The Wallace Group; Laurence J. Stybel | | | Case 2
The Wallace Group, Inc.

I. CASE ABSTRACT

Harold Wallace, founder, serves as Chairman and President of the Wallace Group. He owns 45 percent 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 company's dependence on defense-related business.

Presently, the morale within The Wallace Group has deteriorated to the point where some of the employee stockholders made
To have students learn to develop formal oral presentations,

2. To determine a proper approach for conveying potentially negatively charged information to someone perceived as a superior,

3. To cost out a consulting project based on specific action plans developed by students.

It is most effective to go through this option in one session lasting three to four hours, rather than to space it over two to three classes.

2. Special note from case author:

Regardless of the option selected, the key element of this case is that the acquisition strategy of The Wallace Group has been disastrous for producing the following problems:

A. The acquisition strategy has moved The Wallace Group away from its area of distinctive competence in electronics into areas where it does not have distinctive competence. In a small firm such as The Wallace Group, this has resulted in a tendency not to effectively utilize scarce technical personnel. It also contributes to lack of morale on the part of employees because the firm does not have a clear mission.

B. The acquisition strategy has locked the Electronics Group into using the Plastics Group as its major supplier, thus increasing costs for one group and making them less competitive. Presumably, the Plastics Group is also locked into using the Chemicals Group and is faced with a similar situation.

C. A complex MIS apparatus has been constructed by