STRATEGIC AUDIT: THE WALLACE GROUP

GROUP NAMES& ID SOFIA A. MOHAMED 193014008

EDEN N. MUSAFIRI 193050001
DIVIN LEREH 193052022

INSTUCTOR ASSOC. PROF. LAWRENCE EMEAGWALI

COURSE NAME STRATEGIC MANAGEMENT

COURSE CODE MGMT 502

TASK CASE 2 ANALYSIS: The Wallace Group.

DUE DATE 7th January 2020

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STRATEGIC AUDIT: THE WALLACE GROUP

TABLE OF CONTENTS

No. ITEM PAGE

I Current Situation 3
II Strategic Managers 4
III External Environment 4
IV Internal Environment 6
V Analysis of Strategic Factors 8
VI Strategic Alternatives 10
VII Implementation 11
VIII Evaluation and Control 11

LIST OF TABLES

No. ITEM PAGE

1 External Factors Analysis Summary (EFAS) 12

2 Internal Factors Analysis Summary (IFAS) 12
3 Implementation, Evaluation and Control Plan for The 13
Wallace Group

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STRATEGIC AUDIT: THE WALLACE GROUP

I. CURRENT SITUATION
A. Current Performance
 The Wallace Group’s annual sales generates $70million which was a minimal
improvement from two years ago, with ample of the sales coming from
governmental contracts and automotive markets.
 The Wallace Group portrayed a profit of $3,521,000 before tax in the previous
year.
 The Electronic Group performed well the previous year and involved itself in two
major programs under the Defense Department contracts. These contracts allow
for ongoing sales after the final product has been released with an estimated total
of $56million over the five years.
 Plastics also performed well and continue to be a major supplier for Chrysler,
Martin Tool, Foster Electric, and the Electronics group.
 The chemicals group underperformed last year but did turn bring in a small profit.
 Despite increasing net sales from two years prior and still being able to pay out
dividends, the company morale is low with most of the grievances pointing to the
President, Harold Wallace and his decision making, as well as the corporate
structure and policies. Numerous managers feel each other of the three groups
work independently as opposed to working synergistically
B. Strategic Posture
1. Mission
 The mission statement seems to be missed by many of the Vice President’s and
Directors. Harold Wallace is the only one who seems to be well acquainted with
the vision.
2. Objective
 The organization is in the process of creating a strong management team to meet
future obstacles.

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STRATEGIC AUDIT: THE WALLACE GROUP

3. Strategies
 The organization has chosen to reach out into new markets wherever possible and
to institute the controls needed to move ahead in a planned and orderly manner.
4. Policies
 Groups are encouraged to purchase plastics and chemicals from their sister
companies as part of the transfer pricing corporate strategy
 There is a hiring policy to hire new people below the salary grade midpoint.

II. STRATEGIC MANAGERS

A. Board of Directors
1. Headed by the President, Harold Wallace
B. Top Management
1. Harold Wallace is President and Chairman of the Wallace Group
2. The Electronics’ group has been run by LeRoy Tuscher but he has recently resigned his
position. Jason Mathews has joined The Wallace Group as Electronics Vice President.
3. The Chemical group is led by Vice President, Jerome Luskics who assumed duties after
his chemicals company merged with The Wallace Group.
4. The Plastics group is led by newly hired Vice President, Martin Hempton.
5. There are also new positions to the organization that report directly to Harold
Wallace. Those positions are; Vice President of Finance, Vice President of
Secretarial/Legal, Vice President of Marketing, and Vice President of Industrial
Relations.

III. EXTERNAL ENVIRONMENT

A. Natural Environment:
1. The plastics group also has a bright outlook with their products being utilized in
the electronics and automotive industries.
2. Both industries remain a constant fixture in our society but the group must expand
to other markets in order to show significant growth.

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STRATEGIC AUDIT: THE WALLACE GROUP

B. Societal Environment
1. Economic
a. During a good, booming economy, The Wallace Group should expect large
spending from its customers.
b. Company has a hard time attracting skilled employees
c. U.S. spends more than any other nation in regards to defense
d. Current wars may affect sales of defense related products
e. State of economy and expected direction suggest increased current and future
sales of autos.
f. Rising interest rates will make it more expensive to finance the necessary
adjustments/expansion to the company through long-term debt issues.
2. Technological
a. The Wallace Group needs to be on the cutting-edge of the technology. Rapid
technological advances can be used in the manufacturing processes.
3. Political-Legal
a. The U.S. government is their primary
b. Changes in government policy or funding to defense can affect sales dramatically
c. Change in world environment (peace, war, etc.) can impact government contracts.
d. Unions enforcing a no lay-off clause conflicting with increased product measures.
4. Sociocultural
a. Due in part to the Department of Defense being viewed as a use for social
imperialism, sales could be affected.
b. Impact of automobiles on environment (i.e. Global warming) may impact
automotive sales.

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STRATEGIC AUDIT: THE WALLACE GROUP

IV. INTERNAL ENVIRONMENT

A. Corporate structure
1. Divisional structure: The three groups include Electronics, plastics and
Chemicals; each operates under the direction of a Group Vice president. (S)

2. Recent addition of staffs and functions in the organization has raised conflicts
among the Vice Presidents (w)

3. The responsibilities and roles of the staff needs to be defined in order to improve
the relationship among the corporate and unit staff of the group (W)

B. Corporate culture
1. Quality key ingredient: Growth, expansion and diversity (S)

2. There is a closed and threatening type of corporate culture: decisions are taken
by top level manager and work level management’s opinions and advices are
neglected (W)

3. Weak corporate culture: independent organizations (W)

C. Corporate resources
1. Marketing

a. Group marketing strategic plans are prepared annually (s)

b. The marketing strategies is not effective due to the inefficiency of workflow
between the executive and the workers (W)
c. There is a need to integrate marketing efforts between the group and
corporate (W)
d. Lack of marketing director and sales director s per group (w)

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STRATEGIC AUDIT: THE WALLACE GROUP

2. Finance

a. The profit turned in last year was $3.5 million before taxes which represented a
growth over previous year and dividend was declared for the fifth consecutive
year (S)
b. Chemicals group’s performance has been less satisfactory as anticipated in the
past. (W)
c. Existence of an employee stock option plan for long-term employees (S)

3. Research and Development

a. Inexistent marketing function at the group level to develop a strategy, define
markets, research and develop product opportunities. (W)
b. Unsuccessful planning efforts to expand into non-defensive areas and
product development (W)

c. Major development programs enabled the corporation to the opportunity for

sales growth under the defensive contract. (S)

4. Operations
a. Critical are where the Wallace group may not be able or willing to commit
resources needed for the planned expansion. (W)
b. Materials are transferred among groups at a non competitive cost thus
corporate policy regarding transfer prices among group must be revised (W)
c. Manufacturing problems les to increased prices (W)

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STRATEGIC AUDIT: THE WALLACE GROUP

5. Human resources
a. There is a need for a management development program in order to keep up
with the growth (W)
b. Need of improvement for the recruiting channels of the Groups (W)
c. IEWU negotiations have been extremely tough and strained Labor relations
with the Union pay
d. There is a mood of lethargy and drift within the Wallace Group (W)
6. Information systems
a. The two major developmental programs led to increased sales in the
electronics group and a tactical display system for aircraft in creation may
father increase the sales (S)

b. Lack of technical system supervisor experienced in the no defensive area to

train and supervise the workers (W)

V. ANALYSIS OF STRATEGIC FACTORS

A. Situational analysis

1. Strength

a. Technological competence

b. Government contracts

c. Major plastics supplier Martin, Foster and Chysler

d. Running projects in electronics and plastics business units with guaranteed sales

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STRATEGIC AUDIT: THE WALLACE GROUP

2. Weaknesses

a. Poor relationship between the corporate staff and unit staff.

b. Poor performance for the chemical group

c. Unsuccessful expansion plans relates to the lack of sales representatives and

products diversification and dependence to government contracts.

d. Workforce problems

e. Vision, mission are not clear

3. Opportunities

a. Favorable market for plastics and electronics group

b. Future sales estimated are $56 million with the implementation of the new
system

c. Need of management development program for diversification

d. Diversification to other market and business

e. Creating more vertical integration synergies

4. Threats

a. Employees may shift to competitors due to the poor salary schedules

b. The Wallace group needs to keep up with the technology in order to keep the
market

c. Government contracts loss may impact the financial position of the company

d. Failure to deliver current projects

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STRATEGIC AUDIT: THE WALLACE GROUP

B. Review of current Mission and objectives

1. Current mission, vision and objectives are not clear

2. The main goals are growth and expansion however the company must review the
organizational structure to meet the stated goals

VI. STRATEGIC ALTERNATIVES

A. Strategic Alternatives

1. Capacity building for top management personnel. Create and implement management
development programs for the group.
2. Redefine marketing tactics. Adopt more aggressive marketing tactics
3. Re-deployment of staff in departments where they are most needed. Engineers who are
specialists should be sent to work in relevant groups.
4. Develop capacity transfer programs. This will help train employees and prepare for the
absence or retirement of specialists employees.
5. Review and redesign recruitment policy
6. Redefine the management approach. The management should adopt a more participatory
management approach.

B. Recommended strategy

1. Employees promoted to management positions should have some management experience.

Those without management experience should be trained.
2. A procedure manual should be developed for recruitment and other human resource
functions. The job specifications should be clearly spelt out.
3. Staff or engineers with particular specialties and skills should be deployed to the right
department where their skills are needed most.
4. Wallace group should adopt a participatory management approach. The ideas and
suggestions of all employees at every level of management should be taken into
consideration.

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STRATEGIC AUDIT: THE WALLACE GROUP

VII. IMPLEMENTATION

A. The training should begin prior to the promotion. Engineers should be given management
training. They should also be evaluated on a periodic basis during their training and after the
training while working.
B. The job specifications should be clearly spelt out. A point-based system should be used for
recruitment. The right recruitment channels should be used to source the right professionals.
Those who rightly qualify should be recruited. Qualified professionals should be adequately
remunerated according to industry standards.
C. Every engineer should be under a department. They should not be contracted to several
departments or assigned to several tasks at the same time.
D. The ideas and suggestions of all employees at every level of management should be taken into
consideration. The interview conducted by Rampar reveals that several employees have pertinent
problems, which have not been dealt with. Their voices are not being heard. Wallace should be
more open to accept alternative views and be flexible on expenditure.

VIII. EVALUATION AND CONTROL

A. Comprehensive training programs should be run on a quarterly basis. This training should be
followed by an evaluation of every participant.
B. The recruitment criteria should be clearly spelt out on a point based-based system. This
information should be eloquently communicated to all potential candidates.
C. Management decision should be arrived at in a consultative manner. This ensures that every
opinion has been sampled and that all employees feel involved in the management pyramid.
However, this should not lead to slow decision-making and unnecessary bureaucracy.

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 STRATEGIC AUDIT: THE WALLACE GROUP

Exhibit 1 - External Factors Analysis Summary (EFAS)

External Factors Weight Rating Weighted Score Comments
Opportunities

Favorable market for plastics and electronics group 0.2 4.1 0.82 Leverage
Need of management development program 0.1 5 0.5 As soon as possible
Diversification to other market and business 0.1 1.8 0.18 Might take time
Creating more vertical integration synergies 0.05 2 0.1 Necessary

Threats

Employees may shift to competitors due to the poor salary 0.2 4.3 0.86 To review
Government contracts loss may impact the financial status 0.1 4 0.4 Poor negotiation
Failure to deliver current projects 0.15 3 0.45 Delays
Old technology might cost them the market 0.1 1.6 0.16 Innovation

Total Scores 1 3.47

Exhibit 2 - Internal Factors Analysis Summary (IFAS)

Internal Factors Weight Rating Weighted Score Comments
Strengths

Diverse technical competence 0.15 5 0.75 Major skills

Running projects with guarantee of selling 0.1 4.2 0.42 Key to success
Government contracts and suppliers 0.1 3.9 0.39 To maintain
Major plastics supplier Martin, Foster and Chysler 0.05 3 0.15 To maintain

Weaknesses

Poor relationship between the corporate staff and unit staff 0.05 2.7 0.135 To improve
Unsuccessful expansion (no growth) 0.2 2 0.4 Need review
Workforce problems 0.1 2 0.2 Need review
Vision, mission are not clear 0.15 2.4 0.36 Need review
Poor performance from the chemical group 0.1 2.1 0.21 Questionable

Total Scores 1 3.015

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 STRATEGIC AUDIT: THE WALLACE GROUP

Exhibit 3 - Implementation, Evaluation and Control Plan for The Wallace Group

Strategic Action Plan Priority Who will Who will Review Criteria used
Factor System implement review freque
(1-5) ncy

Managemen Teach leadership 3 Manpower VP Quarte Number of

t capacity and planning & Industrial rly training
building management dev't Relations programs
skills
Marketing Adopt aggressive 2 Director VP Monthl Growth in sales
tactics marketing tactics operations Marketin y figures
g
Staff Deploy to 3 Manpower VP Quarte Number
redeployme appropriate planning & Industrial rly redeployed
nt departments dev't Relations
Managemen Adopt 4 Director CEO Monthl Number of
t culture participatory administrat y complaints from
approach ion employees
Recruitment Clear procedure 3 Personnel VP Semi- Reviews from
policy manual services Industrial annuall candidates
Relations y

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