Fixing the Auto Structure: An Investigation into the Flawed Structure of Fix Auto

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Written by Timothy J. Tetreault on December 1, 2016 – Mount Royal University

Introduction and Overview

Fix Auto is an auto body repair company based in Montreal, Quebec that is looking for rapid worldwide expansion. Fix Auto operates within an external task environment which has many opportunities but also many threats.

Politically, governments are changing how infrastructure spending is allocated. More taxpayer dollars are being spent on mass transit initiatives such as the City of Calgary’s green line project, which aims to create a new train corridor with the municipal and federal governments guaranteeing a cumulative $3.08 Billion towards the project (“Green Line”, 2016). The implication for the auto industry (including Fix Auto) is that the transit projects aim to reduce emissions by having fewer cars on the road. With fewer cars on the road, the likelihood of collisions and the customer base are reduced

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The socio-cultural tendencies of society increasingly are leaning toward an ecological outlook. People work to reduce their adverse environmental impact and many opt out of driving entirely. Environmental awareness has people taking mass transit and walking (or biking) to their destinations, which means less cars are on the road. Society is moving toward more fuel efficient cars that retain value for longer amounts of time. Modern cars are built to last longer and wear out less quickly. Computer technology is now able to optimize everything from gear shifting to lane positioning, and even taking complete control of a vehicle. As a result, parts wear out more slowly and collisions are less frequent. Parallel to the environmental awareness movement, car manufacturers have been working to make the cars themselves lighter in an effort to conserve fuel. The traditional steel and aluminium bodies are being replaced by lighter, plastic, fibreglass, and carbon fiber builds which are not easily as repaired.

Provisions in the law also create issues for Fix Auto. Provincial and federal governments are moving towards carbon taxes, which will hit drivers with higher fuelling prices with the goal of reducing vehicle mileage. In fact, “A $50 carbon tax would drive up pump prices by 11 cents a litre” (Mccarthy & Leblanc, 2016, para. 11). 

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Strengths in the Fix Auto organization include their branding and rapid ability to expand operations with limited operating costs. Fix Auto is working to create a trusted Auto Service brand in an industry that historically is not credible (CB Staff, 2016, Para. 4). Fix Auto gains a competitive advantages through their provocative campaigns. Rapid worldwide expansion is facilitated through their operation of 229 Canadian locations as well as those in other countries (CB Staff, 2016, Para. 3). The franchise structure enables them to quickly open new shops based on a ‘cookie cutter’ set of procedures. It also places the risks onto the franchisee owners as opposed to the Fix Auto brand themselves. Profit margins are maximized as a result.

Major weaknesses to international expansion are the organizational structure and the command hierarchy. The current organizational structure does not allow for different socio-cultural standards and adaptations for the different regions.

According to the Canadian Business (2016) article, the “Canadian market is actually pretty much rolled up… The U.S., however, still represents a huge opportunity” (CB Staff, Para. 10). This is because unlike the Canadian Auto repair industry, the United States consists primarily of privately owned shops. Many of the shop owners are straining in the attempt to retain profit margins in the current economic environment, creating an opportunity for companies such as Fix Auto.

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Through buying out these individual shops, Fix Auto can continue to build its brand and its bargaining power with suppliers. This enables them to pass lower prices on to the customers, building a competitive advantage in the industry and increasing supply chain efficiency. Another opportunity that Fix Auto faces is the advancement of technology. Modern materials make the repair process more complex and expensive, creating an opportunity for established brands such as Fix Auto. The individual repair shops are increasingly unable to compete with established brands such as Fix Auto, and this contributes to the competitive advantage that Fix Auto could potentially establish.

Threats to the Auto Repair industry include government policy, technological advancements and economic struggles. Carbon taxes and public transit spending encourage people to switch to alternate methods of transportation. Fewer drivers means less collisions to repair. Driver error is reduced through new computerization and detection systems. If auto repair companies do not adapt, they lose competitive advantage over companies that do. Finally, fewer people can afford to operate a vehicle in the current economic climate.

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Focal Issue

The organizational structure of Fix Auto is the primary issue in that it does not accommodate the varying regions of the world. They have one division and a ‘cookie cutter’ approach that works in Canada, but may not be as effective in other countries such as the United States and many parts of Europe. The current organizational structure of Fix Auto is functional with divisions based on the acquisition of Prime CarCare Group, a parent company to 142 franchise locations under a variety of different brands (“Fix Auto to Acquire”, 2016, Para. 1,4; “Fix Auto Canada”, 2016, Para. 1, 3).

Regional Implications

Fix Auto’s current organizational structure is inefficient through their bureaucratic controls and the standardization of rules and operating procedures. A set of guidelines that works in Canada will not work elsewhere. European cities for example, are historically different than North American cities. The rich aristocratic citizens who can afford vehicles, live in different areas of the city. In the United States, the prestigious communities tend to be found in the suburbs, whereas in Europe, the city centers are where you find the wealthy. On top of that, in the United States, the automobile has encouraged people to spread into the outskirts through the diminishing attractiveness of the center for communal activities (Melosi, n.d. Para. 5). Rather than having the North American driving culture, more densely populated regions of the globe rely heavily on public transport, cycling, and walking. This means that the same organizational structure cannot be used effectively worldwide to maximize the global market.

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Legal / Trade Implications

Fix Auto operates in a manner that follows Canadian legislative guidelines which varies by national region. The global presence of Fix Auto creates an inefficiency through the requirement to comply to the laws of several differing countries. Each country has its own unique labour standards, competition regulation, licensing processes and tax codes. 

In addition to internal legislation, each country has foreign policy regarding the importation of auto parts. The North American Free Trade Agreement (NAFTA) and the European Union (EU) reduce trade restrictions and tariffs within their respective regions; however, trade between EU and NAFTA countries still have tariffs and taxes. Fix Auto operates in both regions, creating an inefficiency in regards to importing parts for foreign cars. In Europe, taxes are placed on North American car parts and vice versa. The current organizational structure does not effectively take advantage of the trade agreements because Fix Auto is expanding worldwide instead of improving domestic operations in each region.

The national boundaries of Canada are not a confinement for competition guidelines (“Competition Law”, 2013, Role of International Cooperation. Para. 1). Many countries worldwide have slightly different legislation regarding the prevention of monopolies. Due to the rapid expansion of the Fix Auto franchise, they are subject to regulations found in the Canadian Competition Act such as: “the Tribunal shall not find that a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially solely on the basis of evidence of concentration or market share” (Canadian Competition, Sec. 92(2)). The Competition Act ensures that monopolies do not occur through expansion, merger or sale of a company. An example of the Competition Bureau becoming involved with the enforcement of competition regulation occurred in 2013, when Sobeys acquired Safeway and was forced to sell 23 of their locations to meet competition requirements (“Competition Bureau Statement”, 2013, Para. 2). Fix Auto needs to meet similar obligations in regards to their expansion.

Wrong Expansion Objectives

While Fix Auto now has expanded operations into Australia and South Africa, (“Fix Auto Launching”, 2016, Para. 1; “Fix Auto South”, 2016, Para. 2) they are far from completely developing the North American market. Even in Canada, Fix Auto operates no locations in many provinces and territories such as Manitoba and Saskatchewan. On top of this, they are failing to test markets before entering. Fix Auto risks following in the failed footsteps of Target, in that they are moving into new markets with more investment than would be advisable (Dahlhoff, 2015, Para. 5)

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Solutions

There are two feasible solutions to the inefficiencies that Fix Auto is experiencing as a result of their uncontrolled global expansion. 

The first solution for Fix Auto should be to divide its organizational structure into regions. Independent management for different regions rather than worldwide control in Montreal. Organizations with strategy based on region tend to perform more efficiently and effectively than global orientated strategies (Ghemawat, 2005, Para. 2). Fix Auto should adopt a hub strategy, where they open regional offices and operate the regions like individual companies (Ghemawat, 2005, the Hub Strategy.). Locations in European should report to a separate European administration instead of the one based in Montreal. This allows the European operations of the company to operate more efficiently because Fix Auto would be able to employ regional presidents who know the local legislation of the country or region. Larger countries such as Canada and the United States should also be divided into regions. The United States could be divided into three regions (Pacific, Midwest, and Atlantic) with potential hubs in San Diego, Omaha and Atlanta. Similarly, they should divide Canada into regions (East and West) with potential hubs in Calgary and the existing one in Montreal. 

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Fix Auto should slow expansion into new countries and paying unnecessary premiums when there is still room to expand in existing markets. It is mentioned earlier that there are no locations in Saskatchewan, Manitoba and much of their target market in the United States. Fix Auto needs to focus on their primary objective of becoming the North American auto body repair chain. Fix Auto is experiencing overexpansion. “Overexpansion often occurs when business owners confuse success with how fast they can expand their business” (Schaefer, 2006, Overexpansion. Para. 1). In a 2005 study done by the Law School at the University of Chicago, it was found that of the Chapter 11 Small Business Bankruptcies issued in the United States, overexpansion contributed to a “non-trivial” (Baird & Morrison, 2005, Pg. 7, Para. 1) number of cases. The best method for expansion is steadily and to move to new countries one at a time. (Schaefer, 2006, Overexpansion. Para. 1). Fix Auto should capitalize on their existing regions such as the United States, Canada, and the United Kingdom before moving into new markets such as Australia, South Africa and Turkey. 

If Fix Auto desires to maximize corporate efficiency, they need to begin operating the differing regions as separate divisions with unique management and hubs. This way, each region is able to have expertise in local legislation and cultural standards. They need to implement regional strategies, offices, and management before opening branches in new countries and global regions.

In conclusion, while Fix Auto is rapidly expanding into new regions, their organizational structure fails to accommodate for regional differences and as a result, there are inefficiencies in the company. 

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Bibliography

Baird, D. G., & Morrison, E. R. (2005, January 4). Serial Entrepreneurs and Small Business Bankruptcies. Retrieved November 30, 2016, from http://www.law.uchicago.edu/files/files/236.dgb-em.serial-bankruptcies.pdf?

Canadian Competition Act, R.S., 1985, c. 19 (2nd Supp.), s. 45; 1999, c. 2, s. 37. Retrieved from http://laws-lois.justice.gc.ca/eng/acts/c-34/page-25.html#h-40

CB Staff, (2016, May 24). Inside the race to consolidate the auto-collision repair business. Retrieved November 23, 2016, from http://www.canadianbusiness.com/innovation/inside-the-race-to-consolidate-the-auto-collision-repair-business/ 

Competition Bureau Statement regarding the Proposed Acquisition by Sobeys of Substantially all of the Assets of Canada Safeway. (2013, October 22). Retrieved November 30, 2016, from http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03619.html

Competition Law in a Global and Innovative Economy — A Canadian Perspective. (2013, November 21). Retrieved November 30, 2016, from http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03631.html

Dahlhoff, D. (2015, January 20). Why Target’s Canadian Expansion Failed. Retrieved November 30, 2016, from https://hbr.org/2015/01/why-targets-canadian-expansion-failed

FIX AUTO CANADA ACQUIRES PRIME CARCARE GROUP. (2016, May 6). Retrieved November 25, 2016, from https://fixauto.com/ca-bc/en/news/FIX_AUTO_CANADA_ACQUIRES_PRIME_CARCARE_GROUP

Fix Auto Launching Collision Repair Network in Australia – CollisionWeek. (2016, August 03). Retrieved November 30, 2016, from https://www.collisionweek.com/2016/08/03/fix-auto-launching-collision-repair-network-australia/

Fix Auto South Africa Appointment Announcement. (2016, August 3). Retrieved November 30, 2016, from https://fixauto.com/za/en/news/FIX_AUTO_SOUTH_AFRICA_APPOINTMENT_ANNOUNCEMENT

Fix Auto to acquire Prime CarCare Group. (2016, May 6). Retrieved November 25, 2016, from http://www.collisionrepairmag.com/news/18247-fix-auto-to-acquire-prime-carcare-group

Ghemawat, P. (2005). Regional Strategies for Global Leadership. Retrieved November 30, 2016, from https://hbr.org/2005/12/regional-strategies-for-global-leadership

Green Line – Vision. (n.d.). Retrieved November 24, 2016, from http://www.calgary.ca/Transportation/TI/Pages/Transit-projects/Green-line/vision.aspx

Mccarthy, S., & Leblanc, D. (2016, October 03). Liberal government’s carbon tax plan provokes anger from provinces. Retrieved November 24, 2016, from http://www.theglobeandmail.com/news/politics/liberals-to-set-carbon-price-at-10-a-tonne-in-2018-rising-to-50-by-2022/article32206937/

Melosi, M. V. (n.d.). The Automobile Shapes The City: From“Walking Cities”to“Automobile Cities”. Retrieved November 25, 2016, from http://www.autolife.umd.umich.edu/Environment/E_Casestudy/E_casestudy3.htm

Schaefer, P. (2006). The Seven Pitfalls of Business Failure and how to Avoid Them. Retrieved November 30, 2016, from http://indy-biz.com/danpdf/dlArt89.pdf

An Evaluation of Canadian Tire’s Supply Chain

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Written by Timothy J. Tetreault on September 17, 2019 (Mount Royal University)

Operating an efficient and effective supply chain is a necessity for the long term longevity of an organization. A supply chain is the processes and procedures needed to most effectively get the product to the end consumer.

Supply chain management involves controlling the flow of resources and information within an organization such as policies, processes, and
procedures to best deliver the product to the customer. This includes handling and distribution activities, as well as financial management (Reed, 2018).

This article aims to evaluate some current supply chain elements in the retail organization Canadian Tire and suggest improvements to the system or strategy if any are needed. Location is important to the distribution of their stock among over 1700 stores, and this will be investigated as well as the future requirements for the supply chain.

Company Profile

Canadian Tire is one of Canada’s top retailers and a leader in their industry. They offer a multitude of products in the automotive, sports, home, garden, and living categories of goods. Their primary locations are easily recognizable by the triangular logo affixed to the front of each of their general merchandise stores. Canadian tire also owns the brand PartSource
which specializes in automotive parts (C, 2016).

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Canadian Tire operates on a franchise based system. There are 500 independently owned Canadian Tire locations across Canada operated by third party dealers. The merchandise found in each of the stores or online is purchased from the corporate entity for sale to consumers. The supply chain, marketing, and other administrative activities are taken care of
by the Canadian Tire Corporation (CTC). Each dealer owns their own inventories, must cover their own operational costs, and must comply with corporate guidelines. Sale pricing and purchasing abilities are set out by Canadian Tire (C, 2016). Canadian Tire recognizes that in order to become “Canada’s Store,” they need to branch out into other industries as well.

Canadian Tire recognizes that in order to become “Canada’s Store,” they need to branch out into other industries as well.

Canadian Tire Petroleum was founded in 1958 under the same
system as the regular Canadian Tire stores (About, n.d.). Today there are 296 gas bars (83 car washes and 293 convenience stores) operating under the banner “Gas+.” Canadian Tire has the contract to build and operate 23 Petroleum locations along major Ontario Highways (C, 2016).

In 1968, CTC expanded its portfolio by integrating financial services through the acquisition of Midland Shoppers Credit Limited (Canadian Tire, 2019). Canadian Tire Financial today has a wide array of Canadian Tire branded credit cards and insurance. Canadian Tire financial processes all of the transactions from their other subsidiaries and dealers.

PartSource caters to the automotive sector and specializes in automotive parts. Canadian Tire Automotive is a part of their stores and is targeted toward the average consumer while PartSource targets those people who wish to DIY their repairs.

In 2001, Canadian Tire Purchased Mark’s Work Wearhouse in order to capitalize on the high quality workwear, casual clothing, and activewear industries . They would later change the name to just “Marks” for branding purposes. Marks today has 349 corporate stores and 33 franchise stores across Canada (C, 2016). In 2011, Canadian Tire acquired the Forzani Group in a $771 million deal which made Canadian Tire a leader in the sports equipment and outdoor recreation retail sectors (Flavelle, 2011).

The Forzani Group owns SportChek, Sport Experts, and Atmosphere and has 433 locations across Canada (257 Corporate, 176 Franchise) (C. 2016). In 2013, Canadian Tire Corporation launched the subsidiary CT REIT which is a real estate investment firm. CT REIT owns 303 properties across Canada that are leased out to the CTC Dealers (CT REIT, n.d.).

Canadian Tire faces increasing threats from American based multinationals such as Lowes, Home Depot, Nordstrom, Walmart, and Costco. As a result, their ability to remain competitive depends on the competitive advantages associated with efficient operations, supply chain, and diversity in their business model (C., 2016).

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Although known primarily by its retail storefront, Canadian Tire’s success is based on their supply chain and distribution abilities. They strive on moving goods and products through their distribution networks. Efficient distribution management is essential to ensuring that every individual store of every brand is able to succeed in the competitive retail marketplace.

The vast majority of Canadian Tire’s inventory is processed in one of four distribution centers across Canada. There is one in Brampton, and one in Bolton, Ontario that are managed by Canadian Tire’s corporate entity. In addition, there is one in Calgary and another in Montreal that are operated by third party logistics companies.

The Forzani Group, PartSource, and the Marks subsidiaries have separate distribution centers located in Calgary and Mississauga (C.,2016).

Demand Forecasting

An important aspect of any supply chain is its ability to forecast future demand and ensure that the processes are in place to have the product ready for the customer (Reed 2018).

Canadian Tire has about 2000 suppliers that supply the inventory for their distribution centers, and ultimately, their stores. Domestic suppliers account for about 55% of these, while international imports are the other 45% (Wang, n.d.).

A forecast is needed to coordinate the orders out to suppliers so that the product is delivered timely, and in proper quantities. Canadian Tire uses historical demand information, combined with potential growth in demand to predict as accurately as possible, future demand. These forecasts take into account seasonal changes (you will sell more snow shovels in December than July) as well as trending styles. For new products, historical analysis of similar products is used. (Wang, n.d.)

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Canadian Tire keeps very little inventory on hand because of the efficiency of their forecasting. Every week, 2000 suppliers are sent production forecasts for 26 weeks in advance. If there are any sales, Canadian Tire ensures that they have an adequate amount of inventory to handle the demand. This allows the suppliers to be able to source raw materials, have them delivered in their own supply chains, and manufacture the products for Canadian Tire (Anne, 1998).

Distribution centers receive store orders from each of the individual dealers which are then picked from the stored inventory and shipped. The distribution center’s inventory will also need to be replenished from suppliers. The objective of the distribution center model is to move
as much product as possible as quickly as possible without running out, or having a large excess of inventory.

The statistical forecast allows Canadian Tire to more accurately predict how much demand there will be, and this helps in the replenishment process (Wang, n.d.).

Bolton, Ontario Distribution Center

In 2017 Canadian Tire Corporation opened a new distribution center in Bolton, Ontario to replace their aging Brampton facility. This facility is approximately 1.5 million square feet and is designed to receive 15,500 different SKUs from suppliers and store them for later shipment to
the Canadian Tire dealers (Trebilcock (a), 2019).

Bolton Distribution Center:

– 1.5 million square feet –

– 15,500 SKU Processing Capacity –

– 350 Daily Trailers –

– 244 Docks –

The facility is designed to process 350 trailers per day through 244 receiving and shipping docks, which amounts to about 65 million cubic feet
of product each year. The Bolton distribution center is designed to handle inventory for the approximate 1700 Canadian Tire dealers across Canada while the Calgary, Montreal, and Brampton locations are serve more regional purposes and deal only with items with high turnover (Trebilcock (b), 2019).

Photo by Pixabay on Pexels.com (not the Bolton Center)


Since opening the Bolton facility, Canadian Tire has experienced an improvement in product flow through its distribution network, as well as better pallet fill rates, and reduced costs (Trebilcock (b), 2019).


The distribution center is divided up into a cellular layout with three different departments. Building A is the largest of the three, and is also the most automated. This is where the smaller items, or easily movable and packable items are sorted and distributed. There is a 4 story picking center where items are picked, packaged, then sent down one of 197 chutes to be shipped out below.

Building B is designed for items that pass through the facility quickly as well as oversized items and the products are not stored long.

Building C is where awkwardly designed items such as snowblowers, lawnmowers, hockey sticks, and hazardous materials are processed. There is also a machine in this building that processes automotive tires automatically (Trebilcock (b), 2019).

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The cellular layout of the Bolton distribution center allows for efficient receiving, sorting, and distributing activities. By dividing the facility into areas that are able to process items with similar processing requirements, Canadian Tire is able to more quickly build orders for their dealers across Canada (Trebilcock (b), 2019).

Notably, receiving and shipping areas are on opposite sides of the facility. This allows products to flow through the facility smoothly, and Canadian Tire is able to limit the amount of interaction between differing items; there is little cross interaction between departments.

Location

The Bolton Distribution center’s location gives Canadian Tire many strategic advantages. The distribution center is located near the 400 series highway system which opens up easy access to essentially all of Ontario, down into the United States, and into the rest of Canada.

Many of the international suppliers that serve Canadian Tire are from the United States so this is a convenient location that is already designed for the large amount of traffic serving the facility. One of the perks of building outside of a larger urban center such as nearby Toronto, operating costs are kept low, and congestion is less likely to impair supply chain operations
(Foxman, 2018)

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In addition to this, CP and CN operates an intermodal train terminal nearby as well which means that the Canadian Tire containers can easily be shipped to and from the facility from western Canada and overseas markets through Vancouver, Halifax, and Montreal (Foxman, 2018).

In 2016, CT REIT purchased the former Sears Canada distribution center in Calgary after Sears went bankrupt. This warehouse backs onto Canadian Pacific’s Calgary train intermodal, and it also has easy access to both Stoney Trail and Deerfoot Trail (Wilcox, 2018).

Canadian Tire had already owned a distribution center next door to the former Sears one, but the Sears facility has access to the CP train line (Toneguzzi, 2018).

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Calgary is an an important distribution hub for companies wishing to build supply chains in Western Canada. There is easy rail and road corridors to other large cities such as Edmonton, Regina, Vancouver, and down into the United States.

Calgary was once primarily an oil and gas city, but recent infrastructure investments such as the Stoney Trail ring road, and the increasing airport cargo capabilities makes it a good place for building distribution centers (Buxbaum, 2017).

Shipping Containers

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Canadian Tire has invested in developing a fleet of 60’ shipping containers. These branded containers are designed to easily integrate with all of the supply chain systems that CTC has built. Canadian Tire has a contract with Canadian Pacific to be able to attach the containers to flat deck rail cars. This allows for easy transport to any of the Canadian Tire distribution centers. In Bolton and Calgary, the nearby intermodal terminals allow for simple unloading to flat deck semi-trailers.

In Halifax and Vancouver, the CP containers can be loaded onto ocean liners for Atlantic and Pacific transport. Foreign suppliers fill the containers with
product, and they are brought back to the Canadian distribution centers (Norbury, 2015).

Helly Hansen Acquisition

In 2018, Canadian Tire acquired the Norwegian clothing manufacturer Helly Hansen for $985 million. Helly Hansen has a supply chain that distributes products to more than 40 countries in Europe, and across the world (Press, 2018).

Helly Hansen specializes in manufacturing and distributing athletic, and work wear (Celebrating, n.d.). This acquisition supports Canadian Tire’s core business. Helly Hansen integrates very well with Marks, and Forzani branding. Both companies already carry Helly Hansen products, but the acquisition gives Canadian Tire access to the distribution network in Europe and the United States.

Photo by Melvin Wahlin on Pexels.com

Helly Hansen gains access to the CTC supply chain as well, therefore Canadian products can be sold in foreign markets (Canadian Tire Corporation, 2018).

The Helly Hansen acquisition is also important for Canadian Tire because it secures the availability of one of its biggest suppliers. Canadian Tire was for a long time one of Helly Hansens largest customers, but now that they are owned by CTC, there is little risk of losing contracts between the two companies (Canadian Tire Corporation, 2018).

Target’s Mistake

The american brand “Target” serves as a testimony to the consequences of rapid expansion without building a supply chain first, and Canadian Tire should be taking notes (Wahba, 2015).

In 2013, Target opened 124 stores in Canada and attempted to give other retailers such as Walmart, Costco, and Canadian Tire a run for their money. Upon opening however, shelves were empty, and the products that were present were costly and unappealing to Canadian shoppers. Inventory planning was neglected and Target ended up taking a $5.4 billion loss
(Wahba, 2015).

Photo by Pixabay on Pexels.com

Target purchased Zellers from HBC for $1.8 billion which gave them access to an existing distribution network. This is similar to Canadian Tire’s Helly Hansen investment. Target is branded in the United States to appeal to the middle class, whereas Zellers was meant for low-income citizens. The stores were also located in low income areas of Canada. Failure to choose middle-income locations played into the fall of Target (Wahba, 2015).

Technology, inventory management, and POS systems also played a role in the downfall of Target. The management teams at the Target corporate office decided to go with a software program known as SAP for their systems. This program is currently used by Indigo, Sobeys, and Loblaws.

The first time that Sobeys implemented the SAP program, it failed drastically and they reverted to old methods before trying again. Loblaws took 5 years before SAP worked for their supply chain. Target attempted to integrate the SAP program in a supply chain where none of the employees had prior experience with it in a short timeframe (Castaldo, n.d.).

Photo by WinSon 5293 on Pexels.com

Target ordered massive amounts of inventory for their launch, but the inventory tracking systems, and the improvised supply chain resulted in lost orders, and delayed shipments. Stores were unable to keep a base amount of stock and as a result, shelves were empty. Target had three distribution centers in Canada, and each one was at capacity with goods.

Semi trucks were left idling outside because they were unable to access the distribution centers. Eventually Target resorted to renting additional storage facilities just to accomodate for the excess of stock. On paper, Target had tons of products in their system, and yet store shelves were empty (Castaldo, n.d.).

Canadian Tire’s expansion with Helly Hansen is not nearly as aggressive as Target’s expansion, but the consequences are just as likely.

Canadian Tire thus far has done an excellent job in building the supply chain before expanding, but previously all expansions were within Canada. Canadian Tire will face the same challenges that Target did if they intend to expand into the European and international markets. They will need to develop the existing Helly Hansen supply chain before they plan for additional expansion.

Conclusion

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In conclusion, Canadian Tire operates a very well designed supply chain. Product flows smoothly from each of the 2000 suppliers, through the distribution network, and into consumer hands. The corporate strategy aligns well to CTC becoming not only Canada’s retailer, but a leading global retailer as well.

There is not much needed as far as change is concerned, but Canadian Tire needs to be cautious with the rapid expansion that they have been going through with their Marks, Forzani, and Helly Hansen acquisitions. If the supply chain is unable to keep up, customers will experience high prices on goods, and slow service rates. Both of these factors will lead to
struggles in product turnover and cash flows.

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Canada: First Past the Post – A Case for Status Quo

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Written by Timothy J. Tetreault on September 15, 2019 (Mount Royal University)


Introduction

Is Canada’s political system in need of change? Every election cycle, the losing party complains about the current ‘first past the post’ system. They complain that the election was lost because of election bias, where the winning party is over-represented in the House of Commons, and the losing party is often under-represented. The current system allows for majority governments to be formed, even with a lower than opposition popular vote count. Supporters of this electoral system would argue that it gives power to people whose vote would otherwise not count. (Brodie, 2017)

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The current Canadian system is a single member plurality (SMP), one which is designed to manufacture majority governments. Majority governments are more effective at passing legislation because the focus is primarily on majority groups, and legislation is able to quickly and efficiently be passed. The system is designed to be a winner-take-all approach to the individual constituencies across the country. (Norris, 1997, pp. 3 para. 1)

The seats in the House of Commons are awarded to the winner of each of the 338 constituencies. This assures that each region of Canada has input into the decisions made in Ottawa. For example, a riding in Nunavut will have as much influence in the House of Commons as one from Vancouver. 

Proportional Representation Advocates

Opponents to the current SMP system argue that manufactured majority governments are undemocratic and the elected representatives may not properly reflect the values held by the majority. Their theory is that proportional representation (PR) is a more democratic option. Proportional representation is a system in which seats are divided according to the percentage of overall party votes. This would mean that majority governments would be extremely unlikely, if not impossible in Canada because a 50% vote is required for a majority under this system. Supporters of PR would argue that manufactured majority governments prevent democracy because they overcompensate the winner and undercompensate the losing parties. For example, in the 2015 Canadian federal election the Liberals won a majority (54%) with only 39.5% of the vote. The Green Party received 3.5% of the vote, but only received 0.3% of the seats. (CBC, 2015; Nicula, 2014)

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Improved Representation From SMP

Canada does not need to change electoral systems and doing so will result in alienation of minority groups and provinces with lower populations. The current system allows the rural, isolated people of Canada to have more of an impact on the political decisions of the country. A revised system based on population or majority will hand the power entirely to those who live in the cities. This is due simply to the population of the cities compared to the rural areas. If the pluralist electoral system is abandoned, then the northern territories as well as possibly PEI could lost political power and influence in Ottawa (Monroe, 2002).

Benefits of Majority Governments

In addition, the election bias could be a positive thing for the political process in that it makes relatively frequent majority parties. Majority parties are more easily able to pass legislation and bills do get passed more quickly. Simply put, majority governments tend to be efficient since legislation proposed is nearly always passed regardless of opposition from other parties. Party discipline ensures that elected representatives remain loyal to their caucus leader and the their voters. As a result — unlike the US — elected representatives remain loyal to their leader and vote in favour of legislation proposed by their party (Chodos, 2006).

Minority government parties are constantly under threat from opposition. The leading party is often cautious in proposing legislation because the opposition parties can strike down a bill if they collaborate. Under the constant threat of a non-confidence vote, the leading party may have difficulty providing good leadership since their concern includes their public image. Policy is often abandoned in favour of ensuring the party survives its term in office.

“Policy is often abandoned in favour of ensuring the party survives its term in office.”

Accountability of the leading minority party is lost due to the unstable foundation upon which they are built. Minority parties are cautious introducing revolutionary or controversial bills independently. Omnibus bills are commonly used instead. These bundle policies together and include the desired bill along with other clauses that opposition parties support. Since it is an all-or-nothing vote, the leading party is able to still pass their legislation (Massicotte, 2017). Majority governments would not need to ‘hide’ legislation in an omnibus bill in order to get it passed and as a result, government transparency and accountability can be better achieved. 

Governance Through Coalitions

Majority governments also prevent coalitions from forming. Coalitions tend to reduce transparency in government in addition to the potential dangers of alliances and factions. The coalitions can lead to lies, deceit, mistrust and a general shadiness of the political parties. Leaders of these parties align themselves to the ideas of the other parties and occasionally go against their own policies. Coalitions will support a bill one time, and oppose a similar one the next. When parties work together in government, often it is for political interests, as opposed to public interests. In minority governments, parties need to win support of another party to pass any bill. This often means compromising and negotiating which could change the bill to not align to the party’s platform. 

“Coalitions can lead to lies, deceit, mistrust, and a general shadiness of the political parties”

For this reason, minority governments could also be less democratic than majority governments. With majority governments, bills can be more freely passed and backstabbing of other parties is less frequent. Minority governments are also commonly much more unstable than majority ones because in order to be successful, they depend on support of other parties.

An example of how coalition governments could be unstable and potentially dangerous is the 2016 Israeli government coalition which saw the parties: Likud, United Torah Judaism, Shas, Kulanu and the Jewish Home unite to obtain 61 of the 120 seats in Knesset (Assembly). This coalition deal was secured by the Israeli Prime Minister, Binyamin Netanyahu, and is described by the Guardian as the “most rightwing nationalist government in the country’s history” (Beaumont, 2016).

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The coalition saw five of the largest conservative parties come together and dominate the government. Many of the ministers in the new government have been replaced by ultra-nationalist and controversial leaders such as Avigdor Lieberman (Chief of Staff under Coalition)(Beaumont, 2016) This lays the foundation for the most recent coalition crisis in which the prime minister declared the Israel Broadcasting Authority be shut down. Moshe Kahlon, the finance minister and leader of one of the other major coalition parties believed that the authority be allowed to operate as planned. This disagreement led to speculation that the coalition could fall apart (Hoffman, 2017; Jazeera, 2017). These coalitions can grind the government to a halt and lack the foundation found in majority governments.

Conclusion

Manufactured majority governments are a positive thing because they ensure efficiency, transparency and strength in government.

The SMP system serves Canada well, despite the controversy that surrounds the overcompensation of the winner and penalization of the losing party. Rural areas and those of lower populations have more influence in Ottawa under the current system, and a proportional representation system will hand political influence to cities and urban centers.

Canada simply does not need to change its electoral system.

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