...Galvor Company Galvor company is a company built in France by Georges Latour in 1946 as a fabricator. Highest growth period took place in 1960 – 1971, with 1.062.000 franc in sales revenue in 1971. The rise of the company led to an offer of purchasing equity from the company. Latour controls much of the company’s operations and retains his control over the management. In 1973, Latour considered selling the company to take time off work and spend time with his family. Galvor was sold to Universal Electric on April 1st, 1974 and Latour was assigned as chairman and David Hennessy became Managing Director. With this merger, the business’s strategic plans change. The changes in the business plan to be adjusted with Galvor are used as a benchmark in performance measurement in Universal, namely Sales, Net Income, Total Assets, Total Employees and Capital Expenditures. The problem arose from Universal which demanded Galvor and other business units to report performance and financial reports in the format designed by Universal. This created trouble because of several reasons; requiring lots of personnel, limitation in English and low level of well-trained staff, same report submission as bigger operating unit, different accounting standard between the two countries and different currencies and limitation and local system. As a result, much of Galvor’s time was devoted to making the business plan. Universal implements centralization in reporting and control and each business unit is...
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...1. Introduction Galvor had been an independent company in the electronic industry of electronic measuring and test equipment since 1946, under the management of Mr. Latour, who was its founder and president. In 1974, Galvor was sold to Universal Electric (UE). Mr. Latour then became the chairman of the board of Galvor and Mr. Hennessy, from the UE, was deployed as Galvor’s managing director. As parts of the transformation process from a small independent company to a part of a multinational corporation (MNC), Galvor had to change its planning and control system to comply with UE. 2. Planning and control system for Galvor as an independent company: The essential purpose of a company’s planning and control system is to make managers think long-term strategically, to provide a framework for budgeting, to allocate resources, to facilitate communication and coordination among different departments, and to evaluate managers’ performance. For an independent Galvor company, top management’s needs were quite simple. Management was, in essence, a personal thing. Mr. Latour, was intimately familiar with most aspects of the business, such as production, marketing. He would handle all financial matters, even routine jobs, make pricing decisions, and exercise overall cost control. Moreover, as a founder and owner of the company, he had the motivation to work hard and think long term in the company best interest. Besides, in the small Galvor where there were relatively few employees...
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...and Srikant M. Datar. Cost Accounting: A Managerial Emphasis. Eleventh edition. Upper Saddle River, NJ: Prentice-Hall, 2003 (or another cost accounting text) Kaplan, Robert S., and Robin Cooper. Cost and Effect: Using Integrated Cost Systems to Drive Profitability and Performance. Cambridge, MA: Harvard Business School Press, 1998. Kaplan, Robert S., and David P. Norton. The Balanced Scorecard: Translating Strategy into Action. Cambridge, MA: Harvard Business School Press, 1996. Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press, 1985. Ronstadt. The Art of Case Analysis. Third edition. Lord Publishing, 1993. (1-800-525-5673) COURSE METHOD: The requiring reading for the course includes cases and chapters contained in the assigned textbook and supplementary materials. Most class...
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