As a consultant I would advice Galvor company to

-create a management planning and control practices in agreement with the size
of the company.
-hire more people with high technical qualifications so they could produce reports
of quality
-maintain Galvor's current level of autonomy
-proper cost/product association should be done

Issues linked to the acquisition

How can UE imposing planning and control practices
different from those required by an independent Galvor be
justified ?
Every unit in Europe had to submit periodic reports to Geneva according to a fixed
schedule of dates. The same reporting system was implemented in the USA and
Europe in order to harmonize the results of the different units and so in order to
make comparison between them.

The business plan

January : The Geneva HQ of Universal set tentative objectives for the following
two years.
January to April : these tentative objectives were negotiated between Geneva HQ
and the operating managements.
May : Ojectives were reviewed & approved by Geneva and US HQ. Objectives
focused primarily on the five key measures.
June to July : Galvor prepared its business plan and so found a way to reach its
objectives for the following two years. Galvor made also forecasts in less details
for the 5 years to come.
September : approval of the business plan.
-Was prepared annually by each of the operating units
-Primary standard to evaluate the performance of the operating units.
-For the 300 Universal product lines in Europe, objectives dealt with 5 key
measures :
-sales
-net income
-total assets
-total employees
-capital expenditures
(Galvor represents 1 product line)

Page contents
The scope of the business plan can be easily understood when we look in more
details the type of informaton the plan contains. It starts with a brief financial and
operating page which contains comparative data for preceding year, current year,
and forecasts for next year, two years hence and fives years hence.
These summary reports were followed by a complete set of projected financial
statements.

What is your overall assessment of the effectiveness of

Universal Electric's planning system as it is applied to
Galvor ?

Galvor Company
Business Plan : Schedule

 The Galvor company was founded in 1946 by M Georges Latour who was
owner and president until 1974.
 fabricator, buying parts and assembling them to produce electric and
electronic measuring and test equipment.
 On april 1, 1974 Galvor was sold to Universal Electric Company for $4.5
million worth of UE's stock.
 At this time, M. Barsac replaced M.Chambertin as Galvor's controller.

To what extent should a large international organization rely

on a comprehensive system of financial reporting and
control to achieve its strategic objectives ?
Thanks for your attention
The new management systems & techniques
-History and background of Galvor company
-Organizational chart
-Issues
-Business plan
-Summary reports
The new management systems
Questions

Presented by Adrien Combes

History and background of Galvor company
We assume that Gavor is an independent company. If you
were a consultant to Galvor, how would the management
planning and control practices you would recommend for the
company ?
Summary Reports
The new management systems & techniques
Company Case
Actually the change of ownership in 1974 created problems.
The UE company wanted to put into effect an extremely comprehensive reporting
and control system through a business plan.
But for example :
-there were no really workable financial statements for the previous 2 years
-limitation in English even for top managers
-different accounting standard and currencies between France & the US.
Major management actions planned for the next 2 years :
-implement standard cost system
-revise prices
-cut oldest low-margin items from line
-standardize product design
-implement product planning
Separate plans were presented for each of the functional areas.

If the management processes need improving how would

you change them ?
Obviously for the reasons seen previously the management processes should be
improved. For instance it could be possible to simplify the process to enable best
understanding from the managers and to enable a more affordable cost of the
system.
Universal Electric's tried to implement its planning and reporting system for
Galvor company but without taking into account several factors : even top
managers were not that good in English compromising the communication ; there
are many differences between accounting standard and currencies between
France & the US.
Moreover the reporting system costed a lot of time and money cause based on a
monthly period. People did not necessarily understand the purpose of the
reporting system so the effectiveness of it was jeopardized.
To my mind it is really difficult to impose planning and control practices if them
suffer from a lack of legitimacy. If Galvor's members can't understand the
benefits provided by the system it makes it useless. So I would recommend to
invest consequently in trainings so the managers could really feel the importance
of the planning and control practices. To achieve this it could be possible to
organize meetings between Galvor top managers and others top managers of UE
company who have already the knowledge and the experience of this system.
The biggest a company is the hardest it is to manage it that's why formal
procedures and practices are needed. However in the case of Galvor not only
comprehensive reports are demanded but also in a very short time (monthly
reports).
The consequence is that reports can't be produce on time an the over quantity of
reports make them illegible.