In the early part of 2015, Canadian retailing underwent a transition. It started
ID: 426075 • Letter: I
Question
In the early part of 2015, Canadian retailing underwent a transition. It started with Target
Canada announcing that it had filed for bankruptcy and would be closing all 133 of its
Canadian stores, resulting in a loss of 17,600 jobs. Within a few weeks, another announcement
hit the media: this time it was Burger King declaring that it was taking over Tim Hortons
(Canada’s 50 year old doughnut and coffee behemoth), resulting in rumours that hundreds
at Tim’s Oakville head office would be served layoff notices immediately. By mid-April
another surprise announcement was made that effective immediately: all Future Shop stores
would be closing their doors permanently and consolidating under the Best Buy name.
--What would prompt these organizations to make such radical decisions?
--What changes in consumer behaviours were prompting executive decision making to shift?
Explanation / Answer
Q1) Below are the reasons that would prompt organizations to make radical decisions of transformation leading to huge job cuts or layoffs and shutting down of operations -
1. Huge losses resulting from the current business operations resulting in lack of capability to run the units anymore.
2. Business expansion opportunity in the form of strategic alliance/joint venture/mergers and acquisitions leading the decision to do away with the current operations and resources.
3. Market conditions and economic recessions prompting the organization to look for turnaround options.
4. Revenue losses due to loss of consumers to competitors.
Q2) The changes in consumer behaviors that were prompting the executive decision making to shift include -
1. Increase in the competition in the market where competitors are offering better products at relatively lower prices that is attracting consumers to shift their loyalty to competitors.
2. Lack of any improvements in the current products in the market as per the changing consumer requirements leading to obsoletion of the products in the minds of consumers.