The Wallace Group

Adnan AhmedAhmad Atif AbdullahAamir AnsariPrashant RamdasRachit VermaDhruv BhasinManeck Debara

Case Overview

• The Wallace group is devised from three sub-groups as: Electronics, Chemicals and Plastics.

• Harold Wallace was the original owner of the electronics company, but now has 45% of the stock and runs the group as Chairman and President of the company.

• After acquiring the plastics company and then the chemical company. But each of the three groups is run by a Vice President.

• Recently, Hal Wallace asked Rampar to conduct a series of interviews with some key Wallace Group employees, in preparation for a possible consulting assignment for Rampar Associates.

Strength• Vertical integration

• Diverse technical competence

• Running projects in electronics and plastics business units, with guaranted sales

Weakness• Corporate vision, mision, and business strategy

are not clear

• BU operates like separated island

• Boundaries between the roles of corporate stuff and BU staff are not well defined

• All BU are not growing

• Group revenues depend mainly on defense

• No R&D function in any BU

• Work force problem

SWOT

Opportunities• Creating more vertical integration

synergies

• Growing markets of electronics and plastics

• Diversification to other markets or business

Threats• Reputation damage due to slow

respone to bid requests

• Failure to deliver on currentproject

• Bad financial performance, especially in chemicals

SWOT

Problems

• Calling for resignation of the President: Based on Frances Rampar interview with Harold Wallace, he stated that one of his managers called for resignation of the President which is Harold himself. Even though the vote was defeated, it was clear that people who voted are upset with the way things are going.

• Heavy dependence on government contracts could put the corporation in financial difficulty if further sales diversification cannot be found

• Unprofitable chemical division needs new management.

Shared Value

• Unclear vision and mission (corporate strategy)

• Mostly based on shareholder value (one perspective), which is supposed to be base on corporate value

Strategy:

• Consolidation when there was a good opportunity, but lack of support from the internal as they have weak capacity

• Structure: Need to restructure when doing acquisition

System:

• No appropriate Human Resource Management System

• No integrated marketing information system between business unit and corporate level.

Style:

• Leadership style based on one man power, did not match with the organization size. Considering the organization size, the appropriate leadership style is no longer telling, but would be better if Wallace use participating or delegating leadership style.

Skill:

• Not enough skill to do their jobs (management skill for technical people and vice versa)

Staff

• Overlap jobs

• Lack of technical people as most of them recruited as management

Other

• Low earning power (reflected in the inability of company’s debt structure to afford acquisition by themself)

• Failed to conduct transference pricing system as the material’s price higher than outsider supplier

• No good corporate governance

PROBLEM ROOTS

• Unsuitable Wallace’s leadership style (considering the size of the company)

• Unclear corporate strategy

The Strategic Analysis Triangle

WANT

Management Preference Individual

NEED

Environment Industry

CAN

Resource Capabilities and Organization Firm

ALTERNATIVE SOLUTIONSThe recommended strategy for Mr. Wallace to achieve this goal is listed

below in order of priority:

• Examine his personal management style, priorities, direction for the company, and future goals for growth and development.

• Restructure the departments based upon the needs of the new organizational structure and the company goals.

• Utilize Rampar Associates to evaluate the strengths and weaknesses of the existing operation. The outsiders will have fewer reasons to pull punches than staff members that can be promoted or fired. Valuable criticism may come from specialized consultants, owners or board members other than the president or CEO, and even customers.

• Change and develop the personnel services department into a fully operational a HR department.

Recommendations

• Develop new organization chart and clearly define job responsibilities.

• Establish a mission statement, goals and objectives with input put from the VPs and Directors.

• Change management of chemical division or sell off based on cost/benefit analysis to corporation.

• Conduct meetings at each level to get feedback regarding the concerns of the employees, their ideas, strengths and weaknesses and any other issues. This should begin with the VPs, then the Directors, and so forth for each department.

• Encourage a continuous flow for the exchange of information.

• Involve the entire staff in every stage of the evaluation project.

• Make sure that all managers understand that it is a team effort. The overall profitability of the corporation is what is important. This policy needs to be weighed in terms of overall profitability to corporation and not individual departments

CONCLUSION

• Competing effectively which requires investment —commitment to capabilities, assets, people and customers.

• To understand and formulate the wants of customers , governments and what its competitors will do how the organization’s own people will perform.

• Prepare itself for future by planning strategic flexibility which requires the companies to anticipate multiple scenarios; formulate strategies for each; acquire the capabilities to execute those strategies; execute the “most likely” strategy; and be prepared to rapidly adopt one of the alternatives if market forces dictate.