¶ … statistical data being the driver of what choice is chosen and why. The concepts that lead to the decision, the inclusion of proper probability concepts, the outcome of the decision with statistical data to back it up, the tradeoffs between accuracy and precision, and the decision itself are to be discussed in this report. The business decision that will be discussed will be whether the Hostess empire should have been shut down given the events and labor union efforts that were going on at the time.
Decision Made & What Led to It
One concept that had to be assessed during the Hostess drama was two-fold with both dimensions of the decision being very hard. The first part was how expensive it was per day to have the unions on strike and the probability that the strike would be stopped before it was fiscally too late to recover from the bakeries and other parts of the business being dormant. No doubt, one of those dimensions was feeding the other as time drug on, turning the whole situation into a vicious cycle. Even when Hostess laid down the law, one of the unions involved balked and said they were not relenting and shut down Hostess for good (O'Toole, 2012).
In looking at that shut-down decision, it was clear that Hostess was facing a no-win decision. If the strike dragged on, this would have bankrupt Hostess eventually and they'd be in much the same situation, only worse. If they gave into the demands of the union and paid them the salary and benefits, Hostess' unstable financial state would have probably led to bankruptcy in that instance as well. This report does not suggest that the union is solely to blame for the situation, but it was certainly a factor in the Hostess decision (Feintzeig, 2012).
In the end, Hostess' decision became less about ongoing viability of the business but more a matter of whether the union would cooperate or not and when it became clear that no good outcome...
Again, they could have soldiered on but they decided to retain as much brand value and lack of debt as they could so that the firm could be liquidated (O'Toole, 2012).
In terms of probability, there were four outcomes. The first is that the firm would recover, the second was that the union would capitulate, the third is that they would not and the fourth was liquidation. The first three were about chance while the fourth was a calculated decision that was voluntarily done. In terms of what was probable, the focus should really be on the first three of those four. The probability of recover became less and less as time went on and much the same could be said of the union giving in because it was clear that they were not going to. Over time, recovery became less likely, liquidation became more likely and the union agreeing became less. Basically, it came down to liquidation or the union agreeing to relent and Hostess had only one choice out of those two that it could make unilaterally, so it made the choice (McCoy & Higgins, 2012).
Some people may make light of the lack of precision and certainty in the decision that Hostess made but to say that the accuracy of their calculus was off is really a stretch. It is clear that the union apparently thought Hostess was bluffing or was grossly incompetent but it was also clear that Hostess truly meant what they said because they went for it when the union balked. It is clear that recovery was a non-starter from the moment the final "no" came from the union so the decision to liquidate was the only certain move that Hostess could make and that it could make on its own behalf rather than having to rely on the agreement of one or more other parties. Since the bankruptcy courts have since executed the sales of the units, it is clear that Hostess was not faking any of the data and that perhaps the union was over-extending its hand. Even…
