CASE STUDY AIRTEX AVIATION

Indeed, the figures in the balance sheet for Air Tex aviation appear to be very disorganized. They decided to gamble by implementing a new control system of course expensive, but with a long term return on investment. Each divisional manager will be more autonomous and can directly impact their future performances. Another source of motivation for the departments consists in offering them to manage cash by giving them receivables: 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. What appears to be the problem in Air Tex is linked to business which is linked with the state of mind of the staff: There is a static hierarchy, without possibility of evolution.

Moral Each division is an autonomous profit center. 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. Therefore, this case wonders about the difficulties to implement it and the steps to change the management style. 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. Recommendations First, we think that Ted and Frank need to improve their knowledge about the plane sector. To move from a system where they are assisted and have without responsibility to a system which gives them more autonomy, take a long time.

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. 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. There is a static hierarchy, without possibility of evolution.

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Ted and Frank faced a problem when they take decisions of acquiring the company because of a lack of skills: The goal is to make objectives in correlation with the management decision process. So, it decentralizes operations to make each activity a profit centre and group them by departments.

Airtex Aviation Case Study by Crazylittlemiao C on Prezi

Furthermore, they implemented a very changing control system without having time to caze people. The control process gives performance results of divisions each month. We are going to analyze the advantages and the disadvantages of this new control system. The new management control system modifies the transfer pricing, which refers to the pricing of assets, services and funds that transferred within an organization.

So, there is a difficulty to understand how Sarah Arthur built the financial statement and to replace an employee with an important role in the functioning of Air Tex. Key Decision Criteria We saw airte different issues about the old management control system. This resolution suggests limiting the power of the accountant. They decided to gamble by implementing a new control system of course expensive, but with a long term return on investment. In front of the discrepancies of the current control system, Ted Richards and Frank Edwards decide to implement a system which improves transfer pricing, cost allocation and autonomy.

Get Full Essay Get access to this section to get all airrtex help you need avation your essay and educational goals. There are a number of issues before Franck and Ted set up the decentralized control system, which will be analyzed now. How can Airtwx Tex grow in the first five year-period? 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 the decisions and the power.

case study airtex aviation

To move from a system where they are assisted and have without responsibility to a system which gives them more autonomy, take a long time. Furthermore, a training and development program will czse interesting to improve the management skills of the staff. There is also to educate staff by creating seminars of information, and there is a contradiction because there is a need of money.

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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. Moral Each division is an autonomous profit center.

Therefore, this case wonders about the difficulties to implement it and the steps to change the management style. 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.

case study airtex aviation

This decision right is a variable to affect the moral of the managerial team and motivate them. Then, there is a difficulty to understand the accounting system and the economical situation is exigent.

Airtex Aviation – Cost Control Study Case

Indeed, the figures in the balance sheet for Air Tex aviation appear to be very disorganized. Recommendations First, we think that Ted and Frank need to improve their knowledge about the plane sector. 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.

Another source of motivation for the departments consists in offering them to manage cash by giving them receivables: There can be internal motivate managers and monitor performance and external taxes or tariffs reasons for transfer pricing. However, some disadvantages and disturbances can result from the implementation of this new management control system.

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