So, Ted Richards and Frank Edwards need to be very adaptive and proactive. She monopolizes the decisions and the power. It will be easy to implement it with the policy which consists in decentralizing the decision process. The problem statement can be summarized as follows: 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. 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.
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. Get Full Essay Get access to this section to get all the help you need with your essay and educational goals. It will be easy to implement it with the policy which consists in decentralizing the decision process. Each department is responsible of its results, revenues and. The control process gives performance results of divisions each month.
The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Air Tex profitability and its strategic vision. This resolution suggests limiting the power of the accountant.
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Another source of motivation for the departments consists in offering them to manage cash by giving them receivables: There is a static hierarchy, without possibility of evolution.
First, we think that Ted and Frank need to improve their knowledge about the plane sector. 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.
Other intention is to work stdy a cost control system, more efficient than easy to implement, in order to change the current financial situation of the firm. That observation explained the controversy which appeared about the management of receivables by the divisions.
We saw the different issues airtfx the old management control system. An effort must be made to strengthen the links with stakeholders, in the goal to be in position to negotiate with them.
With new owners, the strategic view of Avaition Aviation must be redefined. To motivate managers, there is also the creation of incentives for managers: Get Full Essay Get access to this section to get all the help you need with analysiw essay and educational goals. 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.
Airtex Aviation – Cost Control Study Case
New control system implemented With the new control system, the leadership is divided between Sviation 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.
She monopolizes the decisions and the power. Moreover, all the departments have a negative net income except the fuel line activity which employed unskilled employees. This decision right is a variable to affect the moral of aviafion managerial team and motivate them.
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Each divisional manager will be more autonomous and can directly impact their future performances. To change it and implement a new system, Ted Richards and Frank Edwards took few key decisions on: We know that it is a problem because of the self-interested behavior of Sarah Arthur in the company since 20 years. The decentralization of the decision process is a good way to facilitate it and help to develop relationship between stakeholders and staff.
They decided to gamble by implementing a new control system of course expensive, but with a long term return on investment. Therefore, this case wonders about the difficulties to implement it and the steps to change the management style.
Then, they decided to create an administrative sector which forces them to review the organization of the company, which have a cost.
We are going to analyze the advantages and the disadvantages of this new control system. It provoked a lack of information for the departments and of a motivation because they are not involved in the decision making process. 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. 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.
Each division is an autonomous profit center. Corporate Governance One of the most important decisions is to decentralize management decision.
However, some disadvantages and disturbances can result from the implementation of this new management control system.
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. Aviarion, an important information control is necessary to improve the reliability of Daily Department Reports. The latter need to reduce three basic issues: How can Air Tex grow in the first five year-period?