AIRTEX AVIATION CASE STUDY ANALYSIS

Moreover, all the departments have a negative net income except the fuel line activity which employed unskilled employees. 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. The latter need to reduce three basic issues: So, it decentralizes operations to make each activity a profit centre and group them by departments. Finally, this new control system requires some additional costs, because each department can hire a new employee to deal with the Daily Department Report.

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. We are going to analyze the advantages and the disadvantages of this new control system. The control process gives performance results of divisions each month. Each department is responsible of its results, revenues and. The problem statement can be summarized as follows:.

This resolution suggests limiting the power of the accountant.

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Then, Ted felt a problem linked to the personnel work ambiance, their seriousness and more over their professionalism. The problem statement can be summarized as follows:. Recommendations First, amalysis think that Ted and Frank need to improve their knowledge about the plane sector.

We saw the different analsyis about the old management control system. Get access to this section to get all the help you need with your essay and educational goals. 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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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.

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This decision right is a variable to affect the casse of the managerial team and motivate them.

Ted and Frank faced a problem when they take decisions of acquiring the company because of a lack of skills: 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.

One of the most important decisions is to decentralize management aigtex.

airtex aviation case study analysis

Another source of motivation for the departments consists in offering them to manage cash by giving them receivables: They decided to gamble by implementing a new control system of course expensive, but with a long term return on investment.

Each department is responsible of its results, revenues and.

Furthermore, a training and development program will be interesting to improve the management analgsis of the staff. 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 ajrtex a feedback of their operations.

So, Ted Richards and Frank Edwards need to be very adaptive and proactive. 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.

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. So, there is a difficulty to understand how Sarah Arthur built the financial statement and to replace an employee czse an important role in the functioning of Air Tex. Each division is an autonomous profit center.

We are going to analyze the advantages and the disadvantages of this new control system. The strategic view With new owners, the strategic view of AirTex Aviation must be redefined. Moral Each division is an autonomous profit center. 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.

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Then, we hire as soon as possible in each department an accountant to create a Department Daily Report and accentuate the autonomy of aiirtex division. The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Airtxe Tex profitability and its strategic vision.

Airtex Aviation – Cost Control Study Case

So, it decentralizes operations to make each activity a profit centre and group them by departments. So, an important information control is necessary to improve the reliability of Daily Department Reports. It will be easy to implement it with the policy which consists in decentralizing the decision process.

airtex aviation case study analysis

Aviafion can be internal motivate managers and monitor performance and external taxes or tariffs reasons for transfer pricing. Decisions are taking arbitrarily, without the search of a consensus. 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.

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 analsis autonomy. Finally, this new control system requires some additional costs, because each department can hire a new employee to deal with the Daily Department Report.