Galvor Company

GALVOR COMPANY

Company Background

• Founded by M. Georges Latour in 1946 • BASIC OPERTION:Acts as a fabricator, buying parts and assembling them into HIGHQUALITY, MODERATE-COST ELECTRIC and ELECTRONIC MEASURING and TEST EQUIPMENT. •

From 1960 to 1971 SALES GROWTH almost 6 times (2.2 million ------- 12 million)

•

UNIVERSAL ELECTRIC COMPANY purchased GALVOR for $4.5 million in 1st April 1974.

Major changes after 1st April 1974 M. G. Latour (Chairman)

David Hennessy (MD)

Preparation of Report & Supervising Internal accounting function

Reporting to EU

Working Style in UE Acts as Performance evaluation for unit manager

Business plan preparation for operating unit 6 month lag period and then two year projection

g on l a ) r o f ear n o (5 y i t jec iod o Pr per

Sales Net Income Total assets Total employees Capital expenditures

Problem in GALVOR

 Need a very strong centralized controlling system  Supported by a proper Business Plan & Reporting System.  Employee of GALVOR Struggled a lot adapt the new process.  Mode of Communication and exchange Rate is a major cause of concern  More time required for planning not for reporting  Accounting principle and practice is different in both the Countries

Galvor’s performance in July and August (1976)

Actual

July Budget Variance

Actual

August Budget

Variance

Inventory 2010

1580

430

2060

1600

460

Sales to date

3900

50

4090

4150

60

3850

Exhibit 2

( All figures in $000s)

Galvor’s performance in September Forecast

Actual

Variance

September 1973

2175

202

October

2175

247

1928

Exhibit 4 & 5

UE’s viewpoint

• Planning and controlling System • GALVOR need to change and adopt itself to the current parent company • Experts for the new subsidiary • Uniform reporting and controlling system WHAT GALVOR need ? •INFORMAL WAY of COMMUNICATION •No Budget ONLY if then for Shorter period •FORCAST for Multi meter

Panel meter

Electronic instruments

Recommendation

 Implementation of standard cost System.  Independent work to Departmental Head  Not inducing budget so early  Employee retention  Should spend lower cost for Smaller units ( product line)  Implementation of product Planning  Standardization of product design according to the market

Thank YOU