The Wallace Group Options

Currently, Wallace Group is undergoing some major changes in its sales and marketing focus. Attempting to move from a defense contractor to a non-defense supplier requires many changes. The current strategic plan includes acquiring competitive organizations that offer the goods and services needed by Wallace Group to produce its products and services, as well as focusing on external variables that affect performance. After interviewing many key people at Wallace Group, I have come to the conclusion that Wallace Group should focus on internal processes and organization.

I recommend the following steps be taken to enhance the economic outlook of the firm, both in defense and non-defense contracts.

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1. Reorganize the entire organization into one Group rather than three separate Groups with a supportive corporate Group.
2. Turn functional areas into consultative units, with resource allocation being determined by need and scheduling.
3. Create a matrix reporting structure after restructuring.
4. Upper-level management would need more decision-making authority with more accountability to H. Wallace.
5. Cross-train employees for greater coverage and to utilize employees that will have outdated skills after new technology and equipment are brought in.

Evaluation of Current Objectives and Current Strategy

Current objectives for Wallace Group are to increase market share in defense and non-defense areas as well as to expand into other markets. H. Wallace’s strategy seems to be acquisition of the production groups necessary to manage all functions of existing processes. He is turning away from the strategy of tightening internal controls and maximizing profits and instead is focusing on expanding markets.

Current Strengths and Weaknesses Strengths

There has been an infusion of new ideas by the hiring of a new Vice President, Jason Matthews, of the Electronics Group.

• Wallace Group as a whole is showing a profit and growth over last year.
• Acquisition of the prototype contract could infuse the organization with much-needed capital.

Weaknesses:

• Only some functions within Wallace Group have been centralized.
• H. Wallace has settled all disputes himself between the corporate group and the separate Groups.

This has created an environment of autocratic control, instead of collaborative decision-making.  Each Group functions as an independent company, except for administrative functional areas.  Each group is at the mercy of the weaknesses of the other groups. For example, Electronics is required to purchase from Plastics and Chemicals when they may not be competitive with the market.  Acquisition of the prototype contract could create more personnel issues.

Analysis of Current Environmental Threats and Opportunities Threats: 50% of the organization is owned by outside shareholders. This could result in a hostile takeover.  Electronics and Plastics lack growth in markets and profits. Chemicals is still on the brink of bankruptcy. Opportunities:  Production equipment is on order that will greatly increase efficiency and will allow for cross-training of displaced workers.  A minimal alteration to existing production methods would result in the opening up of may end-use markets in non-defense areas. Stakeholder Analysis. Government agencies are greatly affected by Wallace’s actions now and in the future.

Most of Wallace Group’s business comes from government contracts, and their move to non-defense work could potentially remove them from the pool of contractors available. Also, any change in workflow and/or equipment may be affected by regulations regarding existing contracts as well as future contracts.  Labor unions are affected by future actions of Wallace Group. They are currently struggling with their “no layoff” policy from the union, as well as pay grades. Any reorganization of workers and pay structures is going to have to be approved by the labor union.

Competing organizations would be affected by Wallace Group’s move from defense to non-defense work. Defense competitors could potentially gain work, and non-defense competitors would now have to view Wallace Group as a viable competitor for market share.  Employees would be affected the most by Wallace Group’s reorganization of workflow and the influx of efficient equipment. Their job descriptions would change, as well as their chain-of-command.  Suppliers would likely be affected by an increase in demand for their products/services. The opposite could be true if H. Wallace follows his idea of acquiring the organizations that perform the services he needs.  Customers/clients would change as a result of Wallace Group focusing more on non-defense work. Breaking into a new field/industry often entails developing new relationships.  Civic groups may be more interested in the Wallace Group after a change from defense to non-defense work, as the products will be more widespread in the population.  Public interest groups may take a greater interest in Wallace Group in a similar manner to the civic groups.  Stockholders will most definitely be affected by any change in Wallace Group.

The move from defense to non-defense can open more doors, but it may also have a learning curve time that may result in lower profits, or even a loss, that would cause a lack of dividends. Identifying Current Problems • Vice President of the Plastics Group, Martin Hempton, was merely asked to maintain profits. No progress is expected, and no supervision is given to this new employee.  Very little accountability exists for upper-level management. • Scarce resources and low pay grades create competition among the Groups.  An overabundance of red tape and personal agendas cause lost opportunities.

Alternative Strategies

Wallace’s growth primarily centers on the idea of expansion into new markets. The recent acquisitions have only weakened the overall organization. Additional expansion could weaken it further. An alternative would be to strengthen each group’s position in existing markets, focusing on expanding market share and acquiring new contracts doing similar work. The focus here should be on Sales and Marketing targeted to acquisition of work that would benefit all Groups. This can best be accomplished by creating a centralized Marketing department in the corporate Group, with a representative for each production group.

An alternative to requiring each Group to purchase from the other Groups would be to price according to the market. If this means that Plastics and Chemicals have to sell to Electronics at cost, it will create a more accurate picture of interventions needed for those Groups and a more accurate picture of profits and losses for each Group. • The corporate Group’s functions centralize work, which results in fewer employees, but makes for frustrating and ineffective processes in the production groups.

An alternative strategy would be to create a matrix environment for the corporate Group, with one representative from each function working with the VP of their assigned production group and reporting to the VP of the corporate Group for consistency across all Groups. Recommendations My recommendation would be for The Wallace Group to become one group. Centralization of all the functions in a matrix environment would create better coordination between the production groups. Each functional area, such as Engineering, could then allocate their resources based upon need and production scheduling.

This would also enable the entire group to improve the skills of their existing employees through cross-training as well as pool their resources to hire a higher quality candidate for the pay scale expected in the market. Upper-level management would organize around functional units, allocating resources based on need and deadlines, creating a consultative environment. This centralization would give everyone the vision of Wallace Group being one organization, rather than factions competing for limited resources within an organization.

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