Starbucks vs. Tim Hortons: Companies Competition

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Executive Summary

The given report is an attempt to investigate the most crucial aspects of the functioning of Starbucks and Tim Hortons in terms of their tense competition. Besides, the comprehensive investigation of these organizations history, stock value, size, locations, profitability, wages, climate, benefits, etc. is provided. Additionally, the main data related to these aspects are discussed to obtain a clear vision of these companies future and perspectives for further growth. Yet, comparing Starbucks and Tim Hortons, we also trace the evolution of the major concerns related to the given sphere and admit the importance of different strategic approaches used to attain a certain competitive advantage. Altogether, delving into the vital spheres of these companies functioning, the report improves the basic comprehending of the situation within the given industry and assists in the determination of the character of the potential employers. Finally, the paper also offers information that could be used for further investigation of this topic.

Introduction

At the moment, there are numerous brands that try to sell food, coffee, and other products to customers. Additionally, there is even a tendency towards the opening of new restaurants and coffeehouses as the level of demand for these services remains stable. Thus, the tense rivalry peculiar to the industry introduces the necessity of the creation of a specific strategy that could be explored to acquire a competitive advantage and evolve. Not all companies manage to do it. For this reason, the functioning of such well-known brands as Starbucks and Tim Hortons should be considered a good example that could be investigated to admit strategies and approaches that will ensure positive final results.

History

Beginning the companies investigation, we should trace their evolution and rise. Starbucks was founded in Seattle, Washington in 1971. The first three partners who decided to run a new business were Jerry Baldwin, Zev Siegl, and Gordon Bowker (“Company Information,” n.d.). Being great admirers of the high-quality coffee, they created the first coffeehouse that later transformed into one of the greatest franchises within the industry. At the moment it is popular with the population in different states and has outstanding opportunities for the further rise (“Company Information,” n.d.).

Tim Hortons was founded in Hamilton, Ontario by Canadian hockey player Tim Horton and his partner Jim Charade (“About Tims,” n.d.). The partners first wanted to create a hamburger restaurant; however, in the course of its evolution, it transformed into the chain of multinational fast-food restaurants selling coffee and donuts. Now, many Canadians consider Tim Hortons one of the essential attributes of their lives as it could be taken as the national brand that managed to become successful (“About Tims,” n.d.)

Company Core Values

Besides, companies emphasize different values. Being founded as the representative of a second wave coffee, Starbucks popularizes darkly roasted coffee and points out the unique quality of drinks provided to its customers (“Company Information,” n.d.). The company managed to evolve and make this approach its core value that determines the further evolution of the franchise and conditions the usage of different tools.

Yet, Tim Hortons has other perspectives on the values that should be promoted. Being one of the largest franchises and multinational fast-food restaurants, it emphasizes the taste of donuts and coffee that is sold there, pointing out the unique character of these very goods (“About Tims,” n.d). It becomes obvious that differences in these approaches condition the convergence of the methods used to evolve.

Expansion and Strategies

There are also significant differences in expansion strategies. Starbucks is selling premium coffee and aims at prime markets exclusively. At present, the retailer is entering new markets by establishing its brand in new geographical locations and using different distributional channels. In this regard, its expansion strategy implies the further conquering of prime markets to attain success and find new customers (“Company Information,” n.d.). However, in the last several years, the alteration of the approach to expansion could be observed, and Starbucks is also focused on everyman market.

At the same time, The Canadian company focuses on everyman market, which is now under Starbucks’ expansion, too. It uses different strategies to attract new customers belonging to the given segment.

Impact on Society

Therefore, both these companies have a great impact on modern society. Starbucks has already become an integral part of a certain lifestyle that implies drinking privileged coffee (McGrath, n.d.). Starbucks is one of the most publicized coffee retailers which impacts the appearance of new trends in coffee consumption and impacts peoples mentalities by introducing new tendencies and tastes.

Tim Hortons is also an influential company that is especially popular in Canada. It managed to become an essential part of the everyday routine of millions of people who do not have much time or money to visit privileged restaurants or other coffeehouses. Both these organizations also provide working places for thousands of people, and it is another evidence of their unique social impact.

Employee Benefits

Besides, working at Starbucks or Tim Hortons means belonging to a specific collective characterized by unique traditions, atmosphere, and approaches. Yet, employees working in the first company are provided with employment benefits which are the comparatively high level of wages, social package, and comfortable working conditions. However, at the same time, some employees admit the increased complexity of tasks they should perform and a great level of demands that exist in the company (“Company Information,” n.d.).

Tim Hortons also has a unique corporate culture. Its workers are explained that they belong to the unique brand that is appreciated by people. For this reason, their attitude to customers and their duties should be appropriate. They are also provided with good working conditions combined with a great level of demand for their efficiency. Altogether, it is rather difficult to conclude which company provides better conditions for its workers.

Wages

If to compare wages paid in Starbucks and Tim Hortons, it is possible to obtain the following data. For instance, in the first company, a common barista might count for $7-$11 hourly rates (Starbucks, 2016). It is obvious that wages differ depending on the region or position; however, the above-mentioned price could be used to demonstrate the tendency and the average absolute value.

Speaking about Tim Hortons, we could admit another sum. Baker might get C$10-C$15 per hour. It is about $11 US dollars (Tim Hortons Inc, 2016). It means that the level of wages is similar. In the Canadian company, the wages also depend on the region and the restaurants location.

Community Responsiveness

Continuing the investigation, we should say that both companies bear a certain responsibility for the community and this fact also contributes to the great involvement of the communitys members into its functioning. According to statistics, an area where Starbucks functions is characterized by the great attention given to its functioning (Bookman, 2012). Moreover, it provides many workplaces for these very members.

A similar situation could be observed when speaking about Tim Hortons. The functioning of the given restaurant ensures local people with work and impacts the improvement of the communitys functioning. For this reason, both Starbucks and Tim Hortons have a similar reputation and influence on the life of people in a certain area.

Stock Value

Thus, the companies obviously have different stock values which are conditioned by the significant differences in their financial health. At the moment, Starbucks stock value could be estimated about 56,11 (Starbucks, 2016). The given showing is rather high, and it contributes to the further companys rise and evolution. Besides, the oscillations of this showing remain significant which is also preconditioned by great incomes.

Tim Hortons stock value is about 35,93 (Tim Hortons Inc, 2016) which is much lower than the same showing related to Starbucks. The given statistics demonstrate the existence of a significant difference in the financial performance of these companies. Starbucks is still a more profitable and powerful actor that continues its rise and tries to conquer new markets.

Size

Continuing to compare the above-mentioned companies, we could not but mention their size. Starbucks is the leader in the given sphere. It is a giant international company that managed to create its own franchise. It functions in different regions all over the world and has numerous coffeehouses in different states. Besides, at the moment it is considered one of the most attractive and powerful corporations known at the international level and with numerous opportunities for the further rise (Moe, 2007).

If to speak about Tom Horton’s company, its size is much smaller. For a long period of time, it was taken as the local franchise popular only on the territory of Canada. In the last several years the tendency towards further rise could be admitted; however, it still succumbs to Starbucks. Under these conditions, the first company could be characterized by a stronger position as its significant size introduces numerous opportunities for further evolution and transformation.

Locations

As stated above, the Starbucks huge size preconditioned its entry to the international market and organization of numerous coffeehouses in different states across the world. The company has a number of branches in the USA, Europe, Asia. The Eastern European countries and the post-soviet states are also considered to be promising, and the company opens coffeehouses related to its franchise there.

At the same time, Tom Hortons remains a mainly local company which is not popular in Europe. Its restaurants are an integral part of numerous Canadian towns (Bookman, 2013); however, they are unknown to the rest of the population of the world. It means that Starbucks holds an advantageous position.

Profitability

In this regard, the level of income could hardly be compared. Starbucks is one of the most profitable franchises at about $21, 315, 900 annual revenue (Starbucks, 2016). Additionally, there is a tendency towards a further increase in incomes. It means that the company is extremely profitable and ensures its shareholders in its stable financial power.

Tim Hortons could also be considered profitable. It attracts the attention of numerous investors and agencies. However, its annual revenue is much lower. In 2010 it comprised 1,76 billion Canadian dollars (Tim Hortons Inc, 2016). In 2016 the sum increased, however, it remains low if compare with Starbucks. For this reason, the first company has more opportunities for further rise.

Internal Climate

Besides, both companies could be characterized by a good internal climate. We have already mentioned the fact that there is a specific corporate culture peculiar to these organizations. It was formed in the process of their evolution and contributed to the improved final outcomes. For this reason, the beneficial internal climate could be considered one of the facts that contribute to further companies rise and their empowerment (Lim, 2016). Both in Starbucks and Tim Hortons any employee feels himself/herself a part of a great collective that has an outstanding impact on his/her life and career. Additionally, a beneficial internal climate also creates the ground for improved mutual understanding within the collective and its outstanding efficiency. Customers also feel the unique atmosphere peculiar to every coffeehouse belonging to these franchises and return there again and again to enjoy it.

Conclusion

Altogether, these companies should be taken as promising franchises that have numerous opportunities for further rise. They explore efficient marketing strategies and implement approaches that might condition the preservation of a brands image. However, Tim Hortons is still considered the local brand characterized by the tendencies towards the further rise and improvement of its position. At the same time, Starbucks obviously has a more advantageous position as its bigger size, great level of incomes, and international character contribute to the acquisition of significant competitive advantage and the organizations further rise.

References

About Tims. (n.d.). Web.

Bookman, S. (2012). Branded cosmopolitanisms: ‘Global’ coffee brands and the co-creation of ‘Cosmopolitan cool’. Cultural Sociology, 7(1), 56-72. Web.

Bookman, S. (2013). Coffee brands, class and culture in a Canadian city. European Journal of Cultural Studies, 16(4), 405-423. Web.

Company Information. (n.d.). Web.

Lim, W. (2016). A blueprint for sustainability marketing. Marketing Theory, 16(2), 232-249. Web.

McGrath, C. (n.d.).Starbucks. A Lifestyle. Web.

Moe, M. (2007). Finding the next Starbucks: How to identify and invest in the hot stocks of tomorrow. London: Penguin Books.

Starbucks. (2016). Fiscal 2016 annual report. Web.

Tim Hortons Inc. (2016). Financial information. Web.

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