Evaluating Canadian Tire Corporation's Organizational Structure and Its Business Model

[pic 1]

[pic 2][pic 3][pic 4][pic 5]

Case Study Solution

Evaluating Canadian Tire Corporation's (CTC) organizational structure and its business model.

The business model can be interpreted by evaluating the five business groups presented in the case.^[1]  We have identified that CTC serves three industries or business activities as their core operations.^[2] 

Retail operations are split between Canadian Tire Retail, Part Source, and Mark’s Work Warehouse.  Retailing is directed to different target groups or sub-segments within their structure:

• sports apparel,
• automotive parts,
• and casual/work apparel for women and men.  

Having different target groups within their retailing operations will affect the way that information is used to make decisions, and enhance business performance.  Data gathered will have to be analyzed differently for marketing purposes, inventory planning, strategic planning, and financial performance.  Having said this, there is a common background and knowledge for retail operations that can be applied to all sub-segments.  CTC operates a total of 760 Stores across Canada, from which 390 stores are operated by associate dealers.  

The automotive services operations are carried out by Canadian Tire Petroleum.  Customers are served at 234 locations across Canada (shown in Table 1).  This industry provides integration with the automotive parts retailing, enabling the company to sustain growth and potentially create economies of scale.  

The financial services operation provides a platform to maximize the marketability of all products offered by CTC to its customer base through the implementation of a loyalty program and financing merchandise purchases for customers.  This integration gives the company the ability to retain their customer base and attract new customers with the benefits offered in their Master Card program, which currently registers two million subscribers.

The business environment also presents challenges towards developing their business strategy.  The company has an increased pressure to invest in technology to stay ahead of their competition.  Customer demands towards diversity of products, home delivery, on-time availability, as well as security features to protect them from fraud and identity theft; the company might also need to protect itself towards security threats in their physical and e-commerce platforms through the implementation of technology.  The implementation of BI infrastructure will make more data available to the company, as they capture feedback through social networking and other web 2.0 characteristics.  Table 3 presents a summary of business environment factors that can create pressure to CTC’s business.  (Sharda, Delen, & Turban, 2014; Sharda, Delen, & Turban, 2014; Sharda, Delen, & Turban, 2014)  CTC could generate a competitive advantage if they’re able to beat other companies like Hudson Bay Company and Ace Hardware in implementing successfully their BI structure.  The implementation of a process oriented business environment will also result in cost efficiencies compared to its competitors, due to its capacity to provide data on-time for analysis and decision making.

The organizational structure of CTC shows great opportunities for improvement.^[3]  Canadian Tire Petroleum and Canadian Tire Financial Services are not easily identifiable from the organizational chart provided in the case.  The segmentation of these business groups impedes the implementation of strategic planning for the entire firm, as there is no way to integrate all business units to execute to the plan.  Accountability and responsibility is difficult to determine throughout the firm’s operations, thus resulting in agency costs arising from the duplication of tasks as presented in the IT development within business groups that escapes the scope of IT governance.  

Another aspect that can be affected is gathering of knowledge and the identification of best practices when organizational structures are modeled through companies or divisions rather than core business activities.  Its preferable to have standard processes applied to business activities that can then be specialized through management and planning for specific activities.

Evaluating the importance of business intelligence (BI) for CTC, and their readiness for implementing the BI program w.r.t. knowhow, analytical capabilities and deployment of such a solution.

The firm has a complex operation that poses several logistics and management challenges.  The wide geographic area where stores are located and the inclusion of associate establishments needs to be connected and coordinated.  Standardized processes, and information technology can provide a platform to deliver consistent operational quality in all locations, with the potential of improving customer satisfaction, and cost efficiency.  Business Intelligence platforms would help management to monitor the development of business activities throughout the corporation by providing data at a time that is relevant for analysis and business decisions, and identify best practices that can be implemented across the organization.  

Big data can be mined from business transactions with its customers could lead to predict consumer preference trends through the analysis of web traffic in e-commerce platform^[4], spending patterns from their loyalty program product could enable them to make efficient and effective marketing to maximize the attraction of new customers.  Management can use its BI framework to develop KPI’s to drive predictive analytics that empower structured and unstructured business decisions, such as future store locations or identify business disruption opportunities, and optimize working capital and CapEx.  All of these activities empower the company to improve their operational, managerial and strategic planning, where growth and cost efficiency are identified as a key factors.

Before implementing the BI platform, we suggest a reorganization of activities to reflect core business and key support functions to enable strategic decision making.  In Table 5 you can find a reorganized business structure that would provide better support to all business activities of the firm.  This structure would enable process standardization and capturing knowledge that can then be applied to identify and solve problems from day-to day operations.  The application of this structure transforms into an operational matrix where business solutions are developed by coordinated support functions that make an optimal use of business knowledge and BI tools.^[5]   

Its also imperative to step up the implementation of data quality due to the broad range of ERP systems and specific applications used to capture and process data.  Standardizing data, and making sure that the outputs generated by each ERP systems and application generated data have the same standard of quality will enable CTC to make optimal use of their BI infrastructure.  The reduction of IT groups outside the quality governance is necessary to implement successfully the BI strategy.  The implementation of the BI framework is still at a design base, since the model needs validation to make sure that the proposed changes to the operational matrix and IT governance work for the firm’s BI strategy.

Analysis on how to create a culture that values high quality data at CTC [What are the steps and strategies that various stakeholders at CTC need to take to secure highly valuable and accurate data. Indicate if these strategies differ based on those stakeholders.]

To create a data quality culture, CTC must involve all of the business areas in the firm to develop its data quality governance.  Responsibility, accountability, and ownership is shared between all parties involved to make sure that quality standards are successfully adopted throughout the business.  As mentioned before, the first step towards the correct implementation of data quality would be to eliminate IT groups that operate outside the scope of quality governance.  The CIO should name an SVP of Information Quality to engage with operational and support function SVP’s and manage the data governance project, ensuring that all data customers and suppliers agree on a common format to capture and use the information captured by the data warehouse.  This involves creating Master Data Management guidelines to define the content captured and how data should be presented before making it available in the proposed data marts. The Data Management Association International provides framework for corporate governance that can be used for creating the data governance project.  To manage information and data quality, we could suggest the implementation of the virtuous improvement cycle to assess, integrate, and assure the integrity of data governance standards.  (Loshin, 2010)  We also suggest the selection of KPI’s and SLA’s related to data, operational, managerial and strategic purposes according to the type of data and problems intended to be solved.  The implementation od dash boards with quality data is critical to enhance CTC’s ability to manage their business. Measurable parameters to check on data validity helps the firm to understand real costs efficiencies derived from the implementation of data quality and cost inefficiencies due to the lack of data quality.  This continuous improvement cycle guarantees the involvement and education in data quality principals adopted for the BI strategic plan.