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Galvanor Case Analysis

Essay by   •  December 9, 2011  •  Case Study  •  267 Words (2 Pages)  •  2,533 Views

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The management control system issues in the case are:

* Different control system in Universal Electric (UE) and Galvor; as a large company, UE has a sophisticate and detailed system to plan and keep track of issues while Glavor, a small company was mainly managed by one person. There was no bureaucratic culture, no requirements for reporting.

* The control system and the business planning process was a burden on Galvor because of lack of staff knowledge, language barrier, French and English, in addition to a supportive HQ.

* Most importantly, the control system of UE was not suitable for Galvor because there was no cost-advantage to it. It was a completely time consuming and costly exercise that would bring any value to the business unit.

UE believes that the reporting system in place is the key to have operating people focus on issues affecting short and long term strategy. Although UE has to push Galvor to adopt a management control system, the tight system they imposed to Galvor is not effective. A loose control system would be more appropriate because of the unit's seize, and from the reports submitted there were no signs of troubles. Thus, the costs associated to the tight system could be avoided. However, it should be noted that the budget plan under a loose system would be a communication and planning tool rather than a commitment to meet the goals as UE wants it. Consequently, other processes should be in place to track other important aspects of the business such as inefficiencies, future threats, etc.

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