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The Wallace Group Essay

A. What is the most important problem facing the Wallace Group?

There are several problems facing the Wallace Group, but it seems the most crucial problem facing the group is two-fold; the lack of vision and direction from the CEO, Harold Wallace and improper management.

a. His diversification program that resulted in the acquisition of the chemical and plastics divisions lacked forward looking vision. He simply required the companies to uphold a profitable operation without any direction to improve (Wheelen & Hunger, 2004, p. 2-5).

b. The company seems to have difficulty in the hiring process. It seems the company is focused on cutting cost rather than looking for effective employment resolutions. For example, instead of creating a management development program to train and recruit managers, the company relies on promoting technical staff. The cost cutting approach is also hindering the hiring of qualified engineers. The company focuses on hiring employees at the least possible salary as an alternative to paying the required amount for qualified expertise.

c. Another concern that arises is un-standardized systems of collecting data and presenting information. For example, both managers are using different data and formats for essentially the same purpose, and therefore they create redundancy and higher workloads.

B. What recommendation(s) would you make to Mr. Wallace, and in what order of priorities?

Because I have given more than one important reason, I have several recommendations that will address each of the issues.

a. First, I would recommend that the Wallace Group execute a corporate governance policy familiar to a business of its size. This would require that the company adopt a board of directors, which has five responsibilities (Wheelen & Hunger, 2004, p. 27):

1. Setting corporate strategy, overall direction, mission, and/or vision–the company could implement a diversification in customers into the civilian sector or even foreign governments instead of relying mainly on the Department of Defense.

2. Hiring and firing the CEO and top management–the board of directors could give Mr. Wallace performance requirements that if not met, they could seek out a replacement.

3. Controlling, monitoring, or supervising top management.

4. Reviewing and approving the use of resources–the company could evaluate whether to continue to purchase their raw materials from sister Wallace groups or seek outside sources.

5. Caring for shareholder interest–the board of directors could seek to increase the bottom line of the investors rather than the current policy of just maintaining a profit.

b. In order to solve some of the hiring problems, I would take the suggestion of the Industrial Relations VP and implement a management development program. This would ensure that inefficiency generated by non-qualified personnel in management positions is decreased or eradicated.

c. I would also reform the starting salaries of the employees. The group will have to offer competitive salaries in order to attract qualified employees.

d. In addressing the issues of inefficient information systems, I would propose a single information management system. Their current method, where each division of the group has its own information gathering system, creates redundancy and disorganization. By collecting the data once and using a single information management system the company will reduce costs, disorganization, and confusion among its employees.

C. How do you educate a manager to manage an organization as it evolves over time from an entrepreneurial structure to a more sophisticated and complex organizational structure?

In order to educate a manager to manage an organization as it evolves from an entrepreneurial structure to a more sophisticated and complex organizational structure, I would direct their attention to a couple of theories on organizational adaptation.

a. The first theory, the institutional theory, proposes that organizations can and do adapt to changing conditions by imitating other successful organizations (Wheelen & Hunger, 2004, p. 7). This means that the company should assess companies of comparable size and structure and try to adapt useful management techniques from them. Since the methods employed have already been tested and the results can be predicted, this is a solid approach.

b. The other theory, the organizational theory, states that organizations adjust defensively to a changing environment and use knowledge offensively to improve the fit between the organization and its environment (Wheelen & Hunger, 2004, p. 8). The company must respond to changes to reduce negative impacts and position itself to take action, in order to utilize this theory. This allows for the company to fundamentally learn from its environment and lead to its own innovations in strategic management.


Wheelen, T. L. & Hunger, J. D. (2004). Strategic management and business policy. 9th

Edition. Pearson Education Inc., Upper Saddle River, NJ.

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