Tim Horton's Inc in Consumer Foodservice (Canada)

STRATEGIC DIRECTION
¦ Tim Horton’s strategy is continued expansion to fill the gaps between highways and strategic locations in urban areas. The company has increased its outlet network in traditional and non-traditional locations across Canada.
¦ The player continues to focus on menu innovation and new product developments to capture ever changing consumer tastes and preferences within a highly developed and competitive Canadian marketplace. Additionally, Tim Horton’s announced plans to improve the popular Roll Up the Rim to Win contest, to attract more coffee drinkers to its outlets. Furthermore, new technological improvements, such as mobile payment options, are set to help maintain consumer traffic to the already popular Canadian chain.
KEY FACTS
Summary 1 Tim Horton’s Inc: Key Facts
Full name of company: Tim Horton’s Inc
Address: 874 Sinclair Road, Oakville, Ontario, L6k 2Y1, Canada
I Tel: +1 (905) 845 6511
Fax: +1 (905) 845 0265
www: www.timhortons.com
Activities: Operator and franchisor in bakery products fast food
Source: Euromonitor International from company reports, company research, trade press, trade sources
Summary 2 Tim Horton’s Inc: Operational Indicators
2011 2012 2013
Net sales C$2.0 billion C$2.2 billion C$2.3 billion (estimated)
Net profit C$385.7 million C$407.8 million n/a
Number of employees 3,295 3,690 3,925
Source: Euromonitor International from company reports, company research, trade press, trade sources
COMPANY BACKGROUND
¦ Tim Horton’s Inc is a Canadian publically-traded company headquartered in Ontario.
¦ The company was founded in 1964 in Hamilton, Ontario, by the former ice hockey player Tim Horton. Ron Joyce, the first franchisee, became a full partner in 1967. The company’s headquarters are in Oakville, Ontario. After Tim Horton’s death in 1974, Ron Joyce bought out the business and became the sole owner in 1975.
¦ In 1995, Tim Horton’s merged with Wendy’s International Inc. However, Tim Horton’s continued to operate as a separate entity. The merger helped the company to expand its operations across the border into the US.
¦ In March 2006, the company launched its first IPO (initial public offering). On 29 September 2006,
Tim Horton’s Inc was finally spun-off as a separate company. Since then it has achieved significant growth.
¦ The strength of the Tim Hortons brand traditionally lies in its coffee, but increasingly its menu offering. Although the business started by selling only coffee and doughnuts, the menu slowly expanded to include other items. In 1976, it launched the popular and successful Timbits, while it added a variety of muffins, cakes, pies and croissants in the 1980s. It has since added chillies and soups, sandwiches, breakfast wraps and special blended coffee to the menu. In 2012, the strategic goal included
developing menus for different times of the day, particularly the lunch menu.
¦ The company constantly innovates its beverage and food offers. The proprietary coffee blend is very popular in Canada, and it is also offered pre-packaged for sale within the retail channel in different flavours, including French vanilla, English toffee cappuccino and hot chocolate. This enables consumers to enjoy the player’s coffees at home and away-from-home.
¦ Tim Hortons enjoys iconic status in Canada.. It continues to strengthen its position in this core market, opening new restaurants throughout the review period to reach 3,498 in 2013. Tim Hortons also operates in the US, and the company has expanded into some Gulf countries. In 2012, 99% of Tim Hortons outlets were franchises.
COMPETITIVE POSITIONING
¦ Tim Horton’s is the leading company in consumer foodservice in Canada, accounting for an 11 % share of foodservice value sales in 2013. In fast food, it held a 25% share of foodservice value sales, to remain ahead of McDonald’s. In bakery products fast food, Tim Horton’s dominates with a 61% foodservice value share.
¦ Among the keystrategies is outlet expansion to fill the gaps left in highway and strategic locations in urban areas. Tim Hortons is also very active in menu innovation and new product developments, in order to compete for foodservice value share and to capture a wider consumer base. In 2013, new menu additions consisted of grilled steak and cheese Panini (the Extreme Italian Sandwich), a dark roast coffee blend and a hash brown that is 35% bigger than the standard product. A medium coffee and hash brown combo is priced at C$4.85 in 2013.
¦ Furthermore, Tim Hortons launched a new marketing campaign to promote the 50th anniversary of the brand in Canada. Consumers could buy beverages served in cups that feature the new 50th anniversary logo and 50-year tagline. The anniversary branding extends to doughnuts, muffins and Timbits boxes, bags and take-home coffee.
¦ Tim Hortons has announced improvements to its popular annual Roll Up the Rim to Win contest. The company aims to attract more coffee drinkers by offering two chances to win prizes on each cup purchased. Customers are invited to roll the rim, looking for prizes such as a new car, C$5,000 Visa prepaid cards, C$100 Tim Cards, and coffee and food products. A second roll gives the consumer the chance to win one of 10 new cars. An online contest, Roll Up Roulette, offers additional prizes. These contests are expected to help the player lure new consumers.
¦ In 2013, Tim Horton’s announced a new mobile payment option aimed at improving the speed of service and enhancing the customer experience. This payment option is predicted to become an essential part of the Canadian and US landscapes. As part of the company’s ongoing improvements to operations and consumer satisfaction, the m-commerce strategy marks an essential move in technological innovation.
¦ In 2013, Tim Hortons offered a new dark roast coffee blend. The brand is developing new coffee flavours to retain consumers. Tim Hortons Dark Roast, a brand-new blend made from 100% Arabica beans, is offered in specific locations across Canada and the US.
¦ Tim Horton’s was engaged throughout 2013 in humanitarian efforts. The company donated C$100,000 to support emergency relief efforts in the Philippines in the wake of Typhoon Haiyan. Although this move does not guarantee share growth, it boosts public awareness and the image of the restaurant brand.

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Guidelines for Conducting Case Analysis

Current Situation………………………………………………………………………….

Issue…………………………………………………………………………………………

Mission……………………………………………………………………………………..

Objectives……………………………………………………………………………………….

PEST Analysis:
Political…………………………………………………………………………….
Economic…………………………………………………………………………..
Social………………………………………………………………………………
Technology………………………………………………………………………..

External Analysis– Porter’s Five Forces:
Barriers to entry…………………………………………………………………….. .
The Bargaining Power of Suppliers……………………………………………….
The Bargaining Power of Buyers…………………………………………. ………
Competitive Rivalry…………………………………………………………………..
The Threat of Substitution………………………………………………………….

Opportunities……………………………………………………………………………
Threats……………………………………………………………………………………..
Overall evaluation of the external environment………………………………….

Internal Analysis:
Organizational strategy…………………………………………………………….
Value chain analysis………………………………………………………………..
Strengths…………………………………………………………………………….
Weaknesses…………………………………………………………………………
Market share……………………………………………………………………….
Overall evaluation of the internal environment………………………………….

Key Success Factors…………………………………………………………………………

Alternatives (Strategic Choice of Business Strategies and Corporate Strategies)

Criteria Matrix to Evaluate Alternatives ……………………………………………..

Recommendation…………………………………………………………………………….

Action Plan……………………………………………………………………………………

Contingency Plan …………………………………………………………………………….

References..…………………………………………………………………………………

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