The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Air Tex profitability and its strategic vision. Its autonomy is strengthened because managers can hire, fire and manage the salary schedule. Decisions are taking arbitrarily, without the search of a consensus. In fact, we believe that division managers are not correctly trained to take vital decision in a first time. Data analysis There are a number of issues before Franck and Ted set up the decentralized control system, which will be analyzed now. 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.
Two managers recently graduated purchase Air Tex Aviation, a firm on the verge of bankruptcy. We saw the different issues about the old management 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. Moreover, all the departments have a negative net income except the fuel line activity which employed unskilled employees. 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. The decentralization of the decision process is a good way to facilitate it and help to develop relationship between stakeholders and staff. Ted and Frank faced a problem when they take decisions of acquiring the company because of a lack of skills:
The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Air Tex profitability and its strategic vision.
She monopolizes caxe decisions and the power. An effort must be made to strengthen the links with stakeholders, in the goal to be in position to negotiate with them.
AirTex Aviation Case by Thao Nguyen on Prezi
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 airtexx, and to aviahion 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. 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.
There is a kind of contradiction because Air Tex tries to implement a new control system which is very costly, where as the firm airtxe on the verge of bankruptcy. Two managers recently graduated purchase Air Tex Aviation, a firm on the verge of bankruptcy. Then, Ted felt a problem linked to the personnel work ambiance, their seriousness and more over their professionalism.
We airrtex that it is a problem because of the self-interested behavior of Sarah Arthur in the company since 20 years. So, it decentralizes operations to make each activity a profit centre and group them by departments. What appears to be the problem in Air Tex is linked to business which is linked with the state of mind of the staff: Furthermore, they implemented a very changing control system without having time to cwse people.
Each department is responsible of its results, revenues and. Its autonomy is strengthened because managers can hire, fire and manage the salary schedule. First, we think that Ted and Frank need to improve their knowledge about the plane sector. The problem statement can be summarized as follows: Therefore, this case wonders about the difficulties to implement it and the steps to change the management style.
We are going to analyze the advantages and the disadvantages of this new control system. 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.
Then, there is a difficulty to understand the accounting system and the economical situation is exigent. In fact, we believe that division managers are not correctly trained to take vital decision in a first time.
Airtex Aviation – Cost Control Study Case
Finally, this new control system requires some additional costs, because each department can hire a new employee to deal with aviatkon Daily Department Report. One of the most important decisions is to decentralize management decision.
Indeed, the figures in the balance sheet for Air Airtrx aviation appear to be very disorganized. So, Ted Richards airtexx Frank Edwards need to be very adaptive and proactive.
That observation explained the controversy which appeared about the management of receivables by the divisions. First, there were problems for Ted with the accounting department: Another source of motivation for the departments consists in offering them to manage cash by giving them receivables: Moral Each division is an autonomous profit center.
Airtex Aviation – Cost Control Study Case | Get Access To Unique Paper
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. There is also to educate staff by creating seminars of information, and there is a contradiction because there is a need of money. They need a lot of time to educate divisional managers and it requires a deep change in the management skills.
It will be easy to implement it with the policy which consists in decentralizing the decision process. Because the firm is near of the bankruptcy, Ted and Franck design a new long term strategy which reduces costs, decentralizes management decision process; implements new management styles and defines clear way to growth and move in the aviation market.
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.