TIM HORTONS Case Study Analysis

Organizational performance depends on the strategies put in place by the management team to increase revenue collection. It is essential to analyze both internal and external environment with the aim of making appropriate decisions that can facilitate the positive growth of an institution. Venturing into the restaurant industry is an uphill task due to the kind of competition associated with the penetration of new players in the market. Tim Hortons relies on numerous factors for operations to take place thus creating the need to examine different issues that contribute to the kind of decisions made by the relevant authorities that are designed to transform the image of the company positively.

Bargaining Power of Customers

Clients play a significant role in the growth of any organization because the ultimate aim of a firm’s existence is to serve customers. Bargaining behaviors shape the functionalities of the firm since prices are determined by the clients’ ability to negotiate for a better deal. The ever-changing trends in the restaurant industry require flexibility where hotels are sensitive to the change in behaviors exhibited by the target customers. The practice implies considerations on prices to attract more clients to the hotel and create a competitive advantage over other players in the same industry. Tim Hortons experiences change in consumption trends where individuals prefer service providers that are quick in production and also produce food that is appropriate for their health. To achieve such milestones, the acquisition will help in reinforcing the performance of the company because a lot of resources will be shared thus reducing the operational cost. The bargaining power of customers is high hence making the industry unattractive because the restaurant must invest according to the dynamics in the market.

Bargaining Power of Suppliers

The increase in market coverage demonstrates the need to engage more suppliers for the company to meet the market demands. It is possible to witness a situation where suppliers champion for better pay for the material they supply to the restaurant thus affecting the growth of the firm since the move will consume part of the profits made by Tim Hortons. Suppliers have low bargaining power in the case of Tim Hortons since they have to share the few organizations hence being forced to offer competitive prices to attract clients. Through the acquisition, the company will enhance its bargaining power to contain the demands presented by suppliers thus realizing positive development as compared to working as a single firm. Suppliers negotiate for better prices depending on numerous issues like the economic transformations witnessed in the country where some commodities consume a lot of resources before reaching the destination hence affecting the general performance in a given industry. The existence of competitors like McDonald’s is also critical when understanding the factors that influence suppliers’ prices because the rates vary from one firm to the other depending on the financial abilities within an organization. The high number of suppliers makes the industry more attractive due to the reasonable prices provided by vendors with the focus on retaining clients like Tim Hortons.

Competitive Rivalry

Restaurant industry experiences stiff competition due to the presence of many firms that offer the same services to the same target customers. Price is a crucial determinant of the number of clients served by a restaurant because consumers evaluate the financial implications of engaging with a particular hotel. Tim Hortons has the opportunity to pursue acquisition to focus on specific groups of individuals by enhancing service delivery where the time taken to process food is reduced to attract clients. The presence of many restaurants in the industry is an indication that the field is lucrative and worth investing if a proper analysis is conducted to determine the competitiveness of a firm. The rivalry is high because many organizations offer alternative solutions to clients thus affecting the operations of Tim Hortons.

The threat of Substitute Products

Health matters have become critical when making consumption plans since people are keen to protect their lifestyles by engaging in healthy eating. To manage the situation, alternative foods are consumed since it is perceived that fast food is not adequately prepared to meet the health standards. The threat of substitute products is high since customers’ demands are met by providing food according to their specifications. With such threats, it is difficult to run a restaurant without incorporating the changes demonstrated by consumers who contribute to the survival of a company. Tim Hortons has the potential to maintain relevant on the market due to the strategy applied by the company to provide food according to the client’s specifications. The move prompted the need to embrace fast food approach where a product is produced on order instead of having a ready meal that might not be consumed by the end of the day. Having a variety of food products is also an essential move towards successful operations since the interests of diversified clients are taken care of in the process of functioning within a diversified community. The situation makes the industry attractive to Tim Hortons since the restaurant has incorporated flexibility in its food production services.

The threat of New Entrants

Competition in the restaurant industry is a common practice that is facilitated by the entry of new players who introduce attractive packages to clients. The threat of new entrants is high since the industry is attractive thus contributing to a high number of restaurants being established in the market. Starbucks joined the market in 1971 and made tremendous strides due to the strategies employed by the company where a variety of brands were provided to customers. With such practices in place, Tim Hortons must make a crucial decision that is meant to transform the operations and create a new look to contain the competition in the industry. According to Angwin and Meadows, merging will help in creating a strong team to counter the strategies employed by new players because the combined team will enjoy the presence of vast experience and diversified markets through different networks created by the two companies during their independent operations (236). High competition makes the industry less attractive because many firms have to serve the same client base thus affecting the pricing practices.

Conclusion

Tim Hortons is in a better position to survive in the restaurant industry because the firm has the potential to overcome the challenges associated with high competition from rivalry by merging its operations. The reputation of the firm allows it to overcome threats posed by new entrants since clients are keen on quality food from recognized producers like Tim Hortons. The company has more of the attractive features that can facilitate positive growth. The level of competition implies that the industry is attractive due to the population growth that presents ready market for the food products.

Work Cited

Angwin, Duncan N., and Maureen Meadows. “New integration strategies for post-acquisition

management.” Long Range Planning 48.4 (2015): 235-251.