Canadian Tire Corporation: Current Issues in Business - Case Study

This case study examines the current business situation of Canadian Tire Corporation, focusing on its industry overview, financial performance, and strategies for growth and customer satisfaction. It utilizes Porter’s Five Forces to assess the company's competitive position and analyzes its marketing mix, particularly product, place, and promotion. The report highlights the impact of online selling, the importance of adapting to market changes, and the need for continuous innovation. Key findings include the significance of managing rivalry among existing firms and bargaining power of buyers, as well as the importance of customer involvement and feedback in product development. The study concludes with an action plan emphasizing growth in profitability through improved retail business and customer service, supported by innovative store design and infrastructure improvements. This document is available on Desklib, where students can find more solved assignments and past papers.

CANADIAN TIRE CORPORATION
Running Head: CANADIAN TIRE CORPORATION 0
Case Study:
Current Issues in Business
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CANADIAN TIRE CORPORATION 1
Contents
Information...........................................................................................................................................3
Industry Overview.................................................................................................................................3
Current Situation...................................................................................................................................4
Porter’s Five Forces...............................................................................................................................4
Threats of new entrants....................................................................................................................5
Threat of substitute products or services..........................................................................................5
Rivalry among existing firms..............................................................................................................5
Bargaining power of suppliers...........................................................................................................5
Bargaining power of buyers...............................................................................................................5
CTC Marketing Mix Strategy..................................................................................................................5
Product..............................................................................................................................................5
Place..................................................................................................................................................6
Promotion..........................................................................................................................................6
Evaluation..............................................................................................................................................6
Action Plan............................................................................................................................................6
Bibliography...........................................................................................................................................7
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CANADIAN TIRE CORPORATION 2
Executive Summary
The business current situation mainly depends on the competition, growth, reputation and
customer satisfaction. Here they are taking the Canadian Tire Corporation; Toronto, Ontario,
Canada current situation of their growing business in which they told about what the industry
is all about, its current financial information, the strategy needed to achieve position and
gaining profits and to provide best customer service by the best company. They used the
Porters Five Forces to know about the strength of the company and marketing mix Ps for
smooth functioning in the competitive market internally and externally, in both the ways and
in online selling too. To know about the corrective action they need to take for the betterment
of the company and customer relations.
This report summarizes every detail about the company’s growth financially and substantially
and the data used in this report are all from online (News or company’s website) sources.
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CANADIAN TIRE CORPORATION 3
Information
Canadian Tire Corporation (CTC) was founded by two brothers in 1922 which was
named Hamilton Tire and Garage Ltd. in Toronto. Later on, in 1923 they named it Canadian
Tire because this sounds huge as a head office in Yonge Street, Toronto, Ontario. They
provide services at Canadian Tire Services Limited (holdings, banks), Real Estate Ltd.
(investment trust), and FGL Sports (Alberta), Mark’s Work Warehouse Ltd.
Recently, the financial growth of CTC is $2,894.4 with a change of 2.8% in millions
in 2019 of Q1 (Quarter 1). In 2018, the annual revenue was $14.1 billion, 5.1% excluding
petroleum. They are growing faster with One Company strategy, development of brand
offerings and with the largest retail banner which maintains customer satisfaction. The
increased consolidated revenue of 2018 was $780.0 million increased by 5.1% ( NEILLY,
2012).
Canadian Tire is a retail company with selling a wide span of automobiles, hardware,
sports, home products and more. The brands are divided in all of Canada owned by CTC
which are Canadian Tire (500 stores), Sportchek, Mark’s (382 stores), CT Financial Services,
Helly Hansen, Atmosphere, FGL Sports (433 stores includes Sports Experts, Pro Hockey
Life, National Sports, Trio Hockey), PartSource (91 stores), CT Gas+ (296 gas stations), CT
REIT ( NEILLY, 2012). They work with a force of more than 10,000 employees and have
1,700 retail stores and gasoline channels.
The more about CTC is that they provide their own credit cards; they started the
feature of online shopping, they give deals on the price of gas and keeps on innovating new
things ( NEILLY, 2012).
Industry Overview
CTC the Toronto based company offering product range from automobile to sports
and financial services, down 1.7% to $97.4 million (BLINCH, 2019). They rise up through
revenue of 2.8% to $2.89 billion in the last quarter. In 2018, it was expected to be an
interesting year where retail industries are the power of adaptation and acquire a lot of
competition ( Patterson, 2018). Automobile stores and gas stations retail sales in 2018 were
$229.2 billion where gas stations sales got lower by -3.6%, in sports; it was $12.5 billion and
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CANADIAN TIRE CORPORATION 4
so as of others. The total retail sales in Ontario were $226.8 billion in 2018. After December
2018 retail industries were kept on increasing from 18,775,702 to 19,223,268 in April 2019.
According to Retail Council of Canada (RCC), Ontario Government’s tries to increase
the overall retail sales through increasing the choice for alcohol to benefit the economy by an
increase in GDP, employment and more moves to $45.23 ( Patterson, 2018). RCC will try to
ensure further additional rates are reduced for Ontario retailers by continue working with
Workplace Safety and Insurance Board (WSIB). Even online shopping is getting strong in
Canada where there is a greater variety of product for consumers through retailers applying
marketing techniques to grow businesses.
So in this research of 2018-19, there have been a lot of ups and downs but retail
industries always try to keep on growing and so does CTC, Ontario.
Current Situation
In Ontario, Canada as compared to the other employees there is a more workforce of
youth because of fewer skill requirements in retail. Online selling is affecting profits and
employment of retail industries as a threat because, in Ontario, domestic online retailers are
dominated by internationals. Half of the Canadians use the internet to buy products except
food because of the cost of delivering biodegradables. Retail industries have reduced price
growth to lower some of the consumers. In industry, every time there is a doubt regarding
online selling as both bearer and all level retailers and alter effects of this offline.
Buying and selling of products and services through electronic channels have been
increasing. Retail sales from worldwide electronic commerce are expected to build in 2017
from $2.3 trillion to 2021 from almost $4.9 trillion. Canada with $1.6 billion with e-
commerce retail trade sales and expected to exceed revenue in online market $40 billion in
2018 to $55 billion by 2023 ( Duncan, 2019). Online Canadian retailers are also shopping
internationally and the one who is financially strong are trying to increase their digital efforts
and investing a lot. Even if online selling is taking growth at another level still there is a gap
between online and offline stores and physical stores still have an important role in branding
and consumers satisfaction.
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CANADIAN TIRE CORPORATION 5
Porter’s Five Forces
To evaluate the strength and position of the company, this model was propounded by
Michael E. Porter for evaluation. To determine the position of Canadian Tier to understand
and improve the performance for long term holds up ( Hopkins, 2018).
Threats of new entrants
They try to reduce the threat by having an essential investment. If a product with high
differences and customers are more into the search of unique experience then they lose the
power.
Threat of substitute products or services
This increases when another industry is providing cheap product or services or
maintaining customer relations if any industry offers higher quality than them.
Rivalry among existing firms
For lowering competition they have to look for the limited number of retailers in the
market, they have to grow faster and without any loss, the company can easily take the exit
from the market.
Bargaining power of suppliers
High power of suppliers as they are highly concentrated, buyers comparing cost, if the
demand for any product is high as they are one of the competitors in the market.
Bargaining power of buyers
If buyers start against to bargain more, the power of buyers can be more when there is
less number of sellers and proper knowledge of the product they are going to buy.
These five forces are important for CTC to understand the profitability of Retail
Department where they have knowledge about the competition. Rivalry among existing firms
and bargaining power of buyers are the major forces which are important to understand for
CTC.
CTC Marketing Mix Strategy
CTC using 4P’s; pricing, advertising and distribution strategies for company analysis
and smooth functioning, here they are discussing only three strategies which are:
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CANADIAN TIRE CORPORATION 6
Product
In 1922, they were the largest automobiles and tire servicing brands offering Long
Lasting tires. Now they are providing car batteries, accessories, cables and more, and tools
like drills, drivers. Sports products are like bikes, ice skating, gun accessories for hunting and
more, and for gas stations too, and some financial services and toys for kids.
Place
With 1700 retail stores the company is widely spread with its head office in Toronto,
Ontario, Canada and also have online selling to increase customer base.
Promotion
This company is mainly working with customer involvement and ask them to test
their products and give the feedbacks at first place and with the help of that they try to make
improvisation and on whichever product they had given the feedback is tagged with their
reviews and they got to know about it. They start campaigns for promotion and work as a
team. They try to visit Toronto to know customer preferences and one of the factors is equity
which needs to be maintained for their brand image. They provide 7-second silent ads online
too for customers to give a look at it.
Evaluation
Pros Cons
Provide super customer service Less Knowledge
Great benefits and discounts Management issue
Trusted brands and innovative products High Competition
Strong network Risk
If someone is a supplier with a great product of CTC then they make sure that they
deliver all the needs and wants of the customer. The position of the company is at a peak with
its shareholders of trusting each other and commits to fulfilling all social responsibility.
Suppliers expect standard and policies binding the values together. They need to take action
correctly to not to result in failure. So here the main point is strategizing market product and
all the points are important.
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CANADIAN TIRE CORPORATION 7
Action Plan
Growth in profitability is when there is a strong business and this will increase by
improvement in retail business and customer service. Their motto is to deliver the best
service or product by one best company to one valuable customer ( Wetmore, 2010).
Innovative store design, experience, and performance, improving infrastructure are helpful to
maximize productivity.
Bibliography
Duncan, E. (2019, March Monday). E-commerce in Canada - Statistics & Facts. Retrieved
from Statista: https://www.statista.com/topics/2728/e-commerce-in-canada/
Hopkins, B. (2018, June Friday). CANADIAN TIRE CORPORATION LIMITED
SPREADSHEET Porter Five Forces Analysis. Retrieved from Case48:
https://www.case48.com/porter-case/29921-CANADIAN-TIRE-CORPORATION-
LIMITED-SPREADSHEET
NEILLY, R. (2012, April Wednesday). CANADIAN TIRE. Retrieved from Canadiana
Connection: https://www.canadianaconnection.com/2012/04/canadian-tire/
Patterson, C. (2018, January Sunday ). 2018 Canadian Retail Forecast [Analysis]. Retrieved
from Retail Insider: https://www.retail-insider.com/retail-insider/2018/1/2018-
canadian-retail-forecast-analysis
Wetmore, S. (2010, April Wednesday). Canadian Tire Outlines Strategy for Growth Focused
on 'Core' Business. Retrieved from Canadian Tire Corporation, Limited:
https://corp.canadiantire.ca/English/media/news-releases/press-release-details/2010/
Canadian-Tire-Outlines-Strategy-for-Growth-Focused-on-Core-Business/default.aspx
BLINCH, M. (2019, May Thursday). Canadian Tire profit drops on lower product
shipments. Retrieved from The Globe And Mail:
https://www.theglobeandmail.com/business/article-canadian-tire-profit-drops-on-
higher-interest-costs/
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CANADIAN TIRE CORPORATION 8
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