Twinkie Eating Vultures Company Analysis - Essay Example

? COMPANY ANALYSIS ESSAY Case Study: Twinkie Eating Vultures Introduction When a great company is ruined, many fingers will be pointed to anyone that can take the blame. Case in point is when a great company is destroyed by a vulture capitalist; the vultures will be haste to shift the blame away from them as happens in most of great companies destroyed by vulture capitalism. Blame will be shifted to the union and even workers of the given company. Case in point is the Hostess Brands Inc which is suffering under the weight of vulture capitalism. This has been enhanced with the media outlets reporting the vultures’ point of view on the issue as the truth. A vulture capitalist is an investor who has used sections of the terms of an investment deal in a company to grab rights of the company or the valuable parts of the company (Cyr, 1998). This is a sharp contrast to a venture capitalist who always invests in the company likely to excel in the market and bring profit to the investor. The case of Hostess Brands Inc is run by vulture capitalists who are always looking for ways to invest in a company that will likely not bring profit in the present so that they bring out the takeover clauses which will end up in the forfeiture of the company’s assets. This will make the vulture capitalists sell off the parts constituting the company and this will make them earn profit while the company collapses. This is according to Goldstein (2011) explanation. Twinkie-eating Vultures With the hobbling of the Hostess Brands Inc.; the media through the vulture capitalists have been informing the masses that the products they use to get from the Hostess Brands like Twinkies, Ding Dong and Ho Hos since they believe that the Public Sector Unions are solely responsible for the collapse of the company. This is the first tactic that the vulture capitalists use when they are blaming the other concerned parties for the collapse of the firm or company in this case they ensured that Bakery, Confectionery, Tobacco Workers and Grain Millers International Union were blamed for the collapsing and meltdown of Hostess Brands Inc. The work of BCTGM is to represent the interests of employees within the organizations. In the Hostess case the BCTGM was very influential on the employees’ interests in the company and as such it can be deemed that the conservatives who are the vulture capitalists had seen this as a controversy and as such they had to take the blame for the Hostess Brands Inc. shortcomings. According Kotz (1994) the public unions are always highly controversial among the conservatives who always advocate the downsizing of the public sector and will always blame the unions for their losses and deficit. The union itself was represented in the Hostess Company by around 5,600 employees and this can be argued that they did not bring the company down. Instead the managers left in charge are responsible for being incompetent and bringing the company to a close as they had announced. To the capitalists the employees were of no importance to the employers not with the sacrifices they made on behalf of the company. The union which has the mandate to put the interests of the workers before anything else took a great exception on the Hostess Brands Inc. The BCTGM workers never inquired on getting more money from the company, neither did they ask for any benefits to be accorded to them nor did they ask for better pensions. The union workers’ basis was that they wanted to ensure that the company in the end should have had a great turnover and mobility. This would have brought the company to a profit making firm. One of the main emphases in any company should be the contested exchange logic. The logic of contested change basically implies that when it comes to labor the production process must not be perceived as the combination of labor in conjunction with non-labor inputs instead it should be seen as also the process whereby the labor on actual work is also derived from workers. With this model in mind the uniqueness between hiring a worker for a period of time and getting the particular worker to begin working is very important to any organization. In contrast to the Hostess Brands Inc saga instead of enhancing productivity by getting more workers in the industry to work the company was operating on a deficit. The workers bore the brunt of the company with more than 20% of the workforce getting laid off. The remaining workforce even after the plants were closed they kept showing up for work. The company stopping their payment on their pension funds also did not deter them as they wanted to see the company having a turnaround into a profit making firm. As Kotz (1994) explains that with this kind of distinction in the contested exchange logic, the explanation of the Hostess case leads to declining profit rates. In addition it showed the indictment of the efficiency of capitalism. The vulture capitalist did not adhere to this logic and it lead to the company making a loss and in the end facing a closure. In any other way the union was not participatory in making the company lose its ground as they had a long history of working with the company in ensuring that it remained viable in the market. They had agreed to work for the common good including making wage and benefit compromise. This was done in good faith in order for the union impact to be beneficial for the company turnover in the end. The workers and the union had to cut down had also a great impact on the company’s working conditions by even accepting new technologies in the company in order for it to move forward. This collective bargaining on the union’s part was not fruitful in the sense that they had hoped for the company to be revived but instead it was closed. According to AFL-CIO president Richard Trumka the Wall Street investors were the source of the Hostess woes as they came to Hostess more than a decade ago with lots of promises in investments of equipments, new research and even new trucks but in the end after they purchased the company they led it into debts with all the promises never materializing. This was one of the major shortcomings of the vulture capitalists from the Wall Streets that has led to the collapse of Hostess Company. The vulture capitalists were more concerned about their own vested interests than the interests of the workers as such they had the executives getting compensation packages when the company was sinking with even the top CEO getting as high as 300 per cent compensation package increase while the junior workers were left with nothing and even challenging the Ripplewood Holdings which was incompetent while at the same time demanding more money from the already poor workers while the executives were getting pay rises. The company was left in huge debt all because of the capitalist Wall Street investors who bled the company dry in the end forcing it to be under bankruptcy for the second time in eight years. All this while the investors were bringing ‘New Blood’ that was expected to revive the company but instead they also went away with millions in their accounts as compensation. Conclusion Vulture capitalists were the reason for the crumbling of the Hostess Brands Inc., they came in as investors only to turn they back on the company as they ensured it made a profit but the debts took down nearly all of the company finances. The management team was incompetent in their decision making and concentrated on filling their pockets rather than seeing the company grow. When the downfall started the management shifted the blame away from themselves to other parties like the workers and unions instead of taking responsibility and owning up for their greed. The incompetent managers should be held accountable for their activities in the company and every little effort done in order to revive the company should be supported and held in high esteem. References Cyr, L. A. (1998). Vulture capitalists or virtue capitalists?: Examining the effects of venture capitalist involvement on the use of equity incentives and firm performance in initial public offering firms. Goldstein, Arnold S. ( 2002). "Dealing with Venture Capital Firms". Starting on a Shoestring: Building a Business Without a Bankroll. John Wiley & Sons. Kotz, D. M. (1994). Social structures of accumulation: The political economy of growth and crisis. Cambridge [u.a.: Cambridge Univ. Press. Read More