The paper 'Hostess Brands versus Labor Union' is a great example of a Business Case Study. Industrial disputes have become a common occurrence in the current economic and financial environment. Misunderstandings among employers, employees, and labor unions result in numerous strikes, closure of businesses, and restricted in some of the businesses (Addision and Schnabel, 2003). Some of the consequences of industrial relations include improvement in working conditions for the employees and ensuring the achievement of employees’ requirements. However, some organizations complain these unions do not factor into consideration the impact of their directives to other stakeholders.
For example, British Airways’ labor unions championing for airline staff strikes does not factor into consideration the impact on the customers who utilize the airlines. Therefore, the aim of this paper is to address a food industry dispute, which resulted in closure of the business. The paper discusses Hostess Brand, the contribution of management towards its misfortunes, the contribution of employees, and contribution of labor unions in making the organization to be closed. Background Hostess Brands was a company that was located in the United States. The company that was established in 1930 as Interstate Bakeries Corporation was a distributor and wholesale baker of Wonder Bread, Dolly Madison, Hostess, Butternut Breads, Nature’ s pride, and Drake’ s brands (Hsu, 2012).
The company was renamed after emerging from a 2004 bankruptcy in 2009 and the headquarters moved to Texas from Missouri (Rappeport, 2012). The company sought bankruptcy protection under Chapter 11 in January 2012 and in November 2012, the company sought permission to close its business and on November 21, 2012, the motion was accepted by United States Bankruptcy Court and the business close business and sold its assets. The management of Hostess Brand has been extensively contributed to declining business and also the first bankruptcy.
The company was on high demand for a new investor because the company had a debt of $800 million from two hedge funds and a private equity firm. The strategy utilized by the company to entrench itself to the consumers was not viable at the current market requirement since they championed the methodology that “ bigger is better” philosophy resulting in the company acquiring additional employees and facilities (Hsu, 2012).
The company at its pick had more than eighteen thousand employees while the business was not performing well. These more facilities and employees were acquired in the late 1990s and in the early 2000s, the company started buying back huge amounts of its own stock even though market analysts were against the idea (Rappeport, 2012). This generally means Hostess Brand was a poorly run organization since they had gone through six CEOs without a specific plan rather a cohesive market strategy. Industrial Issue: Reasons According to the Hostess Brand, the company was not doing well, which resulted in the closure of 21 facilities resulting in a reduction of employees from 35,000 to 18,500 (Hsu, 2012).
The decrease of employees occurred in early 2000s just before the first bankruptcy filling (Rappeport, 2012). This also resulted in the company losing market share that may be attributed to continued accruing debt, obsolete technology and lack of codified plan of accomplishing tasks. For example, rather than focusing on ensuring the viability of the business, the executives were rewarded generously, salaries tripled or doubled while the company believed it was still successful and healthy.
Addision, J., and Schnabel, C. 2003. International Handbook of Trade Unions. London: Edward Elgar Publishing.
Palokangas, T. 2000. Labour Unions, Public Policy and Economic Growth. Cambridge: Cambridge University Press
Gall, G., Wilkinson, A., and Hurd, R. 2011. The International Handbook of Labour Unions: Responses to Neo-Liberalism. London: Edward Elgar Publishing.
Harcourt, M., and Wood, G. 2006. Trade Unions and Democracy: Strategies And Perspectives. New York: Transaction Publishers
Hsu, T. (April 18, 2012). Hostess Brands labour dispute could lead to liquidation. Los Angles Times. Available at http://articles.latimes.com/2012/apr/18/business/la-fi-hostess-twinkies-20120418 (March 14, 2013)
Rappeport, A. (November 16, 2012). Hostess Brands to liquidate business. Financial Times. Available at http://www.ft.com/cms/s/0/954c5b8c-2ff0-11e2-ae7d-00144feabdc0.html#axzz2NZtqHbJa (March 13, 2013)