OBJECTIVE OF RESEARCH

The internationalization of global operations of firms is continuously increasing. Multinational

companies and growth strategies of many countrires are driving them (Gerybaze, Schnitzer, & Czernich,
2013, p. 182). Corporate activity is increasingly shaped by global production, procurement and sales as
well as global locations and international ties. Globalization also has an effect on controlling, which is a
system for optimal financial planning and control of the company.

In the context of internationalization, it is a critical question whether standardization in the

management of subsidiaries is a better approach. Uniform controlling at foreign subsidiaries has its own
justification and general approval, but standardization does not do fairness to all foreign subsidiaries,
with regards to consideration of local environment (Schmid, 2014, p. 14).

At Robert Bosch Gmbh’s Diesle Gasoline systems division, Research and development costs are major
part of Annual expenses. Further that, R&D costs are incurred worldwide for customers. Thus it must be
transparent in order to obtain the worldwide view of financial opportunities and risks. In this report, we
tend to analyze the controlling methods and reporting of the Research and development costs at the
firm. We discuss which useful instruments are already in place to make the R&D costs of the regions
more transparent and thus to allow more intensive control.

PRODUCT UNIT DIESEL GASOLINE SYSTEMS ELECTRONIC CONTROL UNITS AT BOSCH GMBH

Diesel Gasoline System Electronic control is a product unit that can be assigned both to Division Gasoline
systems (GS) and Diesel systems (DS) . The GS and DS are part of the mobility solutions division at the
Bosch Gmbh. The controlling deprtment of DGS-EC carries out both GS and DS specific worldwide
financial controlling of the division.
Definition of Control in Investment and Financial Controlling

Thomas Reichmann defines Investment controlling as ‘One of the major tasks of investment controlling
is the fulfillment of controlling targets regarding different phases of planning, realization and controlling
of investments. ( Reichmann, 2012, pg 167)

Also Invesment controlling has to ensure the target orientated, course of entire planning and realization
process by firstly providing decision oriented information, secondly by coordinating parts of the planning
and finally by adequately controlling the course of planning.

The Diesel Gasoline Business unit of Robert Bosch Gmbh has international research and development
facilities. Thus cost controlling of Research and development cost around Germany and worldwide is
central assignment of controlling department. The internationalization of R&D is increasingly ever than
before. Multinational companies and their development strategies are driving them (Gerybaze,
Schnitzer, & Czernich, 2013, p. 182). Globalization also has an effect on controlling, which is a system of
optimal financial planning and control of a company.

RESEARCH AND DEVELOPMENT COSTS AT ROBERT BOSCH GMBH

The calculation of Sales, General and administrative costs are defined in a centralized statement
throughout the group. The outline of the calculation of the R&D costs is shown in following figure
 Figure 7 :Calcuation of R&D cost in DGS-EC

(Robert Bosch GmbH, Bosch Intranet, 2017)

The figure shows the relevant key figures and terms in the controlling process of R&D costs in the
regional controlling. These are further discussed below

Analysis and evaluation of the process of controlling of the R & D costs

The regional governance and organization of regional controlling are analyzed on the basis of
comparison with literature

ANALYSIS AND EVALUATION OF REGIONAL CONTROL PROCESS OF R&D Costs

In this section, the regional control and the organization of the region controlling are first analyzed using
a comparison with the
literature. The evaluation criteriaare then presented and the respective sections described and evaluated

REGIONAL CONTROL AT BOSCH Gmbh

Bosch Gmbh is a divisional organization, which is structed into product specific divisions. The division act
independelty to one another in the ongoing business . The corporates structure of Bosch can be
characterized by decentralized decision making. The divsision are assigned to managers who are
assigned to run the global business . However uniform leadership lies with management of Bosch gmbh.

The regions can be considered as profit centers and are responsible for operative value contribution.
The OVC is relevant control tool and measure since each region receives its own regional OVC target.

The R&D fix target of the regions is very important for DGS-EC, since it is a development area with lot of
variation each year. This parameter can thus be most influenced. The control of the regions at DGS-EC is
carried out by the OVC and R&D fix as central parameters. Regions are independent legal entities at
Robert Bosch GmbH, which are fully consolidated at DGS-EC.

The Bosch Group is a divisional organization (cf. chapter 2.3.2 divisional Organisation), which is divided
into product-oriented divisions. Different GBS are assigned to the division. They are companies in the
company that can act independently of each other in the current business (cf. chapter 2.3.2). The trend
of group design is towards decentralisation (cf. chapter 2.3.3 Centralization and decentralisation of
decision-making tasks). The GBS GS and DS are assigned to individual managing Directors who are
responsible for managing their worldwide business and have different bus among themselves. However,
the uniform management lies with the management of the company. The regions can be regarded as
profit centers (cf. chapter 2.3.3), as they bear the full profit responsibility with the operative value
contribution (OVC) as a top figure. The OVC is control-relevant at regional level, as each region receives
its own OVC target.

The implementation of controlling tools and analysis at Robert Bosch GmbH is based on an integrated
control concept, which means that at all organizational levels, value orientation in controlling method
and tools are visible. This is the reason to use Operating value contribution measure as the main
performance measurement tool. The operating value contribution measures the continuous increase
and contribution of financial performance of the respective business division

The absolute value contribution targets are distributed to the GBs through the Target Business Plan
(TBP). These break down the goals to the BUs and regions. The target is top-down from the
management (see chapter 2.3.1). The TBP is divided into a yellow and a red phase. In the yellow phase,
the first step is the distribution of the goals to the different levels, followed by the action planning,
which is carried out separately by the BUs and regions. In a third step, the measures are checked for
stability and the plan is adopted. The measures must be continuously processed at all levels. On the one
hand, by developing new measures for the plan and the end-of-year forecast, and on the other to
increase the degree of hardening and fulfillment of the current measures. In the red phase, the
subsequent planning of the production costs and the budget of the cost centers takes place.

3 Selection of evaluation criteria

In this section we discuss the controlling tools and methods for R & D costs. The three main processes
used by DGS-EC Controlling department are the Current Forecast discussions, Monthly Control and
Measures Planning in the target business plan. These criteria are evaluated later, as per their
effectiveness according to literature and moreover with discussion with members of the controlling
team. The controllers agreed that , these measuring tools represent the best controlling methods .
There is no weighted average criteria used for the three processes, as all the three criteria should be
conducted in order to ensure highest level of transparency and best practices.
METHOD 1 : CURRENT FORECAST DISCUSSION

Current forecast discussions takes place four times a year that is in February, May, September and
November. The decentralized controllers of german business units and the central controllers of DGS-EC
participate in the CF discussions. The CF discussions with the regions are done separately according to
GS and DS business. The discussions takes place at GS business units and the agreed data on budgets
and financial parameters are transfer into the group-wide IT system, so that the central controllers can
intervene. On the DS side, the entries in the group-wide IT system have been previously made for the CF
discussions. Figure 11 describes the activities of the subprocess as well as process start, input, process
end and output. The respective responsibilities in the activities are highlighted in color.

Only after the existence of the YTD extrapolation does the actual CF plausibility check take place. The R
& D fixed values can be above or bel

PROCESS DESCRIPTION:

The focus of the CF plausibility check is the question of whether a planned R & D fixed value can still be
considered as realistic or whether it needs to be revised on the basis of the findings gained from the
actual earnings analysis. The starting point for the CF plausibility check is the year-to-date (YTD) result,
the actual result, of the reporting months completed up to that point. From this value, the question is
asked which R & D route to go in the remaining months of a year to reach the predicted CF value. This is
followed by a YTD extrapolation, the extrapolation of YTD values to the end of the year. In addition, the
central controllers produce an RI overview of the respective region in order to obtain the value R & D fix
originals of the respective region.
BIBLIOGRAPHY

Bagban, K. (2010). Kombination und Wechselwirkung der Steuerung (1. Auflage Ausg.).Hamburg: Gabler
Verlag.

Reichmann, T (2012), Controlling: Concepts of Management Control, Controllership, and Ratios