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INTRODUCTION
In this fast-paced world, big corporations are expanding themselves from country to

country overseas. The decision to start operations in another country is not sudden. It takes

ample of time and a lot of consideration and analysis. We take a look at Tim Horton’s which is a

big corporation in a whole and has already well expanded itself over the years worldwide. Tim

Horton’s as of now has expanded itself in 14 different countries and its operations are well

established in this those countries. Tim Horton’s is a fast-food doughnut chain and over the years

since establishing itself in Canada in 1964, the company has done well to expand its products as

well. (Essays, 2018). Recently the company announced its plans to open its store in every major

city in UK creating job opportunities for at least 2000 people (World Coffee Portal, 2020).

Starting as a coffee shop, From Canada they expanded their operations to the U.S slowly

entering the UK market as well and taking it by storm. With each year Tim Horton’s continues to

grow and build its fortune worldwide. We take a look at the factors that will play a key role if

Tim Horton’s is to expand its operations in Germany. The reason Germany is the right country

for Tim Horton’s will be analyzed in this research article ranging from a number of factors. The

countrywide analysis for this purpose is the PESTLE analysis and Hofstede’s Characteristics.

Hofstede’s characteristics are divided into 5 major dimensions while the PESTLE analysis itself

covers the most important aspects of that country. For Tim Horton’s to expand its operations in

Germany we take a look at PESTLE analysis in the next section.

PESTLE ANALYSIS

1. Political environment

Germany is a democratic republic. The political system functions under a system called

Grundgesetz which was published in the 1949 constitutional document. (PEST Anaysis
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Contributor, 2015) . For a big business-like Tim Horton’s to expand itself in a big European

nation it is important that the home country has good ties with the subjected country. Germany

being a close relative to Canada means there won’t be any political hurdle for Tim Horton’s to

cross in order to expand its coffee shop there. One hurdle for Tim Horton’s would be Germany's

regulations and bureaucratic procedures can be a difficult for companies wishing to enter the

market and require close attention by U.S. exporters. The taxation policies and procedures may

well be required deep attention before entering and establishing Tim Horton’s operations in

Germany. Germany’s government is divided into three main levels. Federal, state and local. Tim

Horton’s would have to consult with the local government of Germany to take a step towards

establishing its operations here. As of now Germany openly seeks overseas companies to operate

within its dimensions given the tax and trade barriers are not crossed. Belonging to European

Union it would not be difficult for Tim Horton’s to establish its first outlet in Germany. The right

step for Tim Horton’s to enter in Germany is to refer to local government, have a clear picture of

their policies and procedures, conduct a survey and then choose the best location that

economically and politically fits the company. It is a clear and open-end opportunity for the

company to hit a market where there is massive potential as the political situation of Germany

benefits the company and suits the home country i.e., Canada as well.

2. Economic environment

Economic factors are important metrics that determine the economic situation of the

country. These factors have the potential to make a company profitable when the factors are

favorable or likely to incur a loss when they are unfavorable (Perera, 2017). For fast-food

restaurant chains like Tim Hortons, factors like inflation rate, the gross domestic product, the
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current stage of the economic cycle, unemployment rate, and performance of the financial

market in the target country are crucial.

The economic system that is currently operational in Germany is a mixed economic

system which includes a variety of government regulation and centralized economic planning

combined with private freedom (Racy, Vartanian, Vendruscolo, 2019). Moreover, the fast-food

restaurant chain in Germany is highly fragmented owing to large and small players dominating

the market. A CAGR of 2.33% is expected in the German foodservice industry during the period

2020-2025 (“Germany food service market”). With this, the inflation rate of any country affects

the way a company price their products. This will also affect the purchasing power of a

consumer. As of 2021, the Inflation rate in Germany is 2.2% which is lower than the global

inflation rate of 3.2% (“Germany: Economic overview”).

Another economic factor important for this analysis is Gross Domestic Product (GDP)

and GDP growth rate. The rate of GDP growth will determine how fast the economy will grow in

the future. The GDP of Germany in 2021 is 4.3 trillion dollars, whereas the GDP growth rate is

3.6% and is expected to be 3.4% in 2022. Also, a high unemployment rate in a country indicates

the supply of more jobs than demand and it directly affects the labor costs of the company.

Germany has an unemployment rate of 4.4% as of 2021 which is close to the ideal

unemployment rate (“Germany: Economic overview”).

The performance of the financial market is another important factor that impacts how

well a company can raise capital at a fair price, considering demand and supply. As of August

2021, the Frankfurt stock exchange’s index DAX is steadily on a rising trend (“Germany stock

market index”). Moreover, the fluctuation of currency is also important- more fluctuations
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discourage international investors. Germany’s currency Euro is one of the most stable currencies

(“Germany: Economic overview”).

Thus, factors like inflation rate, unemployment rate, GDP and GDP growth rate, the

performance of the financial market, and stability of currency are favorable in Germany for Tim

Hortons to consider as a new market. Although the fast-food restaurant business in Germany has

a high level of competition from local as well as global competitors that can affect its long-term

profitability.

Analysis of Import/Export

For strategic decision-making and expanding the product portfolio in international

markets, trade analysis plays an important role. Germany is the largest export market in the EU

for Canada. Canadian exports to Germany were worth $6.37 billion and imports were $17.27

billion in 2020 (“Canada-Germany relations”). Moreover, Germany is the biggest economy in

the EU and Canada has a bilateral trade agreement with the EU called CETA (Canada-EU

Comprehensive Economic and Trade Agreement). This agreement covers virtually all aspects

and sectors of Canada-EU trade to reduce or eliminate barriers (“CETA Explained”).

With CETA, 98% of EU tariff lines are now duty-free for Canadian goods. Moreover,

Canada and the EU are working to keep the custom procedure simple, effective, and predictable.

This will reduce the processing times at the ports and will make it easier to transport goods

between countries Hence, Canada and Germany experience a positive trade relationship with the

help of CETA.

Germany’s top exports include cars($145B), vehicle parts($62.9B), packaged

medicaments($56.8B), planes helicopter and spacecraft($31.8B), exporting mostly to

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USA($131B), France($115B), China($107B). The top imports of Germany are cars($75B),

vehicle parts($41.1B), crude petroleum($29.4B), refined petroleum($23.5B). Importing mostly

from Netherlands($106B), China($96.9B), France($76.2B) (“Germany import/export

overview”).

3. Social/cultural environment and demographics of the country

Area: 357,114 sq. km. (137,846 sq. mi.)

Foremost Cities for the worldwide business in Germany are: Hamburg, Munich, Cologne,

Capital-Berlin, Frankfurt, Dortmund, Stuttgart, Essen, Dusseldorf, Bremen, Hanover.

Climate/weather: Temperate, cooler, and rainier than much of the US. Population (March 31,

2021, estimate): 83,121,363. Population growth rate (% once a year, 2010 est.): -0.053%. Urban

population (2008): 74%. Traditional groups for German is 91.5%, Turkish is 2.4%, other is 6.1%

(been up largely of Greek, Italian, Polish, Russian, Serbo-Croatian, Spanish); Danish minority

within the north, Sorbian (Slavic) minority within the east. Protestant stands at 34%; Roman

Catholic is at around 34%, and Muslim is only 3.7%; unaffiliated or more covers 28.3%.

Language: German. Education: Year’s compulsory-10; attendance is 100%; literacy rate is 99%.

Health: infant death rate (2010)-3.99/1,000; anticipation (2010)-women 82.42 years, men 76.26

years. Persons employed (second quarter 2010) is approx. 40.3 million.

Germans place a high importance on building, privacy, and dependability. The German

people adopt the values of prudence, industry and conscientiousness and there's great importance

on ensuring that things are planned and are on time. Consistent with Passport to Trade 2.0, a web

business decorum guide by the University of Salford in Manchester in England, "Germans are

most relaxed once they go to organize and classify their world into manageable units. Time,
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therefore, is well handled carefully, and schedules and scheduled and agendas must be

respected."

Germans are stoic people that strive for perfectionism and precision altogether aspects of

their lives. In beginning, their attitude could seem distant, but there's a keen sense of the public

and social conscience and a wish to belong. Everything is meticulously organized out and agreed

upon, with changes happening after an arrangement is formed, reliable with the German

Business Culture Guide.

4. Technological environment

German industry is extremely diversified and, in many sectors, it's a worldwide leader. The

most significant branch of the financial activity in Germany, with conventionally a really high

share of total economic construction, is industry. Total 49,000 German manufacturing enterprises

employ nearly 6.4 million of recruitment. Simultaneously they create revenue of fairly 1.3

trillion euros. 98 % of all German industrial companies are small-scale or medium-sized

businesses (SMEs) with 500 or a small number of staff.

Germany is the globe's third biggest vehicle maker, with fairly 70 % of vehicles made here

intended for export. Machinery and plant building, through which most German industrial

enterprises are involved, is moreover of exceptional global significance. Germany is furthermore

a globe leader within the business. Additionally, among Germany’s most advanced sectors with

above average growth rates are those of technologies for the utilization of renewable energies

also as information technology and biotechnology.

Germany’s greatest strength is its automobile industry. In the years to return, many

developing tools, from optical interaction networks to nanotech materials, will find their way
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into cars. German carmakers are counting on computer-based assistance systems that might

make driving safer and easier. In more-advanced systems, vehicles could use wireless

communications to tell one another in real time about oil puddles, traffic jams, or accidents.

They have introduced prototypes of hybrid gasoline-electric vehicles, carmakers in Germany

are counting on the longer-term vision of cell cars that consume hydrogen. In the late 1990s,

after enormous antinuclear demonstrations, the govt. alliance of Social Republicans and Greens

opted to close Germany’s nuclear power plants by 2020. The country committed itself instead to

developing renewable energy sources like wind and solar energy.

Focus on further ahead, German scientists do world-class basic science in fields beginning

from raw material science to biomedicine. German neuroscientists have made significant impacts

to research in brain transplants and in non-invasive brain-­machine boundaries.

Balance of payments/exchange rates

Many countries are concerned that a foreign-owned company may import many

components or services from its home country, which has negative implications for the host

country’s balance-of-payments position sometimes. However, Germany policy on foreign

investments is relatively liberal. One of the hallmarks of its economic development is its open

investment system. (cotta, huebner, & von, n.d.) Balance of payments benefits in Germany are

quite good in compare of other countries like in Canada for foreign investment and hence, Tim

Horton’s can use such benefits for tax breaks and grants in Germany.

The current account keeps track of commodities and services exported and imported. If

FDI is used to replace imports of goods or services, the outcome can be a boost to the host
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country's current account and balance of payments. Thus, Tim Hortons can sustain in long run in

Germany due to its balance of payments system under FDI rules of Germany.

Some reports claim the Tim Horton’s real estate strategy and choice of prime locations

throughout Canada is a critical factor which has contributed to the organization’s success. It

wisely chooses the best locations which are most convenient to its consumers. Land and

buildings serve as a revenue stream and asset on the corporate balance sheet. (Weatherby, 2016)

So, in Germany also they have to consider this factor to get good level on balance of payments

overall and to maintain balance sheet of the company in required way.

Moreover, there are two probable negative implications of FDI on a host country's

balance-of-payments position. First, the subsequent outflow of earnings from the overseas

subsidiary to its parent business must be weighed against the initial capital infusion that comes

with FDI. On balance-of-payments accounts, such outflows appear as a capital outflow.

Germany has responded by limiting the amount of earnings that can be repatriated to the home

country of a foreign subsidiary. A second issue develops when a foreign subsidiary such as Tim

Horton’s imports a significant portion of its inputs from outside the country, resulting in a debit

on the host country's current account. Likewise, all instruments and physical devices which Tim

Horton will require in Germany should be obtained within the Europe instead of importing it

from Canada to stop impacting on balance of payments in negative manner.

When a currency depreciates, the value of that currency falls in relation to other

currencies. In this scenario, the identical product, Tim Horton's coffee, will be available in both

nations, but sales are different. As a result of the prospective sales of branded coffee in the

Germany, the exchange rate of Canadian dollars to the euro is expected to fall. As a result of the

expansion, the exchange rate of the euro to the Canadian dollar will rise.
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HOFSTEDE’S ANALYSIS

1. Power Distance Index (PDI)

Power distance, one aspect of cultural dimensions which are proposed by Hofstede,

define as how a culture observe and tolerate inequity and power relationships between people. In

case of cultures with higher PDI, power is viewed as distributed unevenly, according to a ranking

system. It is believed that Tim Horton possesses a low PDI which means that everyone

regardless of their positions have the chance to be listened.

Firstly, this company favors an organizational hierarchy which is flatter. This means in

contrast to traditional models it is based on fewer layers. This trait could be translated into much

easier access to administration with resultant increase in personal motivation so as to boost

performance. Secondly this company said to benefit from more decentralized decision-making

process. These companies assign decision-making authority throughout the organization. This

process could lead to formation of closely integrated groups and also enhance the spirit and self-

confidence of workers as they have the chance to be associated in decision making.

The other element worth mentioning is delegation of power to employees. As this

company considered having low PDI, we could expect delegation without restraint. This could

boost responsibility of employees with resultant increase in productivity and faithfulness.

Moreover, there is lower demand for direct supervision as workers are trusted and motivated to

achieve the strategic goals of company.

2. Individualism vs. Collectivism

It is known that in societies with individualistic patterns the emphasis is on personal

independence. Within these cultures, people tend to consider themselves isolated from others and
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individuals could be viewed based on personal traits. In contrast in collectivist societies

individuals could be viewed in groups. Individualistic organizations attach significance to

individual achievements whereas in collective organizations, the vital part is a common objective

requiring people to work as groups. It is stated that Tim Hortons experiences a balance between

individualism and collectivism. This company value privacy of workers in work environment

and their routine life. It is interestingly evident that individual attainments are celebrated in this

company with the potential to enhance the inspiration of workers. At the same time branches of

Tim Hortons could be viewed as groups which are a good example of collectivism and each

branch as a group tend to boost their sale and revenue.

Overview of Germany as potential country to establish branches of Tim Horton’s

As the Tim Horton originated in Canadian culture with

the comparison of these two countries, we could get

insight into possibility of expansion of this company

action in Germany. It is evident that PDI is 39 in Canada

and 35 in Germany. This shows that there is not significant difference between these countries.

However, the lower PDI in Germany showed a more decentralized decision making and

therefore a more equal power distribution. Other companies trying to expand their branches in

Germany must consider this trait and apply a flatter organizational hierarchy.

These statistics shows the score of 80 for Canada

(similar to USA) and 67 for Germany. Although the scores are lower for Germany but The
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German society is considered as individualist country. There you can expect small families with

an emphasis on interactions between first-degree relatives rather than other relatives. Workers

are much more self-reliant. In Germany people concentrate on personal achievements and

individual rights. Autonomy and self-sufficiency are vital parts in individualistic countries.

Therefore, any company wants to make a branch in these countries must pay attention to

personal rights and privacy and the reward system must be directed towards self-competencies

3. Masculinity versus Femininity (mas)

Tim Hortons has a low MAS score, indicating that job roles in the business commonly

share between men and women.

Egoism: Tim Hortons supports a culture that is less egoistic. This has benefited the company

since it has enabled talented women to rise to the top– without affecting the firm's team

dynamics. Women in the company are honored for their accomplishments in the same way that

men are.

Motivation factors: The achievement of Tim Hortons is so much more likely to be

accomplished by means of collaboration and negotiation. The firm does not promote or facilitate

the achievement of individuals – physically, mentally, or emotionally - based on rigorous rivalry.

Gender role differentiation: Within the work duties, activities and career paths based on sex

distinction, Tim Hortons does not encourage discrimination and stereotyping. Most Tim Hortons

duties must be distributed fairly and promote equal opportunities in the workplace for both sexes.

4. Uncertainty Avoidance Index (UAI)

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Companies with a high uncertainty avoidance seem to use a more regulating attitude and

low scores on the uncertainty avoidance reflect a more relaxed open and pleasant culture. Once

more, Tim Hortons is a hybrid of the two, with a preference for lower uncertainty avoidance

ratings.

Opened to change: Tim Hortons fosters an open-to-change whin their company. Using

teamwork, the firm collaborates in change management initiatives to enhance its operations and

cultures.

Sense of urgency: Tim Hortons places a greater emphasis on merit-based performance and

rewards personnel who do not break under stress. In addition, the organization feels less urgent

and personnel have a calmer culture.

Risk-taking: Tim Hortons might be regarded reasonably as a company that takes risks. The

firm's willingness to take risk emphasizes the importance of exploring and capitalizing on

possibilities - while avoiding loss.

Flexibility: Tim Hortons' tactics and different departments operations are dynamic in order to

suit the demands and expectations of the company's aims as well as country-specific necessities.

A high score (masculine) in this diagram shows that

rivalry, performance and success drive society, with a

low score on the diagram (Feminine), other values

and quality of life in society are the dominating values. On this figure, Canada has a score of 52,

while Germany has a score of 66, indicating that it is a fairly “Masculine” society. The

importance of success is highly appreciated. They like to "live in order to work" and obtain a
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great deal of self-esteem from their jobs. Managers are supposed to be strong and determined.

Status is frequently shown, particularly by automobiles, watches, and technological equipment.

The diagram Uncertainty Avoidance depicts how a

society cope with the reality that the future can never

be predicted. The Canadian score on this scale is 48,

indicating that Canadian culture is more “uncertainty accepting.” This indicates an

entrepreneurial spirit, creative goods, and a desire to start something new or unusual. Germany is

one of the countries that wish to avoid uncertainty (65); the score is on the high end, indicating a

modest tendency for Uncertainty Avoidance. Details are also crucial to ensure a well-considered

subject or project. By depending heavily on data, Germans overcompensate for their increased

uncertainty.

5. Long-Term Orientation

Tim Hortons places a high value on employee education and merit. The organization not

only hires the greatest and most educated candidates for its many roles and jobs, but it also

ensures that employees are constantly learning through job assignments, engagement, and

training. The Tim Hortons is equally conscious about its responsibilities. The company's CSR

efforts are ongoing and meticulously planned and implemented to reflect the company's mission

and attitude.

Germany's high score of 83 suggests that the country is pragmatic. People in pragmatic

civilizations believe that truth is highly dependent on situation, context, and time. They

demonstrate an ability to easily adapt traditions to changing circumstances, a strong proclivity to

save and invest, thriftiness, and tenacity in reaching goals.

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So, considering above analysis, Tim Horton’s system can sustain in long run for its Germany

expansion until company is also adapting the nature of country also for its pragmatic level.

However, changes in conditions will not make too much impact on such food industry where

common eating and drinking items to be sold.

MARKET ENTRY STRATEGY

The most suitable market entry strategy for Tim Hortons in Germany is franchising.

Franchising is well-used North American business process for rapid market expansion in new

markets. Franchising works best with firms in the businesses like food outlets that have a

repeatable business model and can be transferred into other markets. To consider franchise

model, the only thing required is to have a strong brand recognition that can be used

internationally.

As mentioned earlier, from an economic environmental perspective, a CAGR of only

2.33% is expected in German food service industry, hence any other strategy like Greenfield

investment or joint ventures can prove risky in the long-term.

Franchising helps expand a business beyond its limits and explore its visions beyond the

horizon. This is a great step in growth of a company not only economically but also politically.

The relationships between countries grow stronger when big businesses open their franchises in

different countries. This helps boost the GDP of home as well as the subject country and it most

importantly expands upon the already built business, touching lives of diverse people on
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international level. International recognition then plays a part through positive word of mouth

and helps business to take steps whereby they are able to survey additional countries to expand

themselves.

According to the studies, the levels of individualism followed by sex-role-differentiation

were positively related to the quantity of international franchisors in a given country. The

relationship with power distance and uncertainty avoidance are relatively insignificant. Studies

suggest that higher levels of individualism and sex role differentiation considered being

attractive for international franchisors. (Alon, Ni, Wang 2010) .In a study done by Micuchova

and colleagues in 2012 it is shown that the brand position of a franchising fast food system

tends to be higher in countries with low Power Distance and high Masculinity. Interestingly

these factors in Hofstede model are in the favor of franchising system for Tim Hortons in

Germany

Based on the technological and social and cultural aspect of the country Franchising

strategy will be the suitable for Tim Horton as well, as the technological aspect of the country is

very high. German is most advanced sectors include technology for renewable for the utilization

of renewable energy and that can be a great benefit for Tim Hortons to start with high

technological and cultural point of view. German culture of professionalism will also be

favorable for Tim Horton to franchise in the country.

.
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