Wallace Group

Wallace Group

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. Potential for increased sales due to administration's commitment to a strong military with the latest technology.

B. Auto industry on an upward trend with high sales volume suggests solid future sales.

III. STRENGTHS

A. The company is able to supply many of its own component parts and raw materials because it is well-integrated.

B. Solid performance from the plastics and electronics divisions in the past. The electronics group has a good track record in developing and manufacturing countermeasure equipment.

C. Public corporation provides the firm with flexibility to attract equity capital versus long- or short-term debt.

IV. PROBLEM ANALYSIS

A. Heavy dependence on government contracts could put the corporation in financial difficulty if further sales diversification cannot be found.

B. Poor organizational design creates span of control problems and results in poor operations. Specific job responsibilities need to be defined at the management level.

C. The corporate policy of transfer pricing needs to be addressed in terms of product cost and profit margin.

D. Stage I management in Stage III corporation.

E. Unprofitable chemical division needs new management or it needs to be analyzed for sale to someone else.

RECOMMENDATIONS

A. Develop new organization chart and clearly define job responsibilities. Let