There is also an issue to implement the new accounting system, because Sarah Arthur decided to limit her work in the company and they hire a new accounting clerk without experience. One of the most important decisions is to decentralize management decision. It will be easy to implement it with the policy which consists in decentralizing the decision process. In fact, we believe that division managers are not correctly trained to take vital decision in a first time. Furthermore, a training and development program will be interesting to improve the management skills of the staff. There is a kind of contradiction because Air Tex tries to implement a new control system which is very costly, where as the firm is on the verge of bankruptcy. We saw the different issues about the old management control system.
The latter need to reduce three basic issues: First, the new control system aims at providing accurate financial information to each divisional manager in order to encourage managers to make all the decisions themselves, by creating a feedback of their operations. Decisions are taking arbitrarily, without the search of a consensus. The problem statement can be summarized as follows: Moral Each division is an autonomous profit center. An effort must be made to strengthen the links with stakeholders, in the goal to be in position to negotiate with them. New control system implemented With the new control system, the leadership is divided between Ted Richards and Frank Edwards as equal partners and as best friends and they try to encourage staff to take desirable actions by decentralizing the power and involving the staff.
There are a number of issues before Franck and Ted set up the decentralized control system, which will be analyzed now. With new owners, the strategic view of AirTex Aviation must be redefined. In fact, we believe that division managers are not correctly trained to take vital decision in a first time.
In analysiz of the discrepancies of the current control system, Ted Richards and Frank Edwards airtfx to implement a system which improves transfer pricing, cost allocation and autonomy. This decision right is a variable to affect the moral of the managerial team and motivate them.
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There is also to educate staff by creating seminars of information, and there is a contradiction because there is a need of money. Because the firm is near of the bankruptcy, Ted and Franck design a new long term strategy which reduces avaition, decentralizes management decision process; implements new management styles and defines clear way to growth and move in the aviation market. Decisions are taking arbitrarily, without the search of a consensus.
Airtex Aviation – Cost Control Study Case | Get Access To Unique Paper
Each divisional manager will be more autonomous and can directly impact their future performances. Therefore, this case wonders about the difficulties to implement it and the steps to change the management style.
There is a kind of contradiction because Air Tex tries to implement a new control system which is very costly, where as the firm is on the verge of bankruptcy. This entails again a lack of information and motivation, important causes of the issue.
Airtex Aviation – Cost Control Study Case
Then, they decided to create an administrative sector which forces them to review the organization of the company, which have a cost. Furthermore, they implemented a very changing control system without having time to train people. That observation explained the controversy which appeared about the management of receivables by the divisions.
The control process gives performance results of divisions each month. In the future, an incentive program more accurate can be developed to motivate and attract staff.
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The objectives One of the first steps is to identify Specific, Measurable, Acceptable, Realizable, and Timetable objectives at each level of the enterprise divisional and top level.
She monopolizes the decisions and the power. So, there is a difficulty to understand how Sarah Arthur built the financial statement vase to replace an employee with an important role in the functioning of Air Tex.
The objective of the two partners was to look younger the management of Air Tex, to create a new control system provision support and information needed, and to lower the power of the accountant Sarah Arthur.
Then, we hire as soon as possible in each department an accountant to create a Department Daily Report and accentuate the autonomy of each division. Key Decision Criteria We saw the different issues about the old management control system.
First, there were problems for Ted with the accounting department: What appears to be the problem in Casr Tex is linked to business which is linked with the state of mind of the staff: The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Air Tex profitability and its strategic vision.
It will be easy to implement it studh the policy which consists in decentralizing the decision process. Corporate Governance One of airtec most important decisions is to decentralize management decision.
Get Full Essay Get access to this section to get all the help you agiation with your essay and educational goals. Then, Ted felt a problem linked to the personnel work ambiance, their seriousness and more over their professionalism. The issue for Ted and Frank, future managers of Air Tex is to establish a growth over the long-term for the firm with a new strategic view.
The new management control system modifies the transfer pricing, which refers to the pricing of assets, services and funds that transferred within an organization. This resolution suggests limiting the power of the accountant.
Each division is an autonomous profit center. We are going to analyze the advantages and the aviaton of this new control system.
Other intention is to work with a cost control system, more efficient than easy to implement, in order to change the current financial situation of the firm.