As Management students the most basic idea we learn about becoming managers, is to know the importance of planning, organizing, leading and controlling. Although these concepts are basic functions of the management realm, they are also vital for the success of an organization. While thinking of this critical step, I was able to recognize its absence while reading an article from the New York Times. The article talked about how American favorite, Hostess, the baked goods company, is filing for bankruptcy, once again.
With over $860 million of debt due to about 100,000 creditors, Hostess, has decided to file for Chapter 11. In the article, it was explained that three years ago Hostess was able to save itself from bankruptcy when a private equity firm rescued it. Yet, with all the restructuring done the company is still in trouble.
It might have been that after the restructuring of the company was complete, the economic downturn affected the success Hostess could have had, but their current annual revenue is still in the billions! With such high earnings, it makes one wonder if their true problems were really found. Did management really pinpoint their previous mistakes to avoid them again? Thus far it does not seem as though they did.
What appears to be the biggest issue for Hostess is that they have such a large debt, mostly linked to their labor force, and somehow it does go down. The article talked about Hostess pursuing the solution of revising some of their union contracts, since a large percentage of their employee’s contracts function through unions, but after initiating a revision, there was no follow through on behalf of Hostess to actually have changes made even though the company was in such a dire condition. With such lack of motivation coming from the employees is it not a surprise that Hostess is the bankruptcy position once again.
If somehow Hostess is able to survive another grueling restructuring process, their comeback plan should be extremely scrutinized. After so many serious struggles the company needs to realize that their previous leaders were unable to follow through with the basic functions of management. Without a proper foundation, how can an organization truly prosper in the long run. With 80 plus years of Hostess making their famous Twinkies, let’s hope this is not their good-bye.
After reading your post, I found myself wondering the same thing. If they are to recover from this latest financial struggle, their recover plan should be heavily analyzed so this never happens again. In this economy, alot of companies are having trouble and this is just a major food brand experiencing it.
Hostess is clearly facing a huge problem, as are many firms. I feel that an unmotivated workforce can almost always bring a company down. I’m curious as to how much on average they get paid, as much of motivation comes from benefits received. Many firms seem to have cut pay, and pay close to minimum wage. Management needs to ALWAYS remember that famous quote: to give is to receive.
I had the opportunity to research some of the problems that the Hostess company had encountered in teh past few years,and from the initial information, the statistics that were mopst readily available, I found that the way the company has handled themselves in the past few years is appaling. planning, organizing, leading and controlling as well as other basic managemnet principles, are vital to a companies health and sustainability, and it appears Hostess failed to do any of it. They either did not see the changing landscape and market of their products or chose to ignore it, and continued pushing outdated operations and strategies that do not apply to the health centered world that is arising. Competition drives progress and creates great companies, and more importantly kills companies that ignore basic business principles. Hostess appears to be getting what theyve had coming.
Planning, organizing, leading and controlling as well as other basic managemnet principles, are vital to a companies health and sustainability. Neverthess, a company’s sign of either success
or failure can and should be linked to its leader/s (CEO, CFO, ect.,). Before someone is chosen to lead a company, that someone should be carefully evaluated on previous jobs and every job description
should be able to be revealed in the potential leader’s previous achievements. Without previous success in plannin, organizing, controlling, non-placement in leadership position in any company should occur
as a result.
With filing for bankruptcy once again there is no doubt that Hostess really needs to analyze for the true problem and fix it. But what puzzles me and that they didn’t figure out a solution the first time they filed for bankruptcy. If they knew that their problem laid within there labor force, why didn’t they come up with ways to motivate their employees? It will be interesting to see if Hostess makes it through this time or if this really is them saying good-bye.
I feel like there’s something missing here. THe annual sales for Hostess is in the billions, yet they’re filing for banktruptcy? I agree with the person who commented above, and strongly believe the Senior Executives should be the blame. They are in that position for a reason, and they need to start making themselves useful. They definitely need to start devising a strategy, making plans of action, and organizing and restructuring the business. They need to determine what, if anything is affecting sales. With society these days attempting to be so healthy and starting diets, there may be a huge chance that sales/revenues are steadily decreasing as people continue to live healthier lives. But on the other hand, people who want to eat twinkies, will continue to do so (especially kids). I think the majority of the problems reside internally within the business. Maybe they should consider restructuring the Senior Executives, and having someone in those positions that can devise a strategy and continue the business operations.
This is a tough approach for the government. Two questions pop up in my head right away. First, due to the revenue the Hostess brings in, should we bail them out? Second question that popped up was why should we bail them out if they don’t even have a proper management foundation and whats the chance they might go bankrupt again? Knowing that this is flowing in my mind. I feel as though if the government doesn’t relieve Hostess of there bankruptcy, i fear for the worst, Twinkies might become endangered, not only that any of the multiple hostess products that are out there will be shut down. Causing nearly alot of jobs outside and inside the hostess corporation. Even though they have gone bankrupt before, I feel as though we should give hostess another chance, but do it with caution, and figure out all the managment problems.
For many reasons I believe that Hostess will not recover from filling for bankruptcy for a third time. One, as many mentioned above if this is their third time filling what makes you believe that they will not file again? Second, we live in a time where obesity is frowned upon and individuals are concerned about eating healthy. One Twinkie has 150 calories and 220 mg of Sodium, which is clearly going to have people stray away from buying. Third, if you have a labor force that is lacking in motivation, what makes the company think that after a third time they are going to want to continue working? Overall, Hostess Twinkies are not a popular item anymore and does not have a strong executive board to help with this problem once again.
Failure is the result of the lack of management skills. Hostess is clearly lacking these skills and upper management can be blamed for the company going bankrupt. With the high costs of labor, rising prices of commodities, and a decline in sales, Hostess failed to anticipate or react to the changes in the market place. Upper management should have been able to recognize these issues and then plan, organize, lead, and control the company in a successful direction.
I also read this article. Sadly, the lack of basic management and leadership skills has led to Chapter 11. I also find it hard to believe that the company managers failed to restructure the high priced labor force. Hostees needs to take a step back and take time to pinpoint the real issue.
After reading and reviewing this post it was apparent in what I had concluded was that such an instance in which hostess was facing was one of these issues that started with management and funneled downward to its workers. Also with the market restructuring and changing, this was one crucial factor in which hostess failed to acknowledge. A great read! although overall I believe that hostess should have encountered and adapted to this situation.
I can relate to your worries! WHAT WOULD I DO WITH OUT TWINKIES!? (seriously) I also found it interesting that they were bought out by a PE firm. The recession obviously has had an enormous impact on PE firms, because they are so highly leveraged. I hate to see Twinkies go, but there must be some serious issues within the company. Can you think of any other house hold names that have disappeared recently?