Question

Read the following news items and explain where a short-run decision and a long-run decision are involved?

a. January 31, 2020: Tim Horton will open 60 more stores in Asian countries  

b. March 30, 2020: All stores of Tim Horton will shut down on Tuesday stores so that baristas can receive a refresher course.

c. June 2, 2020: Tim Horton replaces baristas with vending machines.

d. June 30, 2020: Tim Horton is closing 200 stores in British Columbia by the end of July

Answer 1

Let us first establish what constitutes as short-term and long-term. Any decision with a time horizon of less than a year is considered to be short-term. Long-term decisions generally take a long time to achieve, typically a time horizon of more than a year.

a. Tim Horton's decision to open 60 more stores in Asian countries is a long-term decision. Opening 60 stores is likely to take a lot of planning and effort - and together with execution, it will definitely take more than one year to achieve. Maybe even four or five.

b. Tom Horton's stores will shut down on Tuesdays so that baristas can receive refresher course. This decision can be immediately acted upon and thus constitutes a short-term decision.

c. Tim Horton replacing baristas with vending machines is a long-term decision. It is likely to involve fair bit of planning in order to phase out the baristas and acquiring vending machines.

d. Tim Horton closing 200 stores in British Columbia by the end of July is a short-term decision. The time horizon given for accomplishing this task is one month.