The Wallace Group Case Study

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Read "The Wallace Group," Case below and answer the following questions.

1. What is the most important problem facing the Wallace Group?

2. What recommendation(s) would you make to Mr. Wallace, and in what order of priorities?

3. How do you educate a manager to manage an organization as it evolves over time from an entrepreneurial structure to a more sophisticated and complex organizational structure?

The Wallace Group
By: Laurence J Stybel

Frances Rampar, President of Rampar Associates, drummed her fingers on the desk. Scattered before her were notes. She had to put the pieces together in order to make an effective sales presentation to Harold Wallace.

Hal Wallace was the President of the Wallace Group. He had asked Rampar to conduct a series of interviews with some key Wallace Group employees, in preparation for a possible consulting assignment for Rampar Associates.

During the past three days, Rampar had been talking with some of these key people and had received background material about the company. The problem was not finding the problem. The problem was that there were too many problems!

The Wallace Group Inc., is a diversified company dealing in the manufacture and development of technical products and systems. The company currently consists of three operational groups and a corporate staff. The three groups include Electronics, Plastics, and Chemicals, each operating under the direction of a Group Vice President. The company generates $70 million in sales as a manufacturer of plastics, chemical products, and electronic components an systems. Principal sales are to large contractors in governmental and automotive markets. With respect to sales volume, Plastics and Chemicals are approximately equal in size, and both of them together equal the size of the Electronics Group. Electronics offers competence in the areas of microelectronics, electromagnetic sensors, antennas, microwave, and minicomputers. Presently, these skills are devoted primarily to the engineering and manufacture of countermeasure equipment for aircraft. This includes radar detection systems that allow an aircraft crew to know that they are being tracked by radar units on the ground, on ships, or on other aircraft. Further, the company manufactures displays that provide the crew with visual “fix” on where they are tracking them. In addition to manufacturing tested and proven systems developed in the past, The Wallace Group is currently involved in two minor programs, all involving display systems. The Navy-A Program calls for the development of a display system for a tactical fighter plane; Air Force-B is another system for an observation plane. Ongoing productions orders are anticipated following flight testing. The other two minor programs, Army-LG and OBT-37, involve the incorporation of new technology into existing aircraft systems. The Plastics Group manufactures plastic components utilized by the electronics, automotive, and other industries requiring plastic products. These include switches, knobs, keys, insulation materials, and so on, used in the manufacture of electronic equipment and other small made-to-order components installed in automobiles, planes, and other products. The Chemicals Group produces chemicals used in the development of plastics. It supplies bulk chemicals to the Plastics Group and other companies. These chemicals are then injected into molds or extruded to form a variety of finished products.

Each of the three groups began as a sole proprietorship under the direct operating control of an owner/manager. Several years ago, Harold Wallace, owner of the original electronics company, determined to undertake a program of diversification. Initially, he attempted to expand his market by product development and line extensions entirely within the electronics industry. However, because of...
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