CASE STUDY AIRTEX AVIATION
First, we think that Ted and Frank need to improve their knowledge about the plane sector. There is also to educate staff by creating seminars of information, and there is a contradiction because there is a need of money. Corporate Governance One of the most important decisions is to decentralize management decision. The decentralization of the decision process is a good way to facilitate it and help to develop relationship between stakeholders and staff. Its autonomy is strengthened because managers can hire, fire and manage the salary schedule.
This resolution suggests limiting the power of the accountant. Corporate Governance One of the most important decisions is to decentralize management decision. Key Decision Criteria We saw the different issues about the old management control system. 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.
Therefore, this case wonders about the difficulties to implement it and the steps to change the management style. With the new control system, the leadership is divided between Ted Richards and Frank Edwards as equal partners and as airtexx friends and they try to encourage staff to take desirable actions by decentralizing the power and involving the staff. It will be easy to implement it with the policy which consists aiation decentralizing the decision 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. This decision right is a variable to affect the moral of the managerial team aviatioh motivate them.
The strategic view With new owners, the strategic view of AirTex Aviation must be redefined. This entails again a lack of information and motivation, important causes of the issue.
Key Decision Criteria We aiirtex the different issues about the old management control system. So, an important information control is necessary to improve the reliability of Daily Department Reports.
The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Air Tex profitability and its strategic vision. Furthermore, a training and development program will be interesting to improve the cxse skills of the staff. We saw the different issues about the old management control system.
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Another source of motivation for the departments consists in offering them to manage cash by giving them receivables: In the future, an incentive program more accurate can be developed to motivate and attract staff.
The problem statement can be summarized as follows: There is a kind of contradiction aviatlon Air Tex tries to implement a new control system which is very costly, where as the firm is on the verge of bankruptcy.
Then, there is a difficulty to understand the accounting system and the economical situation is exigent. Then, they decided to create an administrative sector which forces them to review the organization of the company, which have a cost. Then, we hire as soon as possible in avation department an accountant to create a Department Daily Report and accentuate the autonomy of each division.
It provoked a lack of information for the departments and of a motivation because they are not involved in the decision making process. Corporate Governance One of the most important decisions is to decentralize management decision. In fact, we believe that division managers are not correctly trained to take vital decision in a first time. Each department is responsible of its results, revenues and Disadvantages: There are a number of issues before Franck and Ted set up the decentralized control system, which will be analyzed now.
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.
So, it decentralizes operations to make each activity a profit centre and group them by departments.
Airtex Aviation – Cost Control Study Case
To motivate managers, there is also the creation of incentives for managers: Moreover, syudy the departments have a negative net income except the fuel line activity which employed unskilled employees. 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.
Get Full Essay Get access to this section to get all the help you need with your essay and educational goals. The new management control system modifies the transfer pricing, dase refers to the pricing of assets, services and funds stuudy transferred within an organization. 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.
The control process gives performance results of divisions each month.
Each division is an autonomous profit center. Furthermore, they implemented a very changing control system without having time to train people.