In order to assess TimHorton’s response to the external environment, a series of factors will have tobe considered, which will entail how Tim Horton and THs competitors respond toCultural, Geographical and Economical issues. 2.3.
1 Cultural IssuesThe outstanding culturalissues of investing into foreign countries will be a barrier to future success;this is a weakness of international trade as investing into newly developingcountries takes time to adapt to culture, as it creates a culture shock to thelocals as they are unfamiliar with the food types. This is commonly known asacculturation; when an individual is introduced and adjusts to another culture (Czinkotaand Ronkainen, 2001 pg. 61). Therefore, in order for abusiness to strive in foreign market, the need to adapt to foreign marketsculture would be required, for example, problems will arise when certaincultural minorities and majorities will not eat anything due to dietaryrestrictions, as such in India; India have a large majority of Hindus (80.5%),Muslims (13.4%), Christians (2.
3%), Sikhs (0.80%) and Jain (0.4%).
Therefore,MNCs will have to will to ensure they accommodate the needs of all thedifferent types of consumers. Furthermore, the language barrier will inevitablybe a problem, and language will be seen as another weakness of internationaltrade (Hamilton,L. and Webster, P. 2012), especially in the developing countries, whichhave low literacy rates, thus speaking English may become an issue, thuscreating communicative issues. Tim Hortons would have tosuccessfully implement cultural tactics and strategies to attract customer. Forexample, the menu would have to tailor the needs of the population in terms ofdietary requirements and drinks.
To expand, Starbucks have expanded into India,and by doing so they have changed their menu to tailor the needs of the Indianpopulation, by introducing vegetarian produces and more, this is to meet thecriteria that, a big population of India are vegetarians due to religiousbeliefs, so the stores in India have no sandwiches that contain beef (Starbucks.co.uk,2018), which is entirely for both cultural and religious belief.
This is aprime example of diversification that Starbucks have undertaken, moving awayfrom their core foundations and incorporated into the company. Therefore, if THwere to expand into Indian the market or into any other foreign market it isimperative for success, that the integration of local and national culture isundertaken. 2.3.2 GeographicalIssuesGeographical issues can be avery hard barrier to tackle as MNCs will have to overcome issues surrounding communication,legislation and policy change, Climate changes and physical disturbances i.e.
natural disasters. These are obstacles that MNCs will overcome over time. Tim Hortons currently have 4,613 storesworldwide (Timhortons.
co.uk), therefore TH still have a lot of room forimprovement, as other coffee giants like Starbucks, who currently have 26,696(Starbucks.co.
uk, 2018), and other giants like Costa, which have Costa openednet 184 UK stores, bringing the total number of stores in the UK to 2,218.Internationally Costa now operates 1,314 stores across 29 countries (Costa.co.uk.
2018).So as competitorshave expanded operations into foreign markets and fully diversified theirrange, making their brand name famous. TH can learn from this as the growthshows that the coffee industry is demanding and growing. View figure 3:Tim Hortons have clearly notcovered quite the geographical area that competitors have, as the maincompetitors in their foreign markets are doing very well, are a household name,with their brand image worldwide. So this proves to be a weakness, ultimatelyproving that this is an area that TH would definitely need to improve upon. 2.3.
3 Economic IssuesEconomic downfalls are oftenan overlooked issue which can prove to have long term problematic effects onthe organisation. For example, as different countries have different prices,prices of suppliers, exchange rates dropping and many more. These all play apart in the contribution of how successful a MNC will inevitably be. Theconsumer price index mentioned above (See task 1 – Economical Influences) showsus the variations, over the years, of consumers, therefore, this willinevitably play a part in how different consumers decide to spend their money.Furthermore, meaning that consumers may be more viable to opt for householdnecessities e.g.
food, water, clothes and miscellaneous. Especially consumersto are currently living in poverty, this will influence the spendingdramatically, as income is less, TH would have to lower the prices of theirproducts in different countries to increase demand, as to these majority groupswill not be able to afford these meals, and often see them as luxury meals. For example, TH opened stores in the Philippines,where the average minimum wage is 243 Philippines peso (PhP), which is theequivalent of £3.56, so in order to create a demand, TH will have to lower theprice of their products to create a demand and make a profit. However, also dueto the low income, this may deter customers from purchasing products, as noteveryone will be able to afford the products.