Statistical Data Being the Driver of What

¶ … 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 would result, they shut down the business. 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 so, there is much debate about who or what led to Hostess getting to that point in the first place and many pro-union groups say it was not their people, but that mattered little in the final days of the firm as it was too late to craft a solution when no agreement satisfying all needs was possible or acceptable (O'Toole, 2012).

In the end, Hostess made the right call in the view of the author of this paper. Again, regardless of what truly led to Hostess being on the brink, there is no real debate about whether they were there or not. There is also no debate about the fact that the union was given an ultimatum and they scoffed and said they were not going to give in. As such, the management of Hostess was precluded from recovery just as they were precluded from fixing the union contract on their own. That left soldiering on deeper into the abyss or closing down the business, so they chose the latter (Feintzeig, 2012).

It is clear that when speaking of a decision like this, statistical analysis and guesswork can only go so far. This is because of the human element involved in the decision and that element had multiple dimensions in this case. For example, the union apparently thought that Hostess was bluffing and that it was just a move to strong-arm them. This is obviously borne of the union having a deep-seeded mistrust of Hostess and this would perhaps color their judgment to the extent that decisions that normally make perfect sense would not be made. However, perhaps they didn't think the financials of Hostess were as bad as Hostess tried to portray them to be and/or they simply did not think the financials justified the decision that Hostess was about to make, so they stood their ground (McCoy & Higgins, 2012).

Similarly, perhaps Hostess could have given in to the union demands and/or could have been less quick to shut down the business. However, they made the threat to close down the business and it's clear now that they meant every word of it because that is precisely what has happened. In retrospect, they very well could have been bluffing and it stands to reason the union thought exactly that. It became less an issue of probability and more of a proverbial game of chicken or chess between the two parties (O'Toole, 2012).