Recommendation Of The Restructuring Of Interstate Bakeries

1762 WordsMar 25, 20178 Pages
The purpose of this memo is to offer a recommendation in the restructuring of Interstate Bakeries. This advice has been initiated at the request of company CEO James Elesser so that he can better ascertain which option, filing for bankruptcy or seeking further mergers and acquisitions, would be the best direction to take to counteract flailing profit margins. This is an independent recommendation made from researching the company’s financial history as well as the company’s product portfolio and market segments. Summary Interstate Bakeries has long been a leader in the bread and snack cake market. Since its inception in 1930, Interstate Bakeries has built its brand by offering products that appealed to the consumer. These products…show more content…
This was considered a shock to most of the company’s managers, who had long been part of a decentralized management system. Restructuring Aftermath While it was foreseen that the company would initially take financial setbacks because of the reorganization, it was not believed that the financial risks would be drastic. However, the impending report that Mr. Elesser has to present to the board will detail a net income that will be nearly 26 million dollars in the red for 2004 (see exhibit 2)3. The blunt force restructuring met resistance on numerous fronts. First of all, the various components of the company did not operate under the same uniformed leadership objectives. Each division was set up to look out for their own interests and markets. When the restructuring plan that focused on a more centralized management process, many of the things that worked for one division did not necessarily work for other divisions of the company. This left some divisions at a severe disadvantage. Another obstacle that worked against the restructuring was the employee unions in which the company had to deal. The unions were not on board with the various downsizing and restructuring methods. In addition, the company had to deal with a couple of different unions which posed a problem with negotiating tactics. Benefit costs were also a significant investment that did not hold up well under the auspice of restructuring. Value Chain Analysis Interstate bakeries has a
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