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Strategic Management: The Wallace Group Essay

971 words - 4 pages

SummaryThe Wallace Group is a $70 million company that deals in the development and manufacturing of electronic, plastic and chemical products. (Wheelen & Hunger, 2006). Harold Wallace, the President and Chairman of The Wallace Group, held 60% of the company's stock when it was dealing solely in the electronics industry. Since the acquisition of the plastics and chemical companies, his holdings slightly decreased to 45% (Wheelen & Hunger, 2006). However, he continues to serve as the organization's President and Chairman while each group is individually run by a Vice President (Wheelen & Hunger, 2006). Harold Wallace enlisted the help of Frances Rampar, President of Rampar Associates, to perform an organizational analysis and provide a prioritized list of strategic recommendations to guide the direction of the company over the next year (Wheelen & Hunger, 2006).ProblemsA careful review of The Wallace Group's history nd current situation identified a number of internal issues that must be addressed in order for the company to succeed in its goal of diversification and also remain competitive in a global business environment. The most prominent matter facing The Wallace Group is the disproportionate allocation of authority as it applies to corporate governance. "The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation" (Cadbury, 2002, p. 15). In the case of The Wallace Group, Harold Wallace acts as both the President and Chairman of the board of directors, which gives him an enormous amount of control over the direction of the company. While this entrepreneurial mode of management may have worked in an up-and-coming electronics company, the acquisition of the two new companies has rendered this style impractical. (Wheelan & Hunger, 2006). Since Harold Wallace's interests are being divided amongst the three operational divisions, none of them are being effectively managed.The Wallace Group's problem with corporate governance has resulted in a number of significant matters being overlooked. As Frances Rampar's research indicated, important topics such as management training, union negotiations and employee recruitment are not being addressed (Wheelan & Hunger, 2006). Entrance requirements and pay scales are not in line with legal guidelines and current market values (Wheelan & Hunger, 2006). Lower level management and employees have no influence at all in the decision-making process or the direction of the organization.RecommendationsThe first issue that should be addressed in the case of The Wallace Group is the organizational structure. In order for the company to operate more efficiently, Harold Wallace will have to agree to relinquish some of the decision-making authority and allow it to be dispersed amongst top level managers, lower level managers and employees. It is recommended that self-managed work teams be implemented. Self-managed...

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