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 free to make sourcing decisions. There are several benefits with the purchase of Galvor; namely the fact that Galvor has better overhead cost allocation. Also, Galvor is no longer a family business by Latour so efficiency is key to improve performance. As seen from the case, each unit in Universal must submit periodic reports according to a set schedule and follow the same reporting system. The primary focus is on the variance between the actual results and outcomes as well as budgeted....
Bibliography: Hassound, D. (2011). Galvor Company.
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