Case study - analysis company's economic issue and expansion of solution - Essay Example

They are the proprietors who take the advantage of their position in ranking to exploit the employees and strain the gains of a firm for their personal gains. One key aspect of these vulture capitalists is that they invest in a firm, shows quick returns but the firm is bound to collapse and as such, the capitalist seizes part or the whole of the assets of the firm. Such is the case as described by John Nichols about the Hostess Brands Inc. These investors then cover up by laying blames on the employees and the workers unions.

Hostess Brands Inc, the collapsing maker of Twinkies, Wonder Bread, vast range of snack cakes and other breads is one such a company to have severely been hit by the wave of the unscrupulous vulture capitalists. She has closed her 33 plants around the United States and has now embarked into liquidating the assets in a bid to offset the huge amount of debts outstanding. The company’s employees went on a strike joining the rest of the union’s members over the alleged exploitation by the proprietors and the top management distributions.

Neoclassical economists have studied the optimal production of a firm by focusing on distribution of income among other aspects of major importance. This is well illustrated by the analysis of supply and demand and maximization of utility by individuals who are constrained on income matters and the study of firms that are constrained in terms of costs. According to the proponents of the neoclassical thoughts, people are always rational in thinking, and have rational preferences when it comes to value based outcomes.

It is worth noting that firms maximize profits while persons maximize utility. As regards relevance in information, people act independently. However, according to analysts, individual persons lack competence in negotiations and bargains. This necessitates unions of persons with like interests or grievances. This can explain the formation of the BCTGM, a workers union that serves the hostess workers, however, the workers of the firm did not ask for better pensions as individuals or also through their union and this would better explain that the union was in no way responsible for the crisis.

In fact, as a matter of fact, the company employees have a record of good working relations with the proprietors and have had working benefit and wage concessions. Adjustments to new demands in the industry and technological advancements have dominated the firm in the past. Farber defines labor unions associations of workers who bargain collectively and has the employers regarding the terms laid down for employment. The BCTGM was formed to serve the following purposes as is the role of all other labor unions: as a maximizing agent, as a bargaining body for the wages, as an arbitrator in times of conflicts and strikes and basic amongst all the roles, as a determiner of membership (Farber, 2001, 1).

Nevertheless, Hostess collapsed as a result of the vulture capitalist’s nature of the management team. The team laid off 20% of the workforce and while the workers bore all the burden of the collapsing corporation, the management engaged more in looting the company’s assets and funds. According to the classical economics, human beings are assumed to be rational and that they make decisions on the best way for personal gains. This explains the nature of the vulture ca