The Wallace Group Case Analysis

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Case 2
The Wallace Group, Inc.

I. CASE ABSTRACT

Harold Wallace, founder, serves as Chairman and President of the Wallace Group. He owns 45 percent of the outstanding stock. The company consists of three operating groups—Electronics, Plastics, and Chemicals, which generate sales of $70 million. Mr. Wallace continues direct operational control over the Electronics Group. Several years ago, Wallace and the Board embarked on a strategy of diversification into plastics and chemicals in order to decrease the company's dependence on defense-related business.

Presently, the morale within The Wallace Group has deteriorated to the point where some of the employee stockholders made an attempt to force Wallace's resignation. As a result of this crisis, Wallace has hired Frances Rampar, a management consultant, to conduct a management survey into the problems facing The Wallace Group. Her task is to develop a series of priorities for Wallace's consideration.

Decision Date: No Date Sales: $70,000,000
Net Income: $ 1,760,000

II. CASE ISSUES AND SUBJECTS

Corporate Governance Morale and Culture
Diversification Organizational Structure
Stages of Corporate Development Top Management Responsibilities Vertical IntegrationModes of Strategy Formulation
Transfer PricingDistinctive Competence
SuboptimizationEntrepreneurship

III. STEPS COVERED IN STRATEGIC DECISION-MAKING PROCESS

O = Emphasized in CaseX = Covered in Case

STUDENT STRATEGIC AUDIT/STUDENT PAPER

I. INTERNAL ENVIRONMENT

A. Tremendous dissatisfaction among management and employees. This resulted from Wallace's failure to delegate to subordinates and a lack of clear strategies or long term plans, goals, or objectives.

B. Lethargy and lack of direction on top management's part.

II. EXTERNAL ENVIRONMENT

A. Favorable market niche in electronics. Longstanding reputation of reliable government contracts....
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