The Wallace Group Case Analysis

The Wallace Group Case Analysis

Introduction

The Wallace Group is a diversified company that deals in the manufacture and development of technical products and systems. The company consists of three primary operating groups, electronics, plastics, and chemicals. The electronics group is by far the largest, its size is approximately the size of the plastics and chemical groups combined. Of the $70 million in net sales, the electronics groups contributed about $35 million of that, with plastics contributing $20 million and the remaining $15 million coming from the chemical group.

Both the plastics and chemical groups were acquired for the sole purpose of diversifying the company. Mr. Wallace thought if he added these two new divisions, he would be able to bring new life to the company.

However, due in part to these acquisitions, the Wallace Group faces several problems. The first issue relates to their hiring process and how they choose who to promote. Instead of hiring qualified employees with the proper expertise, they focus more on cutting costs, therefore hiring non-qualified employees. One example of this process is, instead of creating a management development program for training and recruitment of new management, they just promote within. However, they promote technicians to management positions without the proper training, because it's cheaper to do that.

The second issue arising is their inability to have a standardize form of collecting and presenting data. One example is that both the Vice President of Marketing and the Director of Advanced Systems, collect and utilize the similar data for marketing purposes. Because both managers are collecting data for the relatively same purpose, there redundancy and a...

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...r investments that can support the other weight and balance their portfolio and therefore alleviate some of the risk they face.

4. Restructure the company and clearly define job responsibilities. This would result in a more efficient operation within and between departments and ensure that people know exactly who is responsible for what tasks. This would also reduce the need for Mr. Wallace to get involved in settling disputes and improve the overall moral among the managers.

5. The chemicals department must become more profitable. Until this can happen, the 2 other departments (electronics, plastics) should acquire their materials from a source that is the lowest cost to the company. If the above recommendations fail to improve the profitability of the chemicals division, it should consider changing management or even selling off this division.