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Strategic Management and Business Policy The case of Wallace Group is a classic example of situation when profitable company undergoing an internal crisis over its inability to come up with effective management strategy. What is the most important in cases like this is the fact that company continues to generate income, yet it is not much enough to guarantee such company remaining competitive in the long run. The only commercial enterprises that will survive strong competition in the future, are those that deploys marketing flexibility as the main principle, upon which its operations are based. The most important problem facing Wallace Group is the fact that this company is being in period of stagnation. As President of the company said in his conversation with Staff Manager: Business wise, I think were OK. Not great but OK.
Last year we turned in a profit $ 3. 5 millions before the taxes, which was a growth over previous year earnings. Yet, Mr. Wallace fails to understand that stagnant companys growth is the first sign that company is very likely to be pushed out of competition in the future by other, more aggressive competitors. One of the reasons for this is companys heavy dependency on contracts with U. S. military.
What is also adds to the problem, is inadequacy among companys 3 divisions: Plastics, Electronics and Chemicals groups. While Electronics group has accounted for $ 30 millions in annual net sales, Chemical group could only come up with $ 15 millions, which only allowed it to generate minimal income. It appears to be quite obvious that President tries to maintain the size of his company at the expense of its efficiency. He increased companys staff by hiring employees relations specialists that were supposed to resolve Wallace Group internal issues. Yet it didnt help- psychological methods alone can never make company profitable again.
The root of the problem is purely economical. Mr. Wallace seems to be an old school businessman, whose now is getting confused because of todays realities of running commercial enterprise. He tries to be progressive by applying the concepts of diversity and psychological stimulation to his employees, but this only makes things worse. When dealing with Wallace Group problems, first of all Id recommend Mr. Wallace to be realist.
He rightly thinks that only diversifying companys electronic production can make big difference. Yet, 80 % of all domestic electronic devices sold in U. S. are being made in China, where qualified worker is paid 1 dollar a day. This makes it doubtful that Wallace Group will remain competitive on U. S.
market if it diversifies its electronic products. Thats why I would recommend Wallace Group to move its production lines to a Third World country. This will automatically double the income that company generates on selling non-military electronic devices. I would also suggest that Wallace Group whether sells its Chemicals and Plastic divisions and concentrate exclusively on electronics or expand on international market. The situation when two out of three companys divisions do not generate sufficient income is intolerable. Also it appears that Mr.
Wallace does not delegate its managers with powers to make executive decisions. His business style is best described as authoritarian. Thats why there is an internal discontent with Presidents personality among many members of staff. Of course, the new managers can be hired, yet this management style is never going to be very productive because it undermines marketing flexibility. I would suggest that Mr.
Wallace simply allow companys managers to be more independent. This will automatically stump out the discontent among them. The last thing Id strongly suggest for Mr. Wallace to do is firing all those employees relations specialists and companys psychologists. As practice shows, it doesnt benefit any company having these kinds of specialists on payroll. Essentially, these are nothing but parasites, whore getting paid from 25 to 50 dollars an hour by telling workers how happy they suppose to be feeling, working for any particular employer.
There is only one way to insure employees satisfaction economical. It is very crucial for every manager to adopt a proper management style when company grows bigger and more structural ized. Very important is to educate managers that there are no good or bad management approaches, everything depends on particular circumstances. For example, with Wallace Group, authoritarian management style cannot be very effective as bulk of companys employees is highly qualified workforce. Itd be much more appropriate if staff members felt their direct responsibility for companys well-being, because their salaries depend on it.
Yet, if we talked of what would be the best management style with non-qualified workers, itd be different matter. Most of these are new immigrants from Third World countries with totally different work ethics. Delegating them with certain rights is a mistake, as they would simply abuse it, as practice throughout America shows. As company becomes more structural ized, it is important to have managers only working in their particular field, without having to deal with issues that are out of their competence. Yet, they should enjoy independence within their departments.
The dynamics of todays commercial market shows us that every company needs to be able to adapt to rapidly changing demand circumstances. This can only be accomplished if managers dont fully rely on higher authority, every time they have to make a decision. For example, Costco retailing network generates 30 % more income then its closest rival Sams Club, even though Club has three times as many warehouses throughout USA. The main reason for this is that Costcos managing style is democratic and flexible, while Sams Club authoritarian. There is no doubt that the roots of Wallace Group problems are the low efficiency of its management approach and current trends within worlds global economy. Still, both of these problems can be resolved when proper tactics are being applied.
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Research essay sample on Electronic Devices Sams Club
