“The Wallace Group” Strategic Management and Business Policy

The Wallace Group is devised of three operational groups which include Electronics, Plastics and Chemicals (Stybel, p. 2-1). Harold Wallace was the original owner of the electronics company, but now has 45% of the group after acquiring the plastics company and then the chemical company (p. 2-4). He also serves as the Chairman and President of the Wallace Group, but each group is run by a Vice President. Recently, Hal Wallace hired Rampar Associates to put together an effective sales presentation. Included in the presentation would be set of priorities to focus on over the next year, a clear plan and the expense (p. 2-6).

The Most Important Problem

Frank Campbell, the Vice President of Industrial Relations, sums up the Wallace Group problem in a simple statement. He said, “Morale is really poor here. Hal runs this place like a one man operation, when it’s grown too big for that.” (Stybel, p. 2-7) Frank also mentions that it took a the entire company revolting against him to finally make the President take action. Therefore, the most important problem facing the Wallace Group, is Harold Wallace himself. However, the problems do not stop there. In his interview, Hal mentions two key factors also contributing to his bad business etiquette.

First, Hal admits he never listened to his key people when they complained (Stybel, . This means there has been no communication and feedback taking place between the corporate staff and the groups. As such, there is a tug of war happening over corporate strategy demands and those strategy plans met for the groups themselves.

Another result of the communication collapse has been a rivalry between group departments. Phil Jones, Director, Administration and Planning says that he feels talks of expansion aren’t serious. Not only are opportunities being passed up due to a lack of communication, but Jones’s reputation was “damaged” due to lack of response to a bid (Stybel, 2-9). This could potentially cause problems for future bids.

Similarly, Burt Williams, Director of Operations feels that the Wallace Group is holding back Electronics because they are “encouraged” to buy from Chemicals and Plastics, which have high prices due to manufacturing problems. This is causing both a loss of profits and hindering expansion plans “…into non- defense areas.” (p. 2-10) Thus, the company has made little progress and the groups continue to miss out the opportunity grow within themselves.

The second problem Harold recognizes is their problem with personnel (Stybel, p. 2-6). The Wallace group has grown so fast, that their has been no time to organize. As stated on page 2-6 of The Wallace Group Case, most positions held by the corporate staff are “recent additions, many of the job accountabilities are still being defined.” The same type of problem is apparent in the groups. In Frank Campbell’s interview he states that the rapid growth of the company forced technical people into management positions that they aren’t qualified or experienced to uphold (p. 2-7).

Furthermore, Mr. Wallace is, in the words of Brad Lowell ” …tight-fisted…” and “won’t let us hire the people we need!” (Stybel, 2-9) Mr. Campbell backed this statement in his interview by saying that “management development programs” should be implemented, due to the lack of experience among the current managers. However, Mr. Wallace “vetoed” the idea because he said it was too expensive (p. 2-7).

The last area of personnel problems is pay scales and job specs. Mr. Wallace expects experienced, well qualified candidates to be hired, but cannot afford to pay them competitive wages. On top of that, the job specs laid out for the positions are so demanding that one candidate is now suing the company (Stybel, 2-7). In fact, Ralph Kane is expected to hire new EE’s below the salary grade midpoint. When in reality, most new EE’s are making more than Wallace’s grade maximums (p. 2-8). Therefore, those being hired are less than “top of line” and are being rejected because they don’t meet the job qualifications group heads feel are necessary (p. 2-7).

Recommendations

As per the issues stated above I would recommend that Mr. Wallace begin to use strategic management. “Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation.” (Wheelen, p. 2) The main problem of The Wallace Group is that there is no focus. Hal was a successful entrepreneur, but lost his focus and handle on the company when it expanded. Some benefits of strategic management are developing a “strategic vision”, focusing on what is “strategically important” and gaining a better understanding “…of a rapidly changing environment.” (p. 4)

Developing a strategic vision would enable Mr. Wallace to express “…the purpose or reason…” the company was built. A mission statement outlines what the company offers, what their purpose is and how it differs from others in its market. He could further develop a vision statement to define what the company hopes to achieve both as a whole and in its individual groups (Wheelen, p. 11). Creating a mission statement will not only bring focus to Hal’s position, but it will guide the groups towards a unified existence.

Next, Hal must focus on what is strategically important. In this instance, finding qualified EE’s and teaching the technical people about managing. In order to find quality EE’s, he must perform an environmental scan. An environmental scan monitors internal and external factors so that key people can be updated with current trends, such as salary wages. It would also help to clarify how demanding their job specs are compared to competition. Last, by scanning The Wallace Group will discover strengths, weaknesses, opportunities and threats regarding their industrial groups (Wheelen, p. 9).

In conclusion, Harold Wallace needs to open his wallet. He’s letting minimum growth stand as acceptable business, while ignoring the detriment of the Plastics and Chemicals groups. He needs to rethink his position as President and Chairman if he wants the company to survive and his staff to stay in tact. Sticking your head in the sand and refusing improvement because of initial costs is costing him his company. Not only would strategic management rearrange his corporation, but it would also gain him back his staffs morale and trust.

Educating a Manager

As an organization evolves over time from an entrepreneurial structure to a more sophisticated and complex organizational structure managers, too, must evolve. In an entrepreneurial, the manager and owners make all the decisions. They keep an eye on the environment and the competition. According to Milton – Wilson, Inc., entrepreneurs are used “to doing”. That is, they were a vital piece in the company and oversaw the entire operations of the business. However, as a company expands and branches out its products and services to other market areas, managers must start dispersing the tasks.

As in The Wallace Group case, Hal never surrendered his authority. As a result, he became the source of focus when any decisions needed to be made from all three groups.

Another mistake Harold made is being both President and Chairman. Holding both positions can be seen as a conflict of interest because the chair should be overseeing the President to make sure tasks are being completed for the both the company heads and its stockholders. Therefore, when a company begins to expand, a manager should begin to branch his tasks so that he/she can still maintain an effective component, rather than an overwhelmed, under qualified head.

References

Milton- Wilson, Inc. Top 10 Mistakes Small Businesses Make Today. Retrieved from http://www.milton- wilson.com/10Mistakes.html

Stybel, Laurence J. (2004) Strategic Management and Business Policy: The
Wallace

Group. (Case 2) (pp. 2-1 – 2-10) Upper Saddle River, NJ. Pearson Education, Inc.

Wheelen, Thomas L. and Hunger, J. David (2004) Strategic Management and Business

Policy. (9th Ed.) (pp. 2 – 11 and Chapter 2). Upper Saddle River, NJ. Pearson

Education, Inc.