The Wallace Group Case Analysis Essay

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The Wallace Group Case Analysis

Introduction

The Wallace Group is a diversified company that deals in the manufacture and development of technical products and systems. The company consists of three primary operating groups, electronics, plastics, and chemicals. The electronics group is by far the largest, its size is approximately the size of the plastics and chemical groups combined. Of the $70 million in net sales, the electronics groups contributed about $35 million of that, with plastics contributing $20 million and the remaining $15 million coming from the chemical group. Both the plastics and chemical groups were acquired for the sole purpose of diversifying the company. Mr. Wallace thought if he added these two new
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Wallace. The acquisitions of the plastics and chemical companies, both lacked forward looking vision, the only requirement for their acquisition was that they were profitable.

PEST

Political
• The U.S. Government is their primary customer
• Changes in government policy or funding to defense can affect sales dramatically
• Change in world environment (peace, war, etc) can affect government contracts
• Unions enforcing a no lay-off clause conflicting with increased production measures

Economic
• During a good, booming economy, the Wallace Group should expect large spending from its customers
• Company has a hard time attracting skilled employees
• U.S. spends more than any other nation in regards to defense
• Current wars may affect sales of defense related products
• State of economy and expected direction suggest increased current and future sales of autos
• Rising interest rates will make it more expensive to finance the necessary adjustments/expansion to the company through long-term debt issues

Social
• Due in part to the Department of Defense being viewed as a use for social imperialism, sales could be affected
• Impact of automobiles on environment (ie. Global warming) may impact automotive sales

Technological
• The Wallace Group needs to be on the cutting edge of technology
• Rapid technological advances can help to better manufacturing processes
• US government committed to the military

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