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View Diary: BREAKING: Hostess Brands to close as revenge for the striking workers standing up for their rights (351 comments)

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  •  jj - competition (0+ / 0-)

    What I am reading in this thread is that competition toppled Hostess and I think that is the main reason that old line companies fail. A new player in a market typically has lower variable costs due to technology, and lower labor and distribution costs and can provide a product at a lower price point. If a company has high variable costs, including legacy expenses, it can put an older company in a difficult position. So I don't think that shareholders are looking for higher rates of return, but rather more intense competition driving out less cost efficient producers. In this specific example of Hostess it appears that low barriers to entry have changed the fundamental price structure of the baking industry.

    "let's talk about that"

    by VClib on Fri Nov 16, 2012 at 02:03:07 PM PST

    [ Parent ]

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