Bcit Team Project Tim Hortons Starbucks June 5, 2010
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Transcript of Bcit Team Project Tim Hortons Starbucks June 5, 2010
TIM HORTONS & STARBUCKSLooking in from the Outside, an Investor’s Perspective
Presented for Dena Jantzen, CEO/Instructor
Presented by
The Charter “Guys”
INTRODUCTION TIM HORTONS -- BACKGROUND
• Tim Horton (Tim), “Hockey Night in Canada Legend”
• 1964 Age 34 founded Tim Hortons• 1967 Partnered with Ron Joyce (Ron)• 1974 Tim’s unexpected death (MVA)• 1974 Ron continues Tim’s legacy
The Charter "Guys"
INTRODUCTIONSTARBUCKS -- BACKGROUND
• 1971 opened Pike Place Market, Seattle• Originally sold coffee beans (home brewing)• Howard Schultz, now CEO – visionary• 1980 opened second store• 2003, over 7,500 worldwide locations
The Charter "Guys"
TARGET MARKET
• THE “EVERYDAY HERO”
• Young, old, students – our Soldiers• Modest/fixed incomes• Densely populated areas (blanketing)
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MARKETINGTIM HORTONS – THE FOUR “P’s”
• “Always Fresh” coffee (double/double) and baked goods/breakfast/luncheon sandwiches (basics)
• Competitive pricing• Highly dense underserviced markets• “Roll up the Rim to Win”, Jingles
The Charter "Guys"
TARGET MARKETSTARBUCKS
• Ages 18 – 49 • Some post-secondary education• Middle/upper classes (high price point)• The “third place”• Consumer looking to be “seen”
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MARKETINGSTARBUCKS – THE FOUR “P’s”
• Freshly brewed coffee and extensive baked goods, breakfast/lunch
• High price point• 25,000 people, corner locations, median annual
household income $40,000+• “Word of mouth, new Via TV commercials, print
adds/billboards
The Charter "Guys"
• HISTORICAL• Until August 8, 1995 managed
by TDL• Wendy’s share interest owned
by TDL, not Tim Hortons• TDL largest Wendy shareholder
following merger
• Wendy’s made IPO selling off 18% shares
• Remaining shares spun off to THD Inc.
Organizational StructureTIM HORTONS
The Charter "Guys"
• Tall structure with Moderate Span of Control
• Int’l head office in Oakville, ON• 700+ employees• Departmentalization by
function/geographic location
Organizational StructureTIM HORTONS
The Charter "Guys"
Tim Hortons Organizational Structure
TIM HORTONS’ ORGANIZATIONAL STRUCTURE
The Charter "Guys"
• Flat top hierarchy.• President/CEO: Howard
Schultz (Schultz)• 11 managers reporting to
Schultz with different focus• Focus differentiated by
function/geographic location
• Matrix structure though not defined as such
• Teams assembly – individuals from different departments
• Employee/2 bosses (project manager/department head)
Organizational StructureSTARBUCKS
The Charter "Guys"
Tim Hortons Organizational Structure
STARBUCKS’ ORGANIZATIONAL STRUCTURE
The Charter "Guys"
• TIM HORTONS• Tall• Functional/Geographic• Matrix-Hybrid• Wide
• STARBUCKS• Flat• Functional/Geographic• Hierarchical Line-&-Staff • Moderate
Organizational StructureCONTRAST
The Charter "Guys"
SOCIAL RESPONSIBILITY
• TIM HORTONS• “Always Fresh” guaranteed• accountable reporting• creating new jobs/wealth • ethical work standards • Children’s Foundation/kids
hockey• “National Organization for
Marriage” • waste/energy/distribution
fleet emission reductions (by
• STARBUCKS• employee (partner)
community volunteers• environmental Responsibility
• Recycling, energy, water – company goals
• CAFÉ – Coffee and Farmer Equity
The Charter "Guys"
FINANCIAL
Tim Hortons (THI)TSX
Starbucks (SBUX)NASDAQ
Q1(2007)
Q2(2008)
Q3(2009)
Q1(2005)
Q2(2006)
Q3(2007)
Current Ratio (Liquidity)
$1.23 $1.27 $1.45 $0.79 $0.80 $1.29
Debt to Equity (Leverage)
.33% .32% .29% 1.34% 1.28% .83%
Earnings Per Share Ratio (Performance)
$931 $983 $59 $911 $450 $558
Return on Equity Ratio(Performance)
27% 25% 29% 29% 13% 13%
The Charter "Guys"
FINANCIAL $1,000 TO INVEST, WHICH ONE AND WHY?
TIM HORTONS• Corporate ethical position• Steady (assertive) growth plans• High liquidity• Record sales during tough times• Low debt ratio• High annual equity
The Charter "Guys"
STARBUCKS• Corporate ethical position• Slowed/cancelled expansion plans• Unadjusted prices … declining
sales/recession• Tackle decline -- Generic (Seattle’s
Best brand)• 2009 liquidity strength recovery • 2009 High debt to equity rating --
decreased borrowing
CONCLUSION$1,000 TO INVEST, WHICH ONE AND WHY?
• both organizations successful• Tim Hortons smaller but better organization to
invest in:• expected to continue to prosper… take
market from Starbucks • their success low prices, quality products…• recession not yet over• expected continued success
The Charter "Guys"
We learned, supported,got the job done by doing the right
things, the right way to be effective , efficient and successful!
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QUESTIONS
The Charter "Guys"