Some of you reported difficulty in reading the questions at the end of the case. Here they are in clear text format:
1. Why was the workers' strike so damaging to Hostess?
2. Why was Hostess struggling prior to the workers' strike?
3. Do you believe the union or Hostess management is more responsible for the downfall of Hostess?
At the end, there was a lot of finger pointing. Basically the bottom line for Hostess was that it suffered from an attack from corporate raiders in the form of hedge fund companies that basically took from the company and put nothing back in return. Combine that with overpaid CEOs and other top management who tried to blame everything on the baker's union when they went out on strike. This is a classic story of how not to run a company.
After 82 years in existence. Hostess took action to liquidate the company after disagreements with worker unions. The company filed for bankruptcy in January 2012 and, as a measure for restructuring the company, reduced employees' wages and increased health care costs. As a result, employees became discontented with their work situation and commenced a strike. The company claimed it could not maintain production with so many workers on strike. When Hostess could not come to an agreement with one of the unions, the company announced it was shutting its doors for good.
Although the strike may have been the impetus for the immediate liquidation of Hostess, this is not the only reason the firm has been struggling. Failure to adapt to changing consumer tastes has dwindled sales of the snack cakes over many years. While other snack companies have made efforts to appeal to the growing market of the health-conscious consumer, analysts believe that Hostess failed to make necessary changes to its product mix.
The judge overseeing Hostess's bankruptcy request ordered a mediation session between the company and the workers' unions. However. the two were unable to reach an agreement. Hostess blames the workers' strike for the termination of the company, but the workers blame the leadership of Hostess, claiming that it is the cause of the company's downfall because of too much accumulated debt and poor management tactics. Thankfully for Twinkle lovers, another company has bought the assets of Hostess and will reopen the company as Hostess Brands LLC. However, according to management. plans are to hire nonunion workers to staff the company
Discussion Questions
1. Why was the workers' strike so damaging to Hostess?
2. Why was Hostess struggling prior to the workers' strike?
3. Do you believe the union or Hostess management is more responsible for the downfall of Hostess?