Executive Summary
Primary Problem:
Burger King must determine if the expansion of Tim Hortons into US markets is necessary for the successful growth of the company.
Alternative Solutions:
1. No expansion of Tim Hortons into the US market
2. Expand Tim Hortons into the US market as a stand alone company
3. Expand Tim Hortons into the US through presence in Burger King restaurants
Recommendation:
In order for both Burger King and Tim Hortons to reach their maximum growth potential, it is necessary for the Tim Hortons brand to expand into new US markets. In order to do this, the company should implement a combination of alternatives 2 and 3. The main justifications are as follows:
Limited opportunity for expansion in the Canadian
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Depending on the execution and implementation of an expansion and its success rates, shares could go up or down in value accordingly, which then effects the companies’ shareholders.
An unsuccessful attempt to expand into US markets also puts the companies at risk for experiencing loss in capital. Many new stores will have to be designed and built in the US markets in convenient locations. One must recall that Wendy’s absorbed the company in 1995, and only 11 years later spun it off as its own company again. Wendy’s could not figure out how to successfully expand Tim Hortons in the US, which makes one wonder if Burger King will be any different. It has been proven before through the example of Wendy’s and Krispy Kreme that it is difficult to penetrate markets across borders (Hemmadi, 2014).
Implications on the Personnel:
The merge of Burger King and Tim Hortons will undoubtedly have considerable effects on the personnel of both companies while an expansion into US markets will result in more substantial effects. First, if the company chooses to expand in the US, and chooses to relocate the headquarters of Burger King to Canada, this will cause a lot of administrative employees of Burger King to relocate as well. This type of relocation would also be a cause for change in the way business is conducted due to varying labour laws, political, economic, and legal policy from Canada to the US. Additionally, the CEOs and top
Burger King and Wendy’s are among the top fast food chains in America, but this fact doesn’t elude either chain from having their negative and positive features. Burger King is cheaper, and has a wider assortment of food than Wendy’s, which makes Burger King more desirable to many Americans. What Wendy’s lacks in diversity, and lower priced food when compared to Burger King becomes irrelevant due to the higher speed and superior quality food they offer. Both qualities of Wendy’s help to maintain equal competition between the two in the fast food market of America.
About everyone at some age, at some point or another, and in some country has gotten a sample of American's symbol for fast food through the golden arches of McDonald's. This report will attempt to analyze the external and internal sectors that affect the company's success. The external analysis will provide opportunities and threats while the internal analysis will show indicators of strength and weakness. It will then follow up with critical issues, strategic alternatives, recommendations and implementation. The case studied is found in Appendix 2 of Mary Coulter's "Strategic Management in Action" book.
With Ron Joyce’s strategy, Tim Hortons expanded quickly in both geography and product selection. In 1981, it already had successfully opened almost 150 outlets in Canada, and became the leading chain in Canada. It even resulted in the major changes to the coffee and donut restaurant market in Canada. Tim Hortons thus confidently believed that the expanding strategy could fit well even in the US market, where the geographical distance was close and the culture seemed to be quite similar to that of Canada.
This analysis as of the industry and Loblaw also illustrate how critical operational responses, not pricing or marketing alone, are required to sustain its existing growth rate and achieve higher growth over time. Each of the specific aspects of Porter’s Model is next analyzed and insights are used for defining alternatives and recommendations for the strategic direction of Loblaw.
In fast-food corporate America In-N-Out Burger has always remained family-owned. It had no stockholders to respond to and was able to invest in maintaining high standards of quality. Unlike its competitors the chain, with 258 stores presently, is able to retain its constant growth in sales, even in times of recession.
Macdonald’s offers a strict, but mutually beneficial franchising and licensing agreements that have a term of 20 years (McDonald’s, 2014). Before an individual obtains a franchise or a licensing opportunity, a careful scrutiny of the restaurant location must conform to expectation of future growth of the business. The scrutiny ensures long-term profitability of the restaurant. The process of setting up a restaurant is very thorough. The franchising and licensing agreement allows the corporation to have enough cash for further expansion. Expansion creates dominance and goes a long way to stamp authority as a
Tim Hortons offers a wide variety of menu to its customers. Its menu contains of course coffee, sandwiches, doughnuts, muffins and cookies, but as the market place and people preferences are changing every day. Therefore, they introduce new types of products to satisfied customers’ need.
The best way for the board to see why this merger would be beneficial was to explain what our customers deserve. Once I explained what our loyal customers were missing out on it was clear to the board that in order to maintain business at the level we have for so many years there needed to be major change. All in all, everyone was excited for the change and Regina welcomed us will open
In a note to customers Monday, Desjardins Securities expert Keith Howlett called the conceivable merger an amazement, noting that "a key driver would be to utilize Burger King 's vicinity within 98 nations to quicken Tim Hortons ' development in worldwide markets."
As is obvious, there is a fierce competition in the Canadian fast food industry and though Burger King has been attracting its fair share of the market. I feel they can explore so many means to lead the chart in the industry market share. Stating from the result of survey conducted on the Canadian fast food industry, 76% of customers would like the convenience of their favorite fast food delivered to them at their comfort while 54% out of the 76% will gladly pay the delivery charges.
As food industry is saturated, it will be hard to add new outlets. Other than that increase in food sources pricing, the continuation of annual dividend and price competition that driven by the competitors hinder the capability to raise revenue. Nonetheless, to rectify this problem the company has swift the focus from a value menu to a more diverse one. Another problem is that there is limited product innovation and sometime customers will be sick of eating the same food again and again. It is also harder to find prime locations and when expand over to other countries; it will have to face the posing potential cultural challenges. There is also growing concern with the healthy diet as the result MacDonald being a fast food restaurant will be an unhealthy choice to most of the healthy lifestyle people and they will choose not to visit MacDonald. Lastly it may create an unhealthy eating culture to the country as fast food is not a good choice for healthy lifestyle and it may increase the rate of obesity of the country.
The second force that acts on the industry is the threat of new entrants. Fortunately for McDonald’s and it’s over 30,000 restaurants world-wide, the corporation has set itself in a position of dominance. Using a growth strategy, “McDonald’s is continuously expanding its reach which makes it increasingly difficult for new fast food restaurants to enter the industry, through franchising, McDonald’s is able to reach nearly every corner of the globe” (Shell, Ellen Ruppel).
1. Competitors – As there are many other restaurants who are trying very hard to compete with McDonalds like KFC, Burger King, and Burger Fuel etc. They are also serving people with same kind of services like McDonalds and burger king is really giving a tough competition to McDonalds at the moment.
We analyzed the barriers and opportunities that affect global expansion of a company in class 2 weeks ago on the Competing in Global Market readings and discussions. I'm going to share with you how this may applied to Tim Horton's plan to penetrate into Philippines.