So I am making fun and I am being somewhat opportunist but seriously…. Are there lessons in this business failure? My answer is ABSOLUTELY!!!
First it would be wise to mention that Hostess has a host of threats. In a SWOT analysis, I think there are more opportunities for this company to go down than to stay alive.
Here are the challenges I see.
- Government agencies regulations
- Labor Unions
- Began in industrial Age
- Competition
- Past Bankruptcy
All these issues should be an easy read that this ship is set to go down and without creative ideas and new processes it will.
So, how does a company like this survive and come back to life?
I have to say that as this company decides whether or not they will fight the union or mediate it is pretty safe to say the media has really shown a lot of support for the business itself. It’s better to hear about their struggles to stay alive instead of going away quietly. The media is essentially free advertising and can help spur on purchases and support.
The general public can also affect change by showing demand for the product and putting pressure on the labor unions to negotiate. Labor unions have a purpose but in this case they appear to be a determent to not only the business but the employees also. Negotiating wages through labor unions began in the twenties and unions have gained a lot of power in the business world. They have been criticized for making business in the United States less profitable by requiring that the unionized businesses pay higher than market value for wages and benefits.
The fact that this company is so old could be a big benefit but if your business practices remain old then it’s at a big disadvantage. New processes for production and cost saving measures may be overlooked. Machinery could be old and need of repair or replacement but they may have no funds for reinvestment. New creative ideas are needed but without a proper budget to invest in these ideas this company would be dead in the water regardless of all the other factors.
As the world becomes smaller with technology and companies willingness to move overseas to not only pay a lower wage but also pay lower tax rates, the competition is at an advantage. As the competition pays lower production expenses it is able to offer their products at a lower price. Consumers during this day and age look for a low cost alternative for their sweets and only a few pennies can make a difference. Strong consumer loyalty is the only way to minimize the risk of the competition.
Finally, the previous bankruptcy is a signal that although they have been in this position before they failed to learn from it the first time. They made little or no changes to their course of action and find themselves in the same spot. Strong viable businesses must adapt or die.
The lessons we learn from the Twinkie all seem to be driven from common sense and easy to point out. I find that although the situation may be complex, simplification is always in order. Simply minimize your threats and increase your opportunities and with creativity this company could regain new life but quite possibly in the hands of better management.
