Most of the supporters will be happy to be involved, considering the emotional value it carries. In my opinion, this initiative has a positive impact on the kindness and brand awareness put forward by TH. Environmental Stewardship. The adherence towards the betterment of our planet is exhibited through various sustainable approaches at TH. This includes minor and major scale decisions such as using eco-friendly packaging to green building design. In addition to these, TH uses waste-reducing raw materials for the production of its merchandise as well as provides funding for recycling in households. The sustainability approach is a very popular term nowadays. People are more drawn to companies that have a lesser impact on the environment. By using greener practices, Tim Hortons can save on not only energy but also on the money spent on operational activities. In-store initiatives. The customers are motivated to buy particular items like 'Smile Cookie' because proceeds from their sales are directed to charities in the community. People, therefore, make purchases on them at Tim Hortons to support the vulnerable in the society. For Canadians, Tim Hortons is more of a tradition for the country, having been around for a

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very long time thereby accruing loyalty to it. The organization being culturally aligned to their ways of life makes customers support their causes even more. Recommendations Franchisees are the point of contact between a company and its customers. In the past, Tim Hortons had trouble with its franchisee association over "always fresh doughnuts." The franchisees claimed that this system was overpriced, making them unable to donate for charity because the profit margin had reduced considerably. The lawsuit was discussed in the media, which in turn took a toll on the public image of TH. In my opinion, it is essential that TH involves their franchisees and develop sustainable practices that will lead to successful future endeavours. In terms of CSR, Tim Hortons provides an example to its competitors by implementing very effective initiatives in various sectors. However, there are still areas in which TH could improve itself. The plastic cups produced by TH were found to be a main source of litter along the shores of Canada in 2019. Introducing recyclable and reusable products would help to increase the sustainability of TH's products, bringing a positive impact on environmental systems. This will, in turn, help in attracting more customers and earning loyalty, thereby increasing Tim Hortons' overall revenue. Employee Motivation Tuition Reimbursement Program The organization offers financial support to the permanent full-time employees who were finalizing on programs/courses in accredited educational facilities that lead to a certified certificate, diploma, or degree. The pursued course should relate to the immediate position of the employee or a position that is within a significant career path (Lin et al., 2016). As of 2014, there were 43 employees incorporate in the program, costing Tim Hortons

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approximately $ 40,000 of financial aid for the support of their employees and organizational development. Coffee Break Sessions These internal sessions by the organization are meant for the Senior Leadership Teams to discuss the tactical priorities and organizational process. The main objective of having them was to enlighten the employees about Tim Hortons' ...