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Hostess Brands: Liquidation

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Answer questions regarding case.
1)Was the leadership of Hostess Brands to blame for the demise of the company? why or why not?
2)What roe did the unions play in the ultimate liquidation of Hostess Brands?
3)Private equity firms and hedge funds are being singled out in this case. Was their conduct unethical ? Why or why not?
4) What could have been done differently by the ownership and management of Hostess Brands?
5) Was there a long term future for Hostess Brands ? why or why not?
6) What do you think will happen now?

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Solution Summary

The response provides you a structured explanation of why Hostess Brands are impossible to save . It also gives you the relevant references.

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In compliance with BrainMass rules this is not a hand in ready paper but is only guidance.

1. The leadership of Hostess Brands cannot avoid responsibility for the demise of the company. Specifically CEO Brian Driscoll and his predecessors were responsible for the demise of Hostess Brands. The failure of HB has been primarily attributed to legacy pension, medical benefit obligations, and slow growth in revenues from products. The leadership of Hostess Brands was responsible for negotiating and entering into agreements with unions over time that increased its pension costs, benefit costs, and labor costs to such an extent that the business became unprofitable. During the 2004 bankruptcy, chief executive Tony Alvarez was fully responsible for not turning the company around and making it profitable. In 2009 when Interstate Bakeries emerged from bankruptcy, Craig Jung negotiated a new agreement with the unionized workers that was not very different from earlier agreements. There was a clause for equity in the company. However, the leadership of Hostess Brands did not negotiate an agreement that could rescue the company from problem of high costs. The leadership has failed to reduce worker related costs, it has failed to improve its products, ...

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Hatim Baxamusa, MBA
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  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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