Presently, there are many options to choose from when it comes to enjoying a great cup of coffee. Whether you want to enjoy a cup of coffee in the morning, or grab a sandwich for lunch, STARBUCKS and TIM HORTONS are always great options for this. You can head to one or the other and often see individuals working on their laptops or groups of people catching up over a cup of coffee. The coffee industry in Canada is growing allowing customers to have large varieties for their daily coffee options.
From iced drinks such as frappuccino’s and iced caps to hot drinks like cappuccinos and lattes, STARBUCKS nd TIM HORTONS are two very well known coffee shop chains in Canada. The following analysis of STARBUCKS and TIM HORTONS will take a look at different areas of comparison such as a company background, relevance within the coffee industry, comparing the companies based on their functions of management, leadership styles, staff training and marketing such as loyalty programs followed by financial indicators.
Company Background STARBUCKS is a coffee shop chain that originated in Seattle, WA, USA in 1971 where they opened their first store. They have come a long way since this after experimenting in the coffee ndustry and opening up multiple stores within the United States. As outlined on their company website, STARBUCKS were up to 84 stores in the United States in 1990, and in 2011 they reported having 17,009 stores open all across the world. They have stores open in all different places in the world including, Argentina, Denmark, Cyprus, United Arab Emirates and many more locations.
STARBUCKS prides themselves on handcrafted beverages, fresh food and coffee. They also have ethical sourcing for their products and as stated on their website “We’ve developed strong, long-term relationships with farmers ll over the world that help ensure we are able to buy the high- quality coffee our customers expect from us. It’s our goal that by 2015, all of our coffee will be grown using ethical trading and responsible growing practices. ” TIM HORTONS is a well known coffee shop chain that was started in Hamilton, Ontario in 1964.
As outlined on their company website, when they first opened, TIM HORTONS only sold coffee and donuts. Today, they sell everything from coffee, sandwiches, soups, chili, cookies, donuts, bagels etc. According to Shaw (2014) “Tim Hortons now has 4,485 restaurants, ncluding 3,588 in Canada, 859 in the United States and 38 in the Gulf Cooperation Council, which it entered in 2011. ” Relevance to the Industry STARBUCKS and TIM HORTONS are big players in the coffee industry in Canada. According to an Anonymous author (2011) “Many Canadians wouldn’t dream of going a single day without their beloved cup of coffee.
In fact, excluding non-bottled water, coffee is the most popular beverage among adults in Canada. ” An unknown author (2014) states that “. 75 percent of the all the coffee sold at fast food restaurants comes from “Timmy’s,” s it is affectionately known. Tim Hortons is found in just about every small town and large city across Canada. ” Comparing the Companies Since both STARBUCKS and TIM HORTONS are big players in the Canadian coffee shop industry, looking at convenience for customers is one way to differentiate the two.
STARBUCKS is deemed to be a more upscale coffee shop compared to TIM HORTONS. Based on experience, you can purchase a medium latte at TIM HORTONS for approximately $2. 50, whereas a grande (medium) latte at STARBUCKS would cost approximately $5. 00. According to Wolf-Wylie (2013)“… hen you look at where each of the two companies have set up shop, it becomes clear which market each is trying to dominate: Tim Hortons owns Eastern Canada and the highways between major cities. Starbucks owns the urban core. Functions of Management.
It is no surprise having a successful business takes a lot of hard work, especially ones as large as STARBUCKS and TIM HORTONS. The leadership teams of these two coffee shops would have to look their functions of management daily to ensure their success such as planning, organizing, leading and controlling.
Both companies would equire to create an action plan, organize their goals, have a strong leadership that keeps staff informed and establish clear expectations. hip Styles. An unknown author (n. ) states that Howard Schultz CEO of STARBUCKS “leadership style is a blend of democratic leadership and transformational leadership. He believes that an open forum, open ended communications, giving everyone a voice and then allowing the people to air their opinion is a secret to achieving greater objectives. ” According to an unknown author (2014) Marc Ciara CEO of TIM HORTONS has Leade been quoted to describe his leadership style as “I’m talking bout leadership. I’m talking about being bold, being first, being proud. I’m talking about being daring”.
Staff Training. STARBUCKS has an extensive training program for their employees. As described on their company website “The Barista Basics Training Program provides the initial training for a newly hired barista on essential skills and knowledge required to the barista role at Starbucks Coffee Company. Through the use of simple and intuitive tools, skills are taught through one-to-one delivery and on-the-job training. It is a highly effective learning experience for a new barista that uickly enhances confidence and competence in delivering customer service.
As outlined on the TIM HORTONS company website, they have a training program through TIM HORTONS University where “the mission of the University is to “provide world-class learning and performance development processes, leading-edge training and education solutions that drive superior restaurant performance. ” Marketing. According to Fichter & Wisniewski (2010), “Loyalty programs are types of incentives where a structured program is introduced to reward and encourage increased and sustained buying behavior.
Based on experience, STARBUCKS has a loyalty program where every time you purchase a drink with your STARBUCKS card you earn a star, and once you earn 12 stars you get a free beverage. This allows for customers to be loyal to the brand and keep coming back to the stores. TIM HORTONS has a ‘Roll Up the Rim’ which is an annual program that allows customers to roll up the rim of their coffee cup to see if they are a winner of the multiple prizes being offered. This is another loyalty program where customers can benefit from free coffees, donuts and even cars if they are lucky enough.
Financial Indicators Taking a look at balance sheets from 2013, we can first compare STARBUCKS who had a total equity of 4. 48 billion dollars and TIM HORTONS had a total equity of $761,519,000. As outlined by Nickel et al (2013) to calculate the company’s liquidity ratio we would need to divide the current assets by the liabilities which according to STARBUCKS 2013 annual report would be 102% and from the TIM HORTONS 2013 annual report it would be 98%. STARBUCKS gross margin was 57% in 2013 and TIM HORTONS was 37. 9%. According to STARBUCKS financial report “Total net revenues increased 12. % to $14. billion in fiscal 2013 compared to $13. 3 billion in fiscal 2012. ”
According to the TIM HORTONS financial report “Operating income increased $26. 6 million, or 4. 5%, to $621. 1 million in fiscal 2013 compared to fiscal 2012”. Taking a look at the working capitcal for both organizations, we can determine that STARBUCKS had a working capital of $209. 2 million dollars whereas TIM HORTONS had a working ratio of negative $11,227 million dollars. Reviewing this information would allow to come to the conclusion that STARBUCKS would be able to pay off any debts they owe, hereas TIM HORTON’s would not in 2013 since they were in a negative.
Nickels et al (2013) defines the inventory turnover ratio as “Inventory turnover ratio measures the speed with which inventory moves through a firm and gets converted into sales. ” STARBUCKS had a inventory turnover ratio of 5. 74 in 2013. Overall by looking at and comparing these ratios and statistics, it is easy to look at side by side data to see they way these companies are progressing. With new product launches and loyalty programs, both STARBUCKS and TIM HORTONS seem to be progressing in sales within Canada.