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Analysis of effective working

relationship & view points.

Presented by:

Jyoti Bhushan (1224108216)

Lawi Anupam (1224108221)

Sheikh Rozal Anaf (1224108242)

Zubair Ahmed (1224108262)

GITAM INSTITUTE OF INTERNATIONAL BUSINESS


VISAKHAPATNAM
 French company founded in 1946 by M. Georges Latour.

 Company was involved in manufacturing


 fabricator,
 buying parts and assembling them into high quality,
 moderate-cost electric and electronic measuring and test equipment.

 Sales grew from 2.2 million new francs in 1960 to 12 million new francs in
1971

 April 1, 1974, Galvor was accquired by Universal Electric Company (UE),


located in Geneva for $ 4.5 million

 M. Latour became chairman of the board of Galvor and David Hennessy was
appointed as Galvor’s managing director.
 Business plan prepared annually by each operating units.

 It is the standard for evaluating the performance of unit managers.

 Authority was given by Universal’s top management to the plan.

 Business plan was described in detail, and takes long time to approve.

 The plan also contained a forecast, in less detail, for the fifth year too.

 Five key objectives detailed in B-plan are:


Sales
Net Income
Total assets
Total employees
Capital expenditures
 As a result :
 system became very strong centralized controller organization
 large staff as well as relatively large business unit controller staffs.

 Galvor struggled to adapt complex and time-consuming requirement of UE’s


business planning process.

 System was very inflexible, detailed system that required far too much time and too
many resources for a business unit of the size of Galvor.

 For example, the controller, and his chief accountant spent 80% of their time
working on the system and reporting requirements for the corporate head office.

 Establish 8000 machines and 3000 assembly standard times.


 In spite of being a highly centralized organization, the management of various
operating units had considerable autonomy.
 For example: Mr. Hennessy was free to purchase components from other universal
units or from outside sources.

Galvor’s performance in July and August (1976) ( All figures in


$000s)
Actual July Budget Variance Actual August Variance
Budget

Inventory 2010 15801 430 2060 1600 460

Sales to date 3850 3900 50 4090 4150 60


 Reasonable amount of selling models in stock to increase sales.

 To manufacture longer series of each model.

 Reduce number of purchase order by maintaining a minimum stock of low value


items.

Galvor’s performance in September

Forecast Actual Variance

September 1973 2175 202

October 1928 2175 247


 Realistic master production schedules

 Short term physical shortage control to ensure shipments

 Work in process analysis of all orders

 Man power reduction

 Elimination of all unscheduled vendor receipts

‘SHELF DISPLAYING 70 MODELS OF 200, IN THIS BUSINESS,


INVENTORY REDUCTION IS NEAR TO IMPOSSIBLE: HENRY’
 Staff was grown from 20 to 42 by 1977, making Galvor over staffed

 Language problem between Galvor and UE.

 Lack of necessary know how and training to handle the requirements of the job.

 Difference in Accounting principles and practice in France from the United States.

 Problem of conversion of internal records of Galvor from its functional currency


to the reporting currency.
 Galvor needs the organization to be:
 Simple,
 Informal,
 Less-staff planning
 Less control practices and
 De-centralized

 Plan for short term should be prepared, for 1 year, focused on KRA like sales
forecasting, inventory etc.
 Should not report on monthly basis.
 Proper cost allocation should be done
 Working hours should be reduced.
 Better trained employees ,familiar in both language.
 Reduce employees in the controller department.
THANK YOU

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