Canadian Tire Company’s Analysis Research Paper

Introduction

Canadian Tire Corporation (CTC) is one of Canada’s largest retail companies. With that Canadian Tire holds a viable contribution to Canada’s economy, political policies, social impact, technological advancement, and environmental effects. The large effect that Canadian Tire holds on those aspects make Canadian Tire stability becomes more impotent as the Canadian economy continues to grow over time.

Canadian Tire obtains this power through large investment in real estate since the mid 1930s, as well as the fast and stable growing since then until 2016 with a CAD 12,681 million in fiscal year revenue. Canadian tire retain the power in the market share due to the strategic location that they have chosen. Canadian Tire stores are located within 15 minutes from 90 percent of all Canadian citizens. With 1702 stores in Canada, it has created 12,356 jobs within their organization.

Company Background

History

John. W and Alfred J. Billes started what would later become Canadian Tire Company in 1922 with a total combined capital of $1,800. The foundation of the company was Hamilton tire and garage limited located at Gerrard and Hamilton Street, Toronto. The next year they closed Hamilton Tire and garage limited and moved to Yonge and Gould, Toronto where Canadian Tire Corporation was born.

In 1928, Canadian Tires first public catalogue was published, displaying the values of their tires. Canadian Tire established their first physical retail store in 1934. The first gas bar was then established in 1958 and was paired with the innovative Canadian Tire money incentive.

In 1963 a distribution centre for goods and other hardware equipment was opened and in 1968 a platform for the financial service sector was set as Midland shoppers credit limited was reformed into Canadian Tire Acceptance Limited. Canadian Tire continued to grow through the early 1980’s with their first operating revenue that exceeded $1 billion (Rodrik 84). At this point the company had expanded to own 334 associate stores and 116 gas bars in just Ontario and Quebec.

In the year 1993 a new format for its retail stores was launched with the objective being “to create an even more exciting and consistent customer experience nationwide”. The late 1990’s and early 2000’s saw the launch of their automotive store chain for vehicle parts and equipments. The early 2000’s also introduced online shopping, a new way of shopping that allowed customers around the globe quick and easy access to their desired products.

Big company acquisitions kicked off with the acquisition of Marks work warehouse, a well known clothes retail corporation. The financial sector also introduced Canadian Tires bank to focus on customers with financial needs relating to Canadian Tires, including master cards or Canadian tire money. The acquisitions continued as Canadian Tire expanded its platform with Forzani Group limited a sporting goods retailer in Canada.

In 2013, Canadian Tires officially became a publicly traded company with a very successful initial public offering and CRT.UN as its official stock exchange symbol (Rodrik 86). In 2016, CTC focused on being more innovative with its consumer brand strategy, considering more products with personalized touch or unique identities. Finally in 2018, the acquisition Helly Hansen work and sportswear was made, expanding Canadian tires deeper into the clothing retail industry. All these changes, compromises and evolution have brought us to today whereby CTC is regarded as one of the biggest retail chains in the country.

Company Vision and Mission

The mission statement of this company is: We are a proud Canadian family. We exist to serve and enrich the lives of our customers, our team and our shareholders (McInnes and Simpson 42). Its vision is to be a growing, innovative eco-system of businesses achieving incredible results through incredible people … we touch more people, in more ways, every day (Rodrik 81).

Social responsibility is very important to the company as seen from the mission statement CTC’s main objective is to improve and give back to the people that have a stake in the company’s growth which involves the whole of Canada as it sells itself as an establishment for the average Canadian.

Macro Environmental Analysis

All conditions and factors arising in the environment, which do not directly depend on the activities of Canadian Tire, but which have a specific impact on the functioning of this retail company and require the adoption of some management decisions on this basis constitute the external environment of the organization. The external environment of the enterprise represents a source which conditions the maintenance of the organization with necessary resources and its ability to preserve the innate potential at the proper level.

Like any enterprise, CTC is always in a state of exchange with the external environment and thus provides for itself the ways and resources necessary to maintain success (McInnes and Simpson 42). Besides, the means received from the external environment are limited.

At the same time, many other organizations that run their business in the same context can simultaneously apply for these resources. Therefore, the main task of Canadian Tire’s strategic management is to organize such an interaction with the macro-environment that will result in its ability to maintain the enterprise’s potential in good shape, capable of achieving its goals and assured about the long term prospects.

Political

This category includes factors associated with the political and legal environment of the enterprise. Such context of the marketing assumes that a PESTLE analysis will assist in regulating the company strategy regarding political realities within which it exists. It is necessary to determine whether changes in the legislative basis of the state, the market environment or the sphere in which the company operates are apt to affect its work (this concerns, first of all, issues related to income).

CTC has beneficial political factor conditions in terms of low taxes. This option has inspired the company to invest more significant sums into research the prospective directions for further development. At the same time, the accession in the percent of social inequality throughout the Canadian territory might trigger unfavorable taxation alterations (McInnes and Simpson 41). Additionally, the local government increases its attention to the data regarding the carbon footprint of the company; CTC might face the rise of the commission paid for the environment safety.

Concerning the governance system, the company is characterized by an inflexible administration approach that was cultivated through the years since the foundation. The managers should consider paying more attention to tracing the trends and introducing appropriate changes to contribute to the continued existence and high rates (Rodrik 81). Also, considering the probability of changing the government, Canadian Tire should always be ready for the shifts in the economy policy regarding the Services sector, where it operates as a retailer.

The company surely needs to stay aware of local-level authorities taking its more privileged impact on the business compared to the national-level Canadian government (see table 1). At the same time, the politics of respectable international organizations such as WHO or World Trade Organization is honored by all levels of Canadian state leaders, which requires an extra attention necessity from CTC regarding its Department & Discount regulations (Rodrik 81). Eventually, the firm might experience assertiveness regarding the low probability of armed or terroristic intrude into Canada and related imminent disruption of its business processes.

Table 1. Possible Political Factors Prospects and Its Potential Influences on Canadian Tire.

Economic

In this category, particular consideration is given to the determinants of the economic situation that prevails at the market. Considering the PESTLE constituents that fall into this category, there are six basic parameters to conduct an assessment of budgetary features in which the CTC functions (Gomez et al. 104). This company’s leaders should consider these aspects: economic dynamics, the exchange rates and fluctuations in prices indexes; unemployment tendencies; drivers of inflation; income per capita numbers; the actual banking trends.

1. Economic dynamics: Canadian trade policy experiences a particular liberalization that might efficiently serve for Canadian Tire progress;
2. Changes in exchange rates or prices: Canadian economy of past decades demonstrates growth and empowered exchange rates, which open new opportunities for Canadian Tire to reach the global market targets;
3. Changes in unemployment: the pressure of governmental agencies and continuous unchanged administration policy theoretically and practically motivate Canadian Tire to involve more immigrants into its operations, thus contributing to the unemployment rates reduction;
4. Changes in inflation: the post-2018 recession and the liquidity might provoke the inflation risks in Canada (see table 2);
5. Changes in disposable income per capita: the liberalized political methods applied to the retailing trade improve the per capita index and open opportunities for the company’s international growth;
6. Trends in the banking industry: the banks, considering the political recession and softening of the legal regulation, tend to increase investments in the regions (particularly its infrastructure) and, therefore, intensify the customers’ turnover for Canadian Tire.

Table 2. Possible Economic Factors Prospects and Its Potential Influences on Canadian Tire.

Social

It is worth paying attention to the group of factors of the cultural and social situation in the market. Considering the social items of PEST analysis, one should pay attention to five main parameters, such as: changes in the demographic state (ups and downs), the respective marketing structure; education level, qualification level; dominating mentality and culture specifics; the social layers of the community; the tastes and preferences alterations traced among the society, occurring prejudices.

1. Demographic and population: this type of statistics in Canada is favorable for Canadian Tire, as the number of young people that consumes more is continuously growing;
2. Level of education of society, qualification of personnel: it is primarily high that might assist the company in intensifying its activities throughout the country;
3. Features in mentality, critical cultural values: Canadian buyers increasingly prefer to experiment with the choices of the goods and services they buy (particularly when it comes to leisure); therefore, Canadian Tire needs to reconsider its trade politics that keeps referring to the traditions;
4. Changes in the social strata of the population: impact of the immigrant is solid, but their perceiving by the society is predominantly adverse, which complicates for Canadian Tire the recruitment process in terms of international managers and other specialists;
5. Changes in the tastes and preferences of the community, the rooted prejudices: the vision and lenses through which Canadian customers see the world is conditioned by the media outlets, particularly by tremendously popular social media and traditional public issues. Canadian Tire could utilize this feature to attract a wider audience and reach them through targeting. As an extra option, the company may consider the changing of the social hierarchy norms that impact customer decisions.

Technological

This group of environmental factors allows tracking changes in technological progress in a particular area. These components demand an exact analysis since the currently going technical modifications improve the marketing substances that existed before in a profound way (Rodrik 87).

These critical factors are essential for analyzing technological forces: possible trends in emerging technologies, how the Internet influences market environment, the impact of rapidly advancing mobile technologies on the construction of the market environment, and innovations in modern information technologies that drive competition.

1. Possible changes in the central technologies: Canadians are reluctant to license new technologies due to the fear to force rivalry instead of collaboration, and it might harden Canadian Tire’s way toward technological innovativeness;
2. The influence of the Internet: it assists Canadian business (including Canadian Tire) with the problems of supply chain organization and partly helps to cope with delivering of quickly expiring products and modification of the cost of operations in terms of more straightforward access to the data for chain partners and those involved in Services industry; plus, there is a high attention to the 5G technologies development able to upgrade the Retail sphere of services (Rodrik 89);
3. The impact of rapidly developing mobile technologies: Despite adherence to tradition, Canadian state and commercial companies still recognize the power of creative disruption, which must inspire Canadian Tire to continue to elaborate the business strategy oriented on innovations;
4. Innovations in information technologies: Some of Canadian Tire competitors like Sobeys have already incorporated new decisions, and the company might learn from their advancement.

Legal

The legal factor represents a highly intuitive notion for the players within the Retail sphere of all national economies. In this regard, Canadian Tire is required to consider the system of justice that works in Canada, especially the elements of timely made responses and the absence of any legal biases.

It is also essential to stay aware of the situation with the intellectual property and data regarding the norms that regulate potential discrimination cases (Skripak et al. 19). Concerning environmental safety, Canadian Tire should consider that this area acquires new regulations in the national law of Canada due to the convincing pro-ecological work lead by the activists.

Next, there are supposedly planned changes in the employment law to be accepted by Canadian Government, which might shift the immigrants’ positions, and the company should get prepared and fix the gaps in its business model to make it adjusted as for the national and international scales. Aside from employment matters, Canadian Tire should stay aware of the changing laws regarding privacy and intellectual property protection.

At the moment, the copyrights and patents in Canada demonstrate a high level of protection from the breach. At the same time, the judicial processes and their reviewing by courts might last for many years, and Canadian Tire must stay aware of such a perspective. As for the Health and Safety, Canada is not the type of too “tidy” country as it takes one of the first places for the amount of trash it produces (McInnes and Simpson 45). Therefore, Canadian Tire might be socially responsible and improve the situation in its home country.

Environmental

For the recent decade, the corporations of all levels have been forced to review its strategies switching to the more ecologically friendly ones. Canadian active groups continue to struggle for fixing the environmental situation in the country through the media and cooperation with the government and international non-governmental organizations. Different companies, including the retailers like Canadian Tire, are prescribed to upgrade their politics regarding the carbon footprints they leave and the various types of pollution-related materials they produce (Gomez et al. 64).

The debates around the issues of climate change due to the excess of hazardous impacts strive to motivate the companies to work on the techniques to make their waste safe and non-harmful for water, soil, and air. At the same time, the expenditures from the Canadian Tire budget targeted on the ecologically friendly strategy increase the numbers of the cost of the operations.

Again, the traditionalist approach to the business lead by the company is not compatible with the pro-environmental changes that entirely depend on technological innovations. At this point, the Paris Climate Agreement that assumes implementation of the newest technologies might add new layers of obligations and financial burden for Canadian retailer under the focus.

The climate shifts matters produce the weather type fluctuations and form additional problems to the supply chain system utilized by Canadian Tire. The latter critically needs some substantiation of its flexibility (Skripak et al. 28). It is vital to admit there is an increasing rate of Canadian residents who support the idea for the corporations to reconstruct their operating toward the ecological friendliness.

Respectively, Canadian Tire as one of the most admired retailers is expected to show an example of a business organization that cares not merely for the profit but for the future which it leaves for the descendants. The company might elaborate on the origins aimed at expansion of recycling practices to change the present face of the Services sector in Canada.

Industry Analysis

Competitive Rivalry

A proper understanding of a company’s competitors is a critical step towards designing and executing stable business activities. The two main competitors to Canadian Tires are Walmart and Target (McInnes and Simpson 47). Walmart is a massive retailing organization that operates on several market fronts. Target (Canada) is a retail subsidiary of Target one of the largest retail corporations in the world. Canadian Tires’ unique selling point is its Canadian Tire money program or CTM. It presents a different way to complete transactions with the help of a company assigned currency that holds value only within Canadian Tire stores. Although this system works similarly to a reward card, it gives consumers a more authentic “buck for bang” experience as opposed to a normal reward system.

Bargaining Power of Suppliers

Canadian Tires is a large corporation and it operates on a vast supply network. Coupled with the large number of suppliers that operate in the same market, Canadian Tire has a competitive advantage in supply negotiations.

Bargaining Power of Customers

The power of clients remains high for this business organization. This is the case since customers can migrate and purchase their favorite products from other suppliers (Skripak et al. 38). The industry is also associated with many companies that are able to offer similar items.

Threat of New Entrants

The level of threat from potential new entrants remains low for CTC. Most of the existing competitors or players have been in business for many years and have superior business models (Gomez et al. 78). Newcomers in will require a lot of money and prolonged time to establish their brands and become recognized in this industry.

Threat of Substitutes

This is one of the major threats CTC is currently facing. Most of the products this organization are similar to the ones available from other players. This means that most of the customers are shared and consider other factors when selecting their favorite items, including quality and price (Naraine et al. 122). They are usually free to switch from one retailer to another. The presence of online shopping is also making it possible for more people to achieve their objectives.

Market Analysis

Size, Scope, and Growth

Since Canadian Tire Corporation operates in the retail industry, a proper understanding of the market size, scope, and growth can inform superior marketing strategies. Its diverse products ensure that the organization attracts an increasing number of customers (see figure 1). In terms of size, the industry is estimated to be around 954.7 billion US dollars (Naraine et al. 124). The scope of this market is quite complex since most of the products are acquired from different distributors and manufacturers.

This company has also diversified its products to include hardware, leisure, sports, and household products. It has a car repair section, footwear, and work apparel. This model explains why Canadian Tire competes in a complex and competitive market. Canada’s retail industry has been growing at a rate of 3.2 percent per annually (Naraine et al. 123). The market will expand within the next few years due to increased demand in a wide range of products.

Demographics and Segmentation

The success of CTC is attributable to various strategies, including its segmentation processes. The concept of demographics is critical since this organization has various products and initiatives that target different members of the Canadian population. For instance, its apparels and sporting items target individuals between 12 and 45 years of age (Naraine et al. 124). It also offers superior car, garage, and tire maintenance services to people above the age of eight.

Most of the merchandise is branded in such a way that it meets the needs of both women and men depending on their unique needs. The petroleum, automotive, and financial segments or stores target individuals with stable income. This means that demographics play a significant role in this organization’s segmentation strategy. The ultimate objective is to ensure that all potential customers get what they want in a timely manner.

Psychographic segmentation is a powerful model that this company takes seriously. From the above discussion, it is evident that people’s lifestyles, interests, hobbies, and activities are factored when developing appropriate stores, petroleum centers, garages, and sportswear shorts. Geographic segmentation is evident at this company since various products are marketed to customers in different regions or locations depending on a number of factors, including climate and topography (Gomez et al. 64). For example, the company produced its MasterCraft Eliminator Ultra battery that was aimed at addressing the needs of people in cold regions.

Current and Potential External Factors

The retail industry has been going through various transformations that companies should take into consideration. Currently, CTC has to appreciate the fact that the demands for many customers are transforming with the times. For instance, more people require sporting equipment than ever before due to the challenges associated with sedentary lifestyles. The same trend is noticeable in the automobile sector whereby many Canadians require serviced vehicles that can perform effectively (Baggs et al. 639). Similarly, more people today prefer to purchase products online. This approach makes it easier for them to acquire various items without having to move around.

There are other external forces that have the potential to influence the goals and future direction of Canadian Tires. Firstly, competition from other companies will force CTC to reduce its prices, open new stores, or liaise with other partners to increase profitability. The current pressure from other business players can force this organization to consider foreign markets. Secondly, technological changes might force this company to digitalize its operations and deliver products to the targeted customers.

Thirdly, any change in political and legal structures in Canada can force or influence the goals and direction of this organization. Fourthly, the performance of this country’s economy can dictate the measures Canadian Tires undertakes to remain competitive and attract more potential customers (Baggs et al. 644). Finally, social forces will influence the goals that this organization will have to consider, such as increased use of Facebook, holiday events, and celebrations.

Competitor Analysis

Canadian Tires has attracted many competitors due to the nature of its business model. The organization’s decision to expand and provide diverse services and products means that it encounters intense rivalry. Some of the leading competitors include Empire, Metro, Loblaw Companies Limited, Trackwerks, Canada Post, and Campell’S (Gomez et al. 72). These companies offer a wide range of products depending on the demands of the customers. They also make revenues of over one billion US dollars per year (Kristin et al. 338). These companies have many employees, adequate resources, powerful advertising strategies, increased market share, and established online presence. Walmart, Alibaba, and Amazon have remained competitive by dominating the online market platform.

Company Analysis: Functional Areas

Canadian Tire’s business model is supported by a number of functional areas that are aimed at supporting performance and ensuring that the needs of all customers are met. The first one is that of human resources (HR) and it ensures that all new employees fit their respective roles. This department focusing on the changes experienced in the market in an attempt to identify individuals with the right competencies and skills (Gomez et al. 94). Managers are required to treat all workers with respect, motivate them, and promote desirable behaviors. They engage in constant planning and promote appropriate strategies that can drive the company to the next level.

The marketing segment of this company is tasked with designing and implementing a powerful mix that resonate with the outlined mission and vision statements. The presence of several stores and business lines explains why changing consumer’s demands are taken seriously. While most of the products and services generating revenues, the purpose of this functional area is to identify emerging customers, their expectations, and the best way to reach them.

The decision to introduce a new product line is usually guided by the ideas of this department (Baggs et al. 641). Those involved in marketing procedures identify emerging target markets based on demographic, geographic, psychographic, and behavioral factors. The supply chain team ensures that various items or products are distributed in a proper manner. These roles or duties are coordinated by the marketing department.

The operations functional are is essential since it ensures that goods are produced and delivered in a timely manner. At CTC, a wide range of activities require alignment and coordination to maximize performance. This department links suppliers, marketers, outlets, and stores across the country (Baggs et al. 641). The roles this segment undertakes continue to support this organization’s performance.

The finance and accounting segment is responsible for managing financial documents, identifying areas for growth, and predicting potential causes of losses. Employees in this functional area engage in budgeting and forecasting activities (see figure 2). They consider the overall financial health of the company and offer adequate guidelines (Gomez et al. 128). They predict potential revenues and consider new strategies for maximizing profits.

Recommendations

From the above sections, CTC remains one of the most successful retailers in Canada. The leaders at this organization have focused mainly on the domestic market. This approach has made it a leading player and provider of high-quality products and services. The presence of different experts and functional areas is something that continues to support performance (Kristin et al. 339).

However, this company needs to expand its operations globally in order to attract more customers in untapped markets. It can also consider a better model whereby dissimilar products are grouped and placed under one roof. For example, the presence of automotives and gifts within the same space makes it impossible for CTC to maximize its sales. Such measures will transform the performance of this company and eventually maximize profits.

Conclusion

The above discussion has identified CTC as a leading retailer that provides high-quality products and services at reduced prices. Its presence in different sectors explains why it is capable of delivering diverse services to more citizens. Unfortunately, the challenges of competition and domestic presence in Canada affect its overall profitability. Its leaders should, therefore, consider new strategies to launch its operations in other promising markets across the globe. The company can go further to improve its model through effective marketing strategies and reorganization of its stores in accordance with the demands of its customers.

Works Cited

Baggs, Jen, et al. “Firm Dynamics in Retail Trade: The Response of Canadian Retailers to Exchange Rate Shocks.” Review of International Economics, vol. 24, no. 3, 2016, pp. 635-666.

Gomez, Rafael, et al. Small Business and the City: The Transformative Potential of Small Scale Entrepreneurship. University of Toronto Press, 2015.

Kristin, Burnett, et al. “Retail Food Environments, Shopping Experiences, First Nations and the Provincial Norths.” Health Promotion and Chronic Disease Prevention in Canada, vol. 37, no. 10, 2017, pp. 333-341.

McInnes, Mitchell, and Adam Simpson. “The Shopkeeper’s Privilege and Canadian Tort Law.” Alberta Law Review, vol. 56, no. 1, 2018, pp. 29-53.

Naraine, Michael L., et al. “New to the Board: A Case Study of Canadian Tire Corporation and the Potential Purchase of the Forzani Group Limited.” Case Studies in Sport Management, vol. 4, no. 1, 2015, pp. 120-131.

Rodrik, Dani. “What Do Trade Agreements Really Do?” Journal of Economic Perspectives, vol. 32, no. 2, 2018, pp.73-90.

Skripak, Stephen J. Fundamentals of Business (Black and White). Virginia Tech University Libraries, 2016.