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<blockquote data-quote="Bagels" data-source="post: 1068888" data-attributes="member: 43436"><p>The article linked to above discusses that the Teamsters required Hostess to use different delivery trucks/drivers for different products.</p><p></p><p>Do you know what makes companies profitable or unprofitable? In very simplistic terms, profits = revenues - expenses. Although Hostess's revenues continued to fall, Hostess still recorded more than $2.5 billion in revenue last year. Do you know what Hostess's biggest expense was? Employee compensation. Sure, Hostess has been a poorly managed company, but the reason it's no longer existent today is because it's saddled with legacy costs its competitors are not, and cannot raise the price of its products to cover these costs.</p><p></p><p>Just like FedEx Ground has a near-20% profit margin. If FedEx so desired, it could heavily cut the price of its ground services and really put some hurt into UPS. Fortunately for UPS, FedEx is using its Ground profits to subsidize other poor-performing divisions.</p></blockquote><p></p>
[QUOTE="Bagels, post: 1068888, member: 43436"] The article linked to above discusses that the Teamsters required Hostess to use different delivery trucks/drivers for different products. Do you know what makes companies profitable or unprofitable? In very simplistic terms, profits = revenues - expenses. Although Hostess's revenues continued to fall, Hostess still recorded more than $2.5 billion in revenue last year. Do you know what Hostess's biggest expense was? Employee compensation. Sure, Hostess has been a poorly managed company, but the reason it's no longer existent today is because it's saddled with legacy costs its competitors are not, and cannot raise the price of its products to cover these costs. Just like FedEx Ground has a near-20% profit margin. If FedEx so desired, it could heavily cut the price of its ground services and really put some hurt into UPS. Fortunately for UPS, FedEx is using its Ground profits to subsidize other poor-performing divisions. [/QUOTE]
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