Business Analysis Report: Tim Hortons Strategic Overview

This report provides a strategic analysis of Tim Hortons, a major player in the Canadian quick-service restaurant industry, focusing on coffee and baked goods. It begins with an executive summary and table of contents, followed by an introduction outlining the importance of strategic analysis for business competitiveness. The report delves into industry analysis, examining market growth, key competitors like McDonald's and Starbucks, and critical success factors such as value proposition and customer experience. It explores the economics of the industry, highlighting revenue trends and profitability. External business factors, including political, economic, social, and technological influences, are analyzed. Market analysis identifies Tim Hortons' target demographics and demand dynamics, emphasizing the significance of coffee culture in Canada. A firm analysis details Tim Hortons' history, product offerings, store locations, revenues, and business model. The report then assesses the company's business-level strategies (cost leadership and product differentiation) and corporate-level strategy (business growth). Finally, it addresses organizational issues, strategic problems, and potential solutions through cost-benefit analysis, offering recommendations for the company's future and suggesting an implementation schedule.

Running head: BUSINESS ANALYSIS
Business analysis
Name of the student
Name of the university
Author note

1BUSINESS ANALYSIS
Executive summary
The aim of this report is to discuss about the firm and industry analysis of Tim Hortons. The
industry where they are operating is critically analyzed and different insights had being gained.
In addition, the major external factors relevant in the business operation of Tim Hortons are also
identified and discussed in this report. This report identified that intensity of competition is high
for Tim Hortons with the presence of number of competitors. Moreover, it is concluded that they
should initiate market development strategy to overcome the challenge of limited market
presence. Associated costs are also discussed for the implementation of the plan.

2BUSINESS ANALYSIS
Table of Contents
Introduction......................................................................................................................................3
Industry analysis..............................................................................................................................3
Economics of the Industry...............................................................................................................4
Determination of the external business factors................................................................................4
Market analysis................................................................................................................................5
Firm analysis....................................................................................................................................6
Determination of the business level and corporate level strategies.................................................7
Organizational analysis....................................................................................................................7
Identification of strategic problem...................................................................................................7
Generation and Evaluation of Alternatives (Strategic Cost Benefit)...............................................9
Recommendations..........................................................................................................................11
Implementation schedule...............................................................................................................11
Reference.......................................................................................................................................12

3BUSINESS ANALYSIS
Introduction
Strategic management analysis is one of the major ways for the contemporary business
organizations in the determining the competitiveness in the market. This involves analysis of the
current situations of the business on the basis of different tools and models and identifies the
strengths and weaknesses of the firm. Thus, the more effective will be the process of strategic
analysis for the business firms, the more will be the potentiality for long term viability of the
business. This report will discuss about the strategic analysis of Tim Hortons on the basis of
different perspectives. Tim Hortons are the largest quick service restaurant in Canada and is
majorly catering to the customers seeking coffee and donut items. Thus, they are operating in the
confectionery industry (Ashton et al., 2014). However, in the recent time, the intensity of the
competition for Tim Hortons is increasing with the entry of the global competitors. Hence, it is
important for Tim Hortons to analyze their current situations, which will be discussed in this
report. This report will involve industry analysis, market analysis and firm analysis in order to
identify the key strategic issues of Tim Hortons. On the basis of these issues, cost benefit
analysis of the alternatives will be discussed as well as a few recommended steps.
Industry analysis
It is reported that the number of coffee and snacks shops witnessed tremendous growth in
Canada in the last few years. This is in line to the increase in the coffee consumption of the
average customers in the country. One of the major reasons behind the emergence of this
industry is the busier lifestyle of the customers, which is further contributing in increasing the
footfall of the targeted customers. It is reported that that this industry will have more than $5
billion as revenue and it is also forecasted that this industry will have 4.8 percent of growth rate
by the end of 2019 (Barrows et al., 2016). Thus it can be concluded that the overall attractiveness
of this industry is positive and the firms operating in this sector will witness growth in the
coming years. Some of the major competitors of Tim Hortons are Burger King, McDonalds,
Dunking Brands and Starbucks. Thus, the intensity of the competition is high for Tim Hortons in
the Canadian market. From the industry analysis, a few critical success factors are identified to
be successful in this sector (Richelieu & Korai, 2014). One of the major success factors is the
value proposition. This refers to the fact that customers expect the maximum value in this
industry and cost is not a major determining factor. This is due to the reason that premium

4BUSINESS ANALYSIS
pricing and positioning is well evident by different brands in this industry. However, the
customers are expecting maximum value and return from their pricing. Thus, the more will be
the value proposition for the customers, the more will be the chance of getting succeeded in this
industry. Another major success factor is the experience. This refers to the fact that customers
are expecting higher sets of experience in the buying process. Thus store ambience and service
process of the players operating in this sector determines the extent to which they will be
succeeded in this industry. It should be noted that this industry is operating in the service sector
and thus the quality of the service delivery process and the customer management approach
determine the extent of success.
Economics of the Industry
The profitability in the fast food industry in US has increased over the years through
observing increase of around 30% of the industry sales. Cost and revenues in the US fast food
industry is observed to increase at a rate of 2.5% each year that is recorded to be around $570
billion in the year 2018 (Moubarac et al., 2017). In addition, analysis of the market statistics also
indicated that the revenues of US food industry was $200 in the year 2015 that attained
tremendous growth since the year 1970 that increased from $6 billion to $570 billion.
Determination of the external business factors
Political and legal
factors
Political factors are having influence on this industry due to the
reason that if the region of operation is not stable, then the business
viability will also be lower. It should also be noted that legal
amendments being initiated for the business organizations will also
affect the business operation (Stokes, 2013). For instance, attracting
the foreign investment in this sector increased the competition for the
domestic players.
Economical factors Stability of the national economy determines the extent to which the
confectionery industry will survive. If Canada is having positive
growth in terms of their national economy, then this industry will also
witness growth and vice versa (Anderson & Sutherland, 2015). In
addition, the intensity of competition also determines the viability of

5BUSINESS ANALYSIS
the operating firms. This is due to the reason that the more will be the
competition in the market, the lower will be the profit margin and
sales volume for the business firms in this industry and vice versa.
Social factors Social factors are having huge influence on this industry due to the
reason that taste and preference pattern of the customers determine
the business viability. This is due to the reason that if the current
trend of coffee consumption in Canada gets changed, then it will be
challenging for the operating players including Tim Hortons in
coping up with these changes. Thus, the more rapid will be the
change in the taste and preference pattern of the customers, the more
will be the challenges for the business firms in this industry.
Technological factors Technological factors involve the technological advancements to be
practiced by the business firms in this industry. In the case of Tim
Hortons, they have involved updated technological practices and
processes. However, it should be noted that huge cost and investment
is involved in the development of the new technology, which will
only affect the business viability of the firms. Moreover, the use of
updated technologies can help in increasing the service efficiency and
reducing the average cost of operation.
Market analysis
The major target groups for this confectionary industry are the teenagers, young adults
and adults. The major reason behind the suggestion of these wide age groups is the wide
acceptances of coffee and other bakery items across all the age groups. Teenagers aged between
18 and 25 are preferring the café and quick restaurant concept due to their modern take on
customer service and casual environment (Bookman, 2013). In this case of this age group, the
store ambience and experience matters the most. Furthermore, the young adults prefer this
industry as an integral part of their busy corporate and professional life. They are expecting
faster service and cost effectiveness, which both are offered by this industry. On the other hand,
the preferences of the aged groups are based on the core product level, which denotes that they

6BUSINESS ANALYSIS
prefer this industry in order to have foods with proper taste and quality. In line to this
expectation, Tim Hortons is positioning themselves as the provider of always fresh coffee
(Bookman, 2014).
As per the reports, the current state of demand of coffee in Canada is favorable due to the
reason that 72 percent of the total population of Canada is having coffee as their regular drinks.
On the other hand, it is also reported that average Canadian drinks 3.2 cups of coffee per day.
This denotes that the trend of coffee culture is well accepted and deeply penetrated in the
Canadian society and it only poses higher sets of opportunities for the firms such as Tim Hortons
(Alwash, Savarimuthu & Parackal, 2016). However, it is also identified that majority of the
Canadians prefer to drink coffee inside the room or at their conveniences rather in any café or
restaurants. Thus, in terms of the demand dynamics, it is a major challenge for Tim Hortons in
attracting the customers.
Firm analysis
As discussed earlier, Tim Hortons are the largest quick service restaurant and café in
Canada. They are founded in 1964 and thus carry a rich and long heritage. This is also enabling
them to leverage on the higher customer recall value in pushing the sales of their new products in
the market. As of 2018, Tim Hortons are having their stores across 4800 locations in different
countries majorly in the Middle Eastern region. In 2018, the revenue of Tim Hortons stands at
3.29 billion US dollar. Products of them include coffee, tea, cold beverages, and breakfast items
including sandwiches, salads and soups (timhortons.com, 2019). Baked items are also being
offered by them. One of the major advantages that are being gained by Tim Hortons from having
this diverse portfolio is targeting and catering diverse sets of customers. In terms of technologies,
Tim Hortons are trailing behind some of their global competitors such as McDonalds and
Starbucks. This is due to the reason that Tim Hortons are having lower sets of operations
compared to the above mentioned competitors.
One the basis of business model canvas, it is identified that key partners of Tim Hortons
are the franchisees who are operating the stores across the world. In addition, the suppliers
including the quality coffee beans suppliers are also their partners. Effectiveness of these
partners determines the business success of Tim Hortons. Key activities of Tim Hortons include

7BUSINESS ANALYSIS
offering café and restaurant facilities and positive ambience to the customers. Key resources of
them include access to higher sets of financial resources, diverse human resources and brand
identity. Value proposition include the distinctive items offered to the customers including the
unique tastes. In terms of the customer relationships, dedicated process is maintained. In terms of
cost structure, employee remuneration and store operations are the major costing. Revenue
streams of Tim Hortons are only the end customers.
Determination of the business level and corporate level strategies
It is identified that Tim Hortons is following cost leadership and product differentiation
approaches in terms of the business level strategies. This is due to the reason that the average
price of the products of Tim Hortons is low compared to some of their competitors. This is
helping in catering larger target segments along with penetrating higher in the market. On the
other hand, initiation of differentiation strategy is helping Tim Hortons in creating distinctive
value proposition for the customers (Banker, Mashruwala & Tripathy, 2014). For instance, some
of their products of Tim Hortons are unique in terms of taste and aesthetic value. In terms of the
corporate level strategy, it is identified that they are following business growth strategy. This is
due to the reason that with the help of the business growth strategy, Tim Hortons have increased
their presence across the world and still planning to enter the new markets.
Organizational analysis
Currently, the ownership of Tim Hortons is with the Burger King. According to the
reports, majority of the shares of Tim Hortons are held by 3G Capital from Brazil and the
remaining are with Burger King. 3G Capital is holding 71 percent of shares in Tim Hortons. As
per the agreement in the merger, the CEO of Burger King became the head of Tim Hortons and
the existing CEO of Tim Hortons took the vice Chairman post (Capurso, 2016). Currently, Tim
Hortons is managed by Restaurant Brand International and headed by Alex Behring.
Identification of strategic problem
It is identified that one of the major problems of Tim Hortons is limited market presence
across the world. This is due to the reason that they are having their presence in Canada and in
Middle Eastern countries. Thus, in terms of the global competition, Tim Hortons is trailing

8BUSINESS ANALYSIS
behind. This problem will have long term consequences due to the fact that increase in the
competition will cause difficulty for Tim Hortons in their limited market presence. On the other
hand, increasing the market diversity will reduce their risk associated with limited opportunities
and saturation.
Generation and Evaluation of Alternatives (Strategic Cost Benefit)
COMPANY NAME DATE CONDUCTED
PROPOSED PRODUCT/INITIATIVE/SERVICE COMPLETED BY
QUANTITATIVE ANALYSIS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL
NON-RECURRING COSTS
Hardware 250.00$ 280.00$ 310.00$ 340.00$ 370.00$ 1,550.00$
Servers 220.00$ 220.00$ 240.00$ 260.00$ 280.00$ 1,220.00$
Desktop 280.00$ 300.00$ 320.00$ 340.00$ 360.00$ 1,600.00$
Telecommunication Equipment 300.00$ 320.00$ 340.00$ 360.00$ 380.00$ 1,700.00$
Software (Packaged or Custom) 320.00$ 350.00$ 380.00$ 410.00$ 440.00$ 1,900.00$
Computer Room Upgrades 160.00$ 180.00$ 200.00$ 220.00$ 240.00$ 1,000.00$
Furniture and Fixtures 400.00$ 420.00$ 440.00$ 460.00$ 480.00$ 2,200.00$
Project Organizational/Support Costs 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
Planning (upon Approval) 200.00$ 220.00$ 240.00$ 260.00$ 280.00$ 1,200.00$
Procurement 320.00$ 320.00$ 340.00$ 360.00$ 380.00$ 1,720.00$
Contract Negotiations 120.00$ 150.00$ 180.00$ 210.00$ 240.00$ 900.00$
Labor 800.00$ 850.00$ 900.00$ 950.00$ 1,000.00$ 4,500.00$
Infrastructure 760.00$ 800.00$ 840.00$ 880.00$ 920.00$ 4,200.00$
Development 900.00$ 930.00$ 960.00$ 990.00$ 1,020.00$ 4,800.00$
Business Process Owners (Users) 950.00$ 1,000.00$ 1,050.00$ 1,100.00$ 1,150.00$ 5,250.00$
Management 750.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,850.00$
Training of Employees (Pre-Implementation) 650.00$ 680.00$ 710.00$ 740.00$ 770.00$ 3,550.00$
Transition Costs (Parallel Systems) 350.00$ 390.00$ 430.00$ 470.00$ 510.00$ 2,150.00$
Post-Implementation Reviews 400.00$ 430.00$ 460.00$ 490.00$ 520.00$ 2,300.00$
TOTAL NON-RECURRING COSTS 8,830.00$ 9,300.00$ 9,860.00$ 10,420.00$ 10,980.00$ 49,390.00$
Tim Hortons

9BUSINESS ANALYSIS
RECURRING COSTS
Hardware/Software 300.00$ 320.00$ 340.00$ 360.00$ 380.00$ 1,700.00$
Software Maintenance and Upgrades 320.00$ 350.00$ 380.00$ 410.00$ 440.00$ 1,900.00$
Computer Supplies 200.00$ 180.00$ 200.00$ 220.00$ 240.00$ 1,040.00$
Desktops (Incremental to the Project) 400.00$ 420.00$ 440.00$ 460.00$ 480.00$ 2,200.00$
Help Desk Support 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
Ongoing Additional Labor 220.00$ 220.00$ 240.00$ 260.00$ 280.00$ 1,220.00$
IT Staff Costs (including Benefits) 300.00$ 320.00$ 340.00$ 360.00$ 380.00$ 1,700.00$
User Training 120.00$ 150.00$ 180.00$ 210.00$ 240.00$ 900.00$
Other 200.00$ 180.00$ 200.00$ 220.00$ 240.00$ 1,040.00$
Telecommunications 400.00$ 420.00$ 440.00$ 460.00$ 480.00$ 2,200.00$
Office Leases 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
TOTAL RECURRING COSTS 3,860.00$ 4,020.00$ 4,280.00$ 4,540.00$ 4,800.00$ 21,500.00$
TOTAL COSTS 12,690.00$ 13,320.00$ 14,140.00$ 14,960.00$ 15,780.00$ 70,890.00$
QUANTITATIVE BENEFITS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL
REVENUES
Stores 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
Online medium 200.00$ 220.00$ 240.00$ 260.00$ 280.00$ 1,200.00$
-$
TOTAL REVENUES 900.00$ 950.00$ 1,000.00$ 1,050.00$ 1,100.00$ 5,000.00$
COST SAVINGS
Decreased Cost of Services Provided 120.00$ 150.00$ 180.00$ 210.00$ 240.00$ 900.00$
Savings from Business Process Improvements 850.00$ 850.00$ 900.00$ 950.00$ 1,000.00$ 4,550.00$
Productivity Gains 760.00$ 800.00$ 840.00$ 880.00$ 920.00$ 4,200.00$
Savings from Structural Changes 900.00$ 930.00$ 960.00$ 990.00$ 1,020.00$ 4,800.00$
Savings from Optimized Information (or Flow) 950.00$ 1,000.00$ 1,050.00$ 1,100.00$ 1,150.00$ 5,250.00$
Decreased Information Publishing Cost 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
Reduced Staffing Cost (including Overtime) 650.00$ 680.00$ 710.00$ 740.00$ 770.00$ 3,550.00$
Reduced Staff Turnover Costs 200.00$ 220.00$ 240.00$ 260.00$ 280.00$ 1,200.00$
TOTAL COST SAVINGS 5,130.00$ 5,360.00$ 5,640.00$ 5,920.00$ 6,200.00$ 28,250.00$
COST AVOIDANCE
Cost avoidance 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
TOTAL COST AVOIDANCE 700.00$ 730.00$ 760.00$ 790.00$ 820.00$ 3,800.00$
OTHER BENEFITS
Promotional campaign benefits 950.00$ 1,000.00$ 1,050.00$ 1,100.00$ 1,150.00$ 5,250.00$
-$
TOTAL OTHER BENEFITS 950.00$ 1,000.00$ 1,050.00$ 1,100.00$ 1,150.00$ 5,250.00$
TOTAL BENEFITS 7,680.00$ 8,040.00$ 8,450.00$ 8,860.00$ 9,270.00$ 42,300.00$

10BUSINESS ANALYSIS
Recommendations
 It is recommended that Tim Hortons should initiate new market development plan with
their existing products especially in the developing countries to tap the growing
opportunities.
 Product development approach should also being initiated to offer larger varieties across
the world.
 Product diversification can help Tim Hortons in catering to the different needs of the
customers in the global market.
Implementation schedule
Activities Resources required Timeline
Market research Research analyst and effective
feedback mechanism
6 months
Cost calculation Funding and allocation 2 months
Pilot project Marketing infrastructure and
marketing department
6 months
Media communication Online and offline mediums 8 months
Monitoring and evaluation Feedback management and
effective communication
channel
4 months

11BUSINESS ANALYSIS
Reference
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