Business Failure Analysis
The Hostess brand has had over 13 years of changes prior to the final change of bankruptcy this year. The founder Newman Drake started the business in New York in 1888. In 1960 Drake Bakeries was owned by a larger company, Borden. Borden was the maker of other popular snacks, Cracker Jack and Wise Potato Chips. In 1987 Borden sold the company to Ralston Purina, which was owned by ITT Continental Baking Company the makers of the rival Hostess Cake and Wonder Bread (Drake, 2008).
After Drake celebrated a 100th anniversary in 1988, the company was acquired by a Canadian company, Culinar. Despite Culinars ability to become profitable in 1997 from restructuring and optimization of already established company routes, they too sold Drake to Interstate Bakeries Corporation (IBC) a year later (Drake, 2008).
In 2007 Grupo Bimbo, another major bakery company wanted to purchase Hostess from IBC for a reported $580 million. IBC declined stating the reason was the low offering price from Grupo Bimbo. Hostess is valued today for $135 million. April 9, 2013 McKee Foods purchased IBC for $27.5 million (Flowers, 2013). McKee Foods decided November 16, 2012 to liquidate Hostess Brand assets and concentrate efforts on the once rival brands to Hostess, Tastykakes.
Drake Organization
The organization’s mission statement was committed to implementing sustainable business practices that will benefit our company, our consumers, our customers, our employees, and our environment (Drake, 2008).The company mission statement was vague and did not have a clearly defined set of goals. A mission statement should tell a customer about a company. It should illustrate goals, purpose, and practice. The organization was resistance to changing market demographics, debt management, and political influences.
Drake’s Debt Management
Drake by 1997 had changed ownership three times and the following year would make Interstate Bakeries Company (IBC) the fourth new owner...