By Saeed Karimabadi

Executive Summary:

Canadian Tire Corporation (CTC), with 495 dealer-owned Canadian Tire stores, 436 FGL Sports banner stores, 297 gasoline outlets, and 383 Mark’s stores, is one of Canada’s largest and most iconic retailers. While CTC’s core business is Retail with Canadian Tire Retail (CTR) as its core platform, the generational shift CTC is embarking on places increased focus on FGL Sports, with Sport Chek as its super brand. Here we will discuss Risks and rewards of Canadian Tire Expanding to United States markets

Company Overview:

Canadian Tire Corporation (CTC), with approximately 1,700 retail and gasoline outlets, is one of Canada’s largest and most iconic retailers. In 2014, Company reported revenue of $12.5 billion dollar and they ranked 38 out of 50 top most valuable retail brand in North America.

CTC’s core business is Retail and its core platform is Canadian Tire Retail (CTR), CTS is also focus on FGL Sports (specifically, the Sport Chek banner) as the proverbial tip of the spear for CTC.

CTC has six business categories:

·         Automotive

·         Living

·         Fixing,

·         Playing and Sport

·         Apparel

·         Financial Services

Everything positioned to prepare Canadians for the jobs and joys of everyday living in Canada. The CTR operated network comprises 595 (including 91 corporate PartSource) dealer-operated stores representing 20.5 mln sq. feet of retail space. The FGL and Mark’s banners comprise 436 (7.2 mln sq. feet) and 383 stores (3.5 mln sq. feet), respectively. Canadian Tire Gas bar locations currently number 297.


Figure 1- CTC Business Categories – 2014 Revenues

Source: Canadian Tire Corporation, Statistics Canada, Raymond James Ltd.

Sport/Playing Market:

With an estimated 8.7% market share, Canadian Tire is the third-largest player in the approximately $8.7 bln Canadian sporting goods market. The following diagram, below, highlights the evolution of the Canadian sporting goods industry and its largest players.


Figure 2- Largest Canadian Sporting Goods Retailers – Market Share

Source: Trendex North America, Raymond James Ltd. (CTC banners marked in red)

Canadian Tire’s sporting goods selection is largely comprised of hardgoods (70% of assortment), with leading market positions in hunting, fishing, and camping, as well as strong market presence in hockey equipment, biking, and biking accessories.


Mark’s offers affordable industrial and casual apparel and accessories, and is one of the largest specialty retailers in Canada. The store network at the end of 2014 was 383 of which 348 were corporate stores (including 65 store-within-stores), and 35 were franchise stores. While Mark’s is generally associated with industrial wear, it also offers men and women’s business, casual, and active wear. Mark’s 2014 revenues were $1,122 mln (9.9% of CTC revenues).


Canadian Tire Petroleum is one of Canada’s largest independent gasoline retailers, with 297 gas bar locations across the country. The majority of the gas bar sites are located adjacent to a CTR store, which serves to drive increased traffic to these stores.

Financial Services

The Financial Services segment or Canadian Tire Financial Services, while a key driver of CTC’s profitability with a solid track record, has found driving growth relatively challenging in the 5 years through 2014. While Financial Services represents only 8.6% of total revenues, the segment generates much higher margins and, as such, accounts for approximately 39.3% of EBT. Canadian credit card purchase volumes increased by 7.9% to $387.4 bln in 2014.


Automotive Market:

Canadian Tire is the largest player in the aftermarket DIY auto parts industry in Canada, commanding an estimated 9.2% share of total auto aftermarket sales, and the leading online tire and wheels retailer. Canadian Tire bannered stores cater to the light to medium Do-It-Yourself (DIY) customers, while PartSource caters to the hard-core DIY and the previously untapped commercial installers markets.


Figure 5- Size of Automotive Aftermarket – DIFM and DIY

Source: Canadian Tire Corporation, Statistics Canada, Raymond James Ltd.


Loyalty Program:

Canadian Tire money is a loyalty program. It consists of coupons, which resemble the real currency before the introduction of the polymer bills. It can be used as scrip in Canadian Tire stores, but is not considered a private currency.



Figure 4 – Canada’s Oldest Loyalty Program Goes Digital



SWOT Analysis:

Strength Weaknesses
·         Canada’s largest retailer

·         Strong & loyal customer base

·         Wide range of goods & Services

·         Attractive promotional offers

·         Longest running customer rebate program

·         Lack in global recognition due to other brands

·         Market share is limited due to competitive segment

·         Lack of adapting to changing demographic

Opportunities Threats
·         Expansion to other countries other than Canada

·         Large brand awareness to leverage

·         Easily expand cultural aspect to attract more diverse clientele

·         Global presence of its competitors

·         Low priced brand perceived to be low quality

·         Losing focus on customer service


Host Country:

The chosen Host country is united states. Since it is very accessible due to the close distance and also the country has lots in common in term of the cultural similarities, as well as market common attributes.

United States Political and Legal system:

The government of the United States of America is the federal government of the republic of fifty states that constitute the United States, as well as one capital district, and several other territories. The federal government is composed of three distinct branches: legislative, executive, and judicial, whose powers are vested by the U.S. Constitution in the Congress, the President, and the federal courts, including the Supreme Court, respectively.  (Wikipedia, Federal Gov.)

Legal System:

United States legal system is based on English common law at the federal level. States legal systems are based on common law except the Louisiana.


The President of the United States, United States Congress, and United States federal courts share powers reserved to the national government. At the same time, the federal government shares sovereignty with the state governments. Two political parties, the Democratic Party and the Republican Party, have dominated American politics since the American Civil War, although there are also smaller parties like the Libertarian Party, the Green Party, and the Constitution Party.


United states Judicial system consists of courts, Judges and the Supreme court which interprets and applies the laws.


At the federal level in the United States, legislation consists exclusively of Acts passed by the Congress (House or Senate) of the United States and its predecessor, the Continental Congress, that were either signed into law by the President or passed by Congress after a presidential veto. Congress has 535 voting members: 435 Representatives and 100 Senators. The members of the House of Representatives serve two-year terms representing the people of a single constituency, known as a “district”. Each senator is elected at-large in their state for a six-year term, with terms staggered, so every two years approximately one-third of the Senate is up for election.


Voters will select presidential electors, who in turn will vote for a new president and vice president through the Electoral College.

Political Risk:

According to (GlobalEdge, 2016), United state has very low political risk and it has been categorized as Country Risk Tier 1 which indicates it is a safe place to do business.

International Organization Participation:

According to CIA world fact book (CIA Fact book,2016) United states is part of several prestigious organizations including NAFTA (The North American Free Trade Agreement), WTO (World Trad Organization)


Country Risk:

According to (Global Edge, 2016) united states has very good political and economical situation with very low risk. The business climate is also very good. Corporate financial information is available and reliable. Debt collection is efficient. institutional quality is very good.


International Strategy:

Current Strategy: Until now, Canadian Tire was more focused on the Canadian market and they have not expanded their business to any other countries. They decided to no go abroad to not loose their focus on their main business which is the Canadian market. Also Canadian Tire is a true Canadian established business, they have this advantage of knowing their local market and also they have outstanding brand awareness among the Canadian customers, so they decided to be more focused on their core business of serving Canadian market.

Short Term Strategy: Our proposed short term international strategy for the Canadian tire is to perform the home replication strategy to expand its activity to United States market. Considering the market and cultural similarities between two countries it is reasonable to create outlet stores based on the currently established model of Canadian outlets. Company can use the same store layout, business internal procedures, distribution methods and supplier selection approaches.  Canadian Tire should focus on generating incremental sales. The Initial start-up expansion can will be funded by diverting profits from Canada.

In this step the company will expand to the northern US states first, since those states have socio-cultural and geographical similarities comparing to Canada. Also Canadian people who trespassing borders have more presence in these states, which will help the sale boost as well as more brand awareness in the region. Canadian Tire will open 10 stores in major US cities where it gets cold and there is an NHL team, like Detroit, Boston, Buffalo, Philadelphia, Washington, New York, Pittsburgh, Chicago, Minneapolis and Columbus. During the NHL games many of the Canadian citizens pass the border to be part of the NHL matches.  They are potential customers who already know Canadian tire brand.

Long Term Strategy: in second phase of the expansion, Canadian Tire should expand to Southern US provinces. Since southern states have more geographical distances from the company home country, switching to Multidomestic Strategy would be a better approach for as a long term strategy.

Timeline: 2017 is Canada big 150th year birthday, we can leverage the favourable view of the Canada and president Justin Trudeau to launch the company expansion to united states.

The company will launch its distribution center in Buffalo which is close to the Canadian Border. Shortly company will launch its first two stores in Buffalo and Detroit. Later Canadian Tire will open other eight stores in major Northern cities.

Global Market Opportunity Assessment:

Canadian tire is active in several markets in Canada including: Gardening Tools, Home Furnishing, Home Improvements, Homewares, Home and Garden and automotive parts and etc. Following table shows market segments for some of these markets:


Table 1 – Sales of Home and Garden by Category: Value 2010-2015 (euromonitor, 2016)

USD million 2010 2011 2012 2013 2014 2015
Gardening  29,560.1 30,944.4 31,996.7 32,581.7 33,205.3 34,250.0
Home Furnishings  121,199.2 123,764.4 127,151.3 130,158.0 133,921.6 138,965.3
Home Improvement  57,444.7 59,884.6 62,477.8 65,138.9 68,107.9 71,015.3
Homewares  10,523.0 10,973.5 11,003.2 11,174.3 11,373.3 11,664.9
Home and Garden  218,727.1 225,566.9 232,628.9 239,052.9 246,608.2 255,895.6


Home and garden market is about 256 Billion USD with 4% annual growth. Considering the market statistics, we expect that in first couple of years’ Canadian tire can achieve 0.5 percent of the market which will bring 12.8 Billion dollars in revenue for this segment.

Tools and Hardware wholesaling is another relevant market in the US which 63 Billion USD with 4.6% of annual growth. Our estimation market penetration for this segment is around 1% for first years which will bring 6.3 billion dollars for the company.


Choosing Business Partner:

Establishing strong business partnership can reduce the total expansion risks. We suggest Canadian tire to Establish US based releation with existing partners and suppliers including Goodtear Tires, DeWalt, Mastercraft, Coca-Cola and Legostina. These brands already have US presense and establishing partnership with these company can result in smoother business expansion and controlled risk and liability.

Main Competitors Analysis:

In retail store, Wal-Mart, Home Depot and target are three main competitors for Canadian Tire, following tables shows that main strategy, weakness and advantages of these three companies:

  Wal-Mart Home Depot Target
Future Objectives ·                 To satisfy customers with the lowest prices and expand in new markets. ·  To deliver innovative and distinctive products to customers at attractive value. · To provide the long-term value for customers and deliver continued profitable growth and meaningful shareholder reward.
Current Strategies ·                 Use of information technology: to refine resource procurement processes and create more efficient international logistic system

·                 Strategic Alliance: joint venture with companies in target international markets

·  Customer Service: introduce new information technology to serve customers more effectively and enhance the shopping environment · Product Authority: form strategic alliance with suppliers

·  Interconnected Retail: improve customer’s retail experience and customer’s access to information about products

· Focus on the expansion to Canadian market

· Open the expected number of Canadian Target stores

· Design new marketing programs that creates differentiation to other Canadian retail stores

Assumptions ·                 Global environmental awareness is increasing

·                 Globalization of markets

·                 Effective information system is important for company to optimize its operation and maximize sales

·  Business is needed to be expanded in the international market whiling maintaining competitive position in the U.S. market

·  Relation between strategic alliances is key

· Differentiation: improve customer experiences by creating an attractive value proposition through combination of price, guest services and marketing efforts

· Multichannel retailing is rapidly evolving

· Increased product safety concern in the society

Capabilities ·                 MIS: use point of purchase data collection system to manage inventory effectively

·                 Distribution: state of the art retail distribution system maintains effective logistic management

·  Supply Chain: effectively managing inventory investment, and total supply chain costs; provide optimal flow path for products

·  Serve different types of customers: DIY, DIFM*, and Professional customers

· Vertical integration: Target sells its owned and exclusive brand products such as Market Pantry and Target Home which generally carries higher margins

· Extensive use of computer system: effectively manages company inventory, processes guest transactions and logistic system

General Notes Large existing competitor in the overall retail industry Largest home improvement retail competitor Incoming competitor from the U.S. and a competition of the grocery sector


Mode of Entry:

Due to market attributes we want to have high control over the new branches so Canadian Tire will use Wholly Owned Subsidiaries as the Mode of entry for this expansion. This Greenfield venture will let the company to have high control and adapt the new stores to the new markets demands. With This method, Canadian Tire owns 100% of the stock. It is easier to build the Canadian Tire Culture, and strong localization advantages due to the shared border.

Wholly owned Subsidiaries needs high capital investment, and Company is responsible for all of possible Risks.

Greenfield ventures take more time to establish versus acquiring an existing firm. Past experience in U.S. market in 80`s and 90`s  provides historical experience the corporation can learn from to do it more efficiently this time around.

Canadian Expatriates: Approximately one Million Canadians are currently living in U.S.

California is the highest state of Canadian residents to-date. (Stat Canada, Immigration)

Brand Recognition: Highly competitive U.S. Market does factor into entry strategy; however due to large number of Canadians living in border states, brand recognition plays a significant role in supporting the Greenfield venture strategy.


Canada and United States has several cultural similarities, according to Hofsted cross-cultural dimension score table, both countries have almost same scores in Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long Term Orientation and indulgence. (Hofsted, 2016)

This similar cultural environment will reduce the company risk, and company can save on using same products and advertisement for both domestic and host market.


Table 2- Hofstede Cross-Cultural Dimension Scores (Hofstede, 2016)




United states has a very suitable business environment with proper ethic attributes, we will consider following aspects for analysing US Ethic status:

  • Corruption
  • Intellectual Property
  • Corporate Social Responsibility & Environment
  • Human Rights


Both countries have low level of corruption. According to (CPI,2015) US is ranked 16 out of 167 on the CPI 2015 and Canada is ranked 9th.

Rank Country/territory 2015 Score 2014 Score 2013 Score 2012 Score
1 Denmark 91 92 91 90
2 Finland 90 89 89 90
3 Sweden 89 87 89 88
4 New Zealand 88 91 91 90
5 Netherlands 87 83 83 84
5 Norway 87 86 86 85
7 Switzerland 86 86 85 86
8 Singapore 85 84 86 87
9 Canada 83 81 81 84
10 Germany 81 79 78 79
10 Luxembourg 81 82 80 80
10 United Kingdom 81 78 76 74
13 Australia 79 80 81 85
13 Iceland 79 79 78 82
15 Belgium 77 76 75 75
16 Austria 76 72 69 69
16­­­­ United States 76 74 73 73

Table 3 – Corruption Perceptions Index (CPI) 2015

United states have International anti-corruption conventions and intergovernmental organisations. Country has rich anti-corruption laws and bribery is considered as and offence. There are several Penalties for individuals and companies who do not follow the rules. And country has several enforcement agencies.

Intellectual Property: United State has strong laws, supporting Intellectual Properties. The Nationwide Intellectual Property (CHIP) Coordinator Network consist of 93 Offices countrywide.

Corporate Social Responsibility & Environment:

There are too many NGO’s in U.S. that they are monitoring environmental and corporation’s social issues. There major Criticism on this matter and companies should be responsible to agreements and codes of conduct and Maintenance of standards in domestic and global operations.

More and more corporates are expected to move toward sustainable production.


Human Rights:

Corporations are receiving heavy criticism about complying human rights. Companies should consider Equal opportunity in their hiring and provide a hostile work environment. NGO’s are very active in these domains and companies should maintain standards in domestic and global operations.


Human resources:

For new outlets, company will need four different type of resources: hr manager, store manager, cashiers, departments staff, auto repair expert mechanics. As it is a new experience in a foreign country, we recommend that the store managers to be selected from previous Canadian store managers, so they can bring and transfer company values and expertise to these new stores.  HR manager should be sources from local US people, because HR manager should know the local culture and people behavior and habits. The reset of resources can be hired from US local candidates. Us is a more competitive market, we should consider minimising the labor cost in US to be able to compete with other market players. There are lots of common socio-cultural attributes between two countries. The same approach to human resources can be chosen for US market.


Risks and rewards:

Cross- Cultural Risk: As we discussed in previous section both countries have similar cultures and Cross-Cultural risk is very low. Both countries share English as their official language and the customer preferences is pretty the same.

Canada GDP per capita is 50,000 USD and United State GDP per capita is 51,486 which is very close to each other.

Political Risk:

United State has stable democratic political system. Country benefits from an Strong Legal system. following table shows United states political stability over last 15 years. As we see, recessions and terrorist attacks had minor effect on countries stability, but in overall, US is conceived to have stable political environment.


Table 4 – United States Political Stability (Word Bank,2016)

Another research from A.M. Best shows (A.M.Best, 2016) that united state has low risk in several social and political areas and the country rate is better than world average in all areas.


Table 5 – United States Political Risk Summary (A.M. Best, 2016)


Presidential Election: Uncertainty over the 2016 presidential election could lead to uncertainty over international relations and the potential for trade deals in the near future.

Currency Risk :

Over the last recent years Canadian Dollar has lost its value against the US dollar, also due to the strong economy of the united state, US dollar has been appreciated world wide. Following diagrams shows Currency fluctuation rates and us dollar appreciation over the years.


Table 6 – Currency exchange fluctuations


Table 7 – Appreciation of the U.S. dollar (Wikipedia-USD Fluctuation)


Our analysis shows noticeable revenue for Canadian Tire expansion to united states. United States has favorable political and economical environmental for doing business. Risks are very low and there are several similarities between two countries.   Our analysis shows that Canadian Tire should expand its business to united states and we predict a good future and revenue for Canadian tire.



Canadian Tire Corporation, Statistics Canada, Raymond James Ltd. Retrieved from:

Government of United States, Wikipedia, retrieved on19 October 19, 2016 from

United States presidential election, 2016, Wikipedia, retrieved on 19 October 19, 2016 from,_2016

GlobalEdge Business Report, retrieved on October 2016 from

GlobalEdge Business Report, retrieved on October 2016 from

CIA Factbook, Accessed on October 2016

Euromonitor report on Home and Garden in the US, retrieved on October 2016 from:

Stat Canada report on Emigration from Canada to the United States from 2000 to 2006, retrieved on October 2016 from:

Hofstede Cross-Cultural Dimension Scores between US and Canada,  retrieved on October 2016 from:

Corruption Perceptions Index (CPI) 2015, retrieved on October 2016 from:

World Bank report on Unites State Political Stability, retrieved on October 2016 from:

A.M. Best United State Political Risk, retrieved on October 2016 from:

US Dollar Index, Wikipedia, retrieved on October 2016 from:

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.