THE WALLACE GROUP, INC.
THE WALLACE GROUP, INC.
I. CASE ABSTRACT
Harold Wallace, founder, serves as Chairman and President of the Wallace Group. He owns 45% 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 companys 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 Wallaces 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 Wallaces 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 Integration Modes of Strategy Formulation
Transfer Pricing Distinctive Competence
III. STEPS COVERED IN STRATEGIC DECISION-MAKING PROCESS
(see Figure 1.5 on pages 20 and 21)
IV. CASE OBJECTIVES
1. To acquaint the students with a CEOs management of a company that leads to conflict and power struggles among managers. To deal with an issue in corporate governance: Why hasn't the board of directors become involved in this issue?
2. To have the student act as a consultant. As such, the student should develop a list of the most important problem(s) facing the Wallace Group, and specific action plans to deal with each specific problem.
3. To discuss how to convey potentially negative information to the person who hired you, especially if that person is the principal cause of this negative information.
4. To review the corporation diversification plan from an area of expertise (electronics) into areas (plastics and chemicals) where it has no distinctive competence.
V. SUGGESTED CLASSROOM APPROACHES TO THE CASE
1. Dr. Larry Stybel, the case author, suggests two possible ways of handling this case.
A. The first option involves students individually formulating a response to the following questions:
What is the most important problem facing The Wallace Group?
Develop a specific action plan to deal with this problem.
This option typically involves 1.5-2.0 hours for class discussion.
B. The second option would be to bring in a guest who would take the role of Harold Wallace. A retired president would be ideal for this kind of exercise. Under this format, students are divided into consulting teams and are given the following instructions:
Attached is some information about The Wallace Group, Inc....