Introduction

Tim

Hortons

Inc. (Tim

Hortons

Cafe

and

Bake

Shop)

is

Canadian multinational fast casual restaurant. It was founded in 1964 in

Hamilton, Ontario, by Canadian hockey player Tim Horton and Jim Charade,
after an initial venture in hamburger restaurants.
It is also Canada's largest quick service restaurant chain; at the end of 2013,
it had 4,592 restaurants in Canada, 807 in the United States, and 38 in
the Persian Gulf region. In 1967, Horton partnered with investor Ron Joyce,
who assumed control over operations after Horton died in 1974. Joyce
expanded the chain into a multi-million dollar franchise.
The chain accounted for 22.6% of all fast food industry revenues in Canada in
2005. Tim Hortons commands 76% of the Canadian market for baked goods
and holds 62% of the Canadian coffee market
The company competes with specialty coffee retailers, baked goods retailers,
sandwich shops, and gas and other convenience locations, ranging from
small local independent operators to national and regional chains, such as
McDonalds, Wendys, Starbucks, Subway, and Dunkin Donuts.

Mission
The guiding mission is to deliver superior quality products and services for
our guests and communities through leadership, innovation and partnerships

Vision
To be the Quality leader in every thing they do

Values

Porters Five Forces Model of Competition

Threat of New Entrants
- There are hardly any barriers of entry for potential new entrants in the quick
service restaurant segment.
- Any new entrant can join the quick service restaurant industry whenever
they like, but it will be very challenging for them to earn huge profits since
most of the market share is controlled by large firms.
- High capital requirements mean a company must spend a lot of money in
order to compete in the market. High capital requirements positively
affect Tim hortons.
- Weak distribution networks mean goods are more expensive to move
around and some goods dont get to the end customer. The expense of
building a strong distribution network positively affects Tim hortons.
- High sunk costs make it difficult for a competitor to enter a new market,
because they have to commit money up front with no guarantee of returns in
the end. High sunk costs positively affect Tim hortons.
- If strong brands are critical to compete, then new competitors will have to
improve their brand value in order to effectively compete. Strong brands
positively affect Tim hortons.
- Economies of scale help producers to lower their cost by producing the next
unit of output at lower costs. When new competitors enter the market, they
will have a higher cost of production, because they have smaller economies
of scale. Economies of scale positively affect Tim hortons.
- If existing competitors have the best geographical locations, new
competitors will have a competitive disadvantage. Limiting geographic
factors positively affect Tim hortons.
Bargaining Power of Buyers
- When customers require special customizations, they are less likely to
switch to producers who have difficulty meeting their demands. Buyer
customization positively affects Tim hortons.
- When buyers are less sensitive to prices, prices can increase and buyers will
still buy the product. Inelastic demand positively affects Tim hortons.
- Acquisition occurs in high volumes and these acquisitions push suppliers to
satisfy their consumer.

- As one may conclude, it is certain that buyers have more power than
suppliers in the industry. Moreover, the competition between the rivals is
quite intense since all of them are trying their level best to achieve a higher
market share in the industry by offering similar products and promotions.
- When there are large numbers of customers, no one customer tends to have
bargaining leverage.
Threat of Substitute Product
- At present, the strength of substitute companies is low because of the
organic nature of the products, such as tea/coffee.
- A lower performance product means a customer is less likely to switch
from Tim hortons to another product or service.
- A lower quality product means a customer is less likely to switch
from Tim hortons to another product or service.
- Limited number of substitutes means that customers cannot easily
switch to other products or services of similar price and still receive the
same benefits. High switching costs positively affect Tim hortons.
Bargaining Power of Supplier
- Due to the Tim Hortons Coffee Partnership, supplier strength is relatively
low. Tim Hortons has established a solid partnership with its farmers in South
America.
- Tim Hortons can also change suppliers at any time they prefer since there
are several other suppliers they can cooperate with at the current market
price for coffee beans.
- The more diverse distribution channels become the less bargaining power a
single distributor will have. This positively affects Tim hortons.
- When suppliers are reliant on high volumes, they have less bargaining
power, because a producer can threaten to cut volumes and hurt the
suppliers profits. This can positively affect Tim hortons.
- The easier it is to switch suppliers, the less bargaining power they have.
Low supplier switching costs positively affect Tim hortons.
Rivalry Among Competing Firms Industry
- There is strong rivalry from several typical quick service restaurants, in
addition to large quick service restaurant chains.
- McDonalds has increased competitive pressure by entering into the
breakfast and coffee line; offering superior quantities for identical prices.
- Tim Hortons popular roll up the rim campaign is being copied by Country
Style and Coffee Time.

- Competitors such as Coffee Time, McDonalds and Country Style might cause
tough competition for Tim Hortons, but Tim Hortons will continue being the
leader since it owns 40% of the quick service restaurants in Canada.
- When storage costs are low, competitors have a lower risk of having to
unload their inventory all at once. Low storage costs are a positive for Tim
hortons.
- Government policies and regulations can dictate the level of competition
within the industry.
Staging advertising battles, increasing consumer warranties
PESTEL Analysis
Political
The way coffee houses produce is becoming more and more submitted to
high standars of quality and local governments have the right and the weight
to affect the business significantly. There must be since incentives up to
supports in order to attract more business and its expansion in a specific
area, providing low-interest bonds.
Economical
The industry of coffee is a high and growing market in the world. As there are
some big leaders competitors such as Starbucks, Dunkin Donuts and now
McCaf, they are all fighting each other in order to gain more and more
market shares. It seems that there is a high potential in the new emerging
markets such as Asian countries and South America for example. Moreover,
the rising price of coffee beans might be a threat for those industries.
Social
Sustainability and Responsibility at Tim Hortons is the way we formalize how
we make a true difference for individuals, communities and the planet
everyday. Their sustainability and responsibility framework focuses on three
main pillars. Individuals: Tim Hortons respects individuals and encourages
them to achieve their very best. Communities: Tim Hortons believes it has a
positive role to play in enabling communities to thrive and grow. Strong
governance, high ethical standards and a commitment to active engagement
with our stakeholders support this framework.
Technological
As there is a high and growing variety of products in coffee houses, they need
to always develop new machines and high-tech equipment in order to stay
up-to-date. Some beverages are so complicated to make that they require
high standards of quality in terms of technology.

Environmental
Tim Hortons has been tracking energy consumption, water consumption, and
greenhouse gas emissions across our organization since 2008. They strive to
continuously improve the quality of their environmental data, and enhance
their understanding of their environmental performance. They also began
tracking their waste diversion at their corporate operations in terms of
recycling and reducing waste

Legal
The Company is subject to various laws and regulations, including laws
and regulations relating to: zoning, land use), transportation and traffic;
health, food, sanitation and safety; taxes; privacy laws, including the
collection, retention, sharing and security of data; immigration, employment
and labor laws, including some increases in minimum wage requirements
that were implemented in certain provinces in Canada
Also laws affecting the design of facilities and accessibility; taxes;
environmental matters; product safety; nutritional disclosure and regulations
regarding nutritional content, including menu labeling and TFA content;
advertising and marketing; record keeping and document retention
procedures; new and/or additional franchise legislation; and anti-corruption
law

SWOT Analysis
STRENGHTS

It is Canada's
largest fast food service with
over 100,000 employees
Strong brand name and
company image.
Reputation for having
remarkable product quality.
Tim Hortons commands
majority of the Canadian
market for baked goods and
holds major of the Canadian
coffee market

It has been purchased by

Burger King in this August
2014 and they now are the
third-largest operator of fast
food restaurants in the world

Great customer service.

OPPORTUNITIES

WEAKNESS

High competition brands

Does not cater to the health

conscious segment

Not a solid worldwide

existence

Paying method

Not real differenciation with

other competitors

THREATS

Expanding into new markets

Growing health conscious

segment

Joining alliencies and

partenships

Presence of strong competitors

in this segment

The brand can leverage its

existing image and increase its
popularity through marketing
exercises

Higher costs of raw materials

Higher costs of labour make

difficult to mantain low prices

Increasing variety of products

can increase sales

Implement bio products in

their menu

External Factor Evaluation (EFE)

External Factors
Opportunities
Expanding into new markets
Joining alliances and partnerships
The brand can leverage its existing image and
increase its popularity through marketing exercises
Increasing variety of products can increase sales
Implement bio products in their menu
Threats
Growing health conscious segment
Presence of strong competitors in this segment
Higher costs of raw materials
Higher costs of labour make difficult to maintain low
prices
Total Score

Weight

Rating

Weighted
Score

0.2
0.15
0.05

3
4

0.6
0.6
0.1

0.1
0.05

2
4
2

0.4
0.1

0.1
0.15
0.1
0.1

3
4
2
3

0.3
0.6
0.2
0.3

3.2

Internal Factor Evaluation (IFE)

Internal Factor
Strengths
It is Canada's largest fast food service with over
100,000 employees
Strong brand name and company image.
Reputation for having remarkable product quality.
Tim Hortons commands majority of the Canadian
market for baked goods and holds major of the
Canadian coffee market
It has been purchased by Burger King in this August
2014 and they now are the third-largest operator of
fast food restaurants in the world
Great customer service.
Weakness
High competition brands
Does not cater to the health conscious segment
Not a solid worldwide existence
Paying method
Not real differentiation with other competitors
Total Score

Weight

Rating

Weighted
Score

0.05

0.1

0.15
0.1

3
3

0.45
0.3
0.1

0.05

0.15

0.45

0.1

0.2

0.1
0.05
0.1
0.05
0.1
1

2
1
1
2
2

0.2
0.05
0.1
0.1
0.2
2.25

Competitive Profile Matrix

Tim Horton's
Critical Success Factor
Advertising
Product Quality
Price Competitiveness
Customer Loyalty
Brand Name
Financial Position
Sales Distribution
Costumer Loyalty
Total

Weight
0.1
0.15
0.1
0.15
0.15
0.15
0.05
0.15
1

Ranking
2
3
3
4
4
3
2
4

Score
0.2
0.45
0.3
0.6
0.6
0.45
0.1
0.6
3.3

Krispy Kreme
Ranking
3
2
2
2
2
3
3
3

Score
0.3
0.3
0.2
0.3
0.3
0.45
0.15
0.45
2.45

Dunkin
Donuts
Ranking Score
3
0.3
3
0.45
2
0.2
3
0.45
4
0.6
4
0.6
2
0.1
4
0.6
3.3