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GALVOR COMPANY

Company Background

• Founded by M. Georges Latour in 1946

• BASIC OPERTION:-
Acts as a fabricator, buying parts and assembling them into HIGH-
QUALITY, 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)
Reporting to EU

David
Hennessy
(MD)

Preparation of
Report
&
Supervising
Internal accounting
function
Working Style in UE

Business plan Acts as


preparation for Performance evaluation
operating unit for unit manager

6 month lag
period and g
then two year l on
r a )
projection f ear
o
i n
o (5 y
t
ojec iod Sales
Pr per 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 Variance


Budget

Inventory 2010 1580 430 2060 1600 460

Sales to 3850 3900 50 4090 4150 60


date

Exhibit 2 ( All figures in $000s)


Galvor’s performance in September
Forecast Actual Variance
September 1973 2175 202
October 1928 2175 247

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 Electronic
meter Panel instruments
meter
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

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