case study
AirTex Aviation
1. Did AirTex need a new control system at the time of the takeover?
* “The management system that was in place was one woman who magically kept everything in her head. There was limited and almost incomprehensible formal system.” Sarah Arthur, the company’s accountant, had complete autonomy over the company’s information, and she kept this information private.
* AirTex was in need of a more formalized accounting system, since accounting was a central department of the company, and profitability was a key measure to ensure the success of the company at the time of the takeover.
* Also, Ted and Frank had plans to dispose of Sarah Arthur, who was acting manager upon their arrival. However, given her central role within the company for 20 years, she possessed a plethora of information, which was undocumented and she retained in her head
* AirTex should make an effort to document and provide proper procedure for all major processes. It will ensure that knowledge is not lost with the departure of key personnel. However, Ted and Frank should be cautious about “rubbing people the wrong way”, especially their employees who have worked at the company for 10+ years. These individuals will be the most resistant to change and will perceive Ted and Frank as new and disruptive.
* Managers were unaware of their department’s profitability. It was kept very secretive by Sarah Arthur, the accountant. As a result, managers didn’t know how big their receivables were and whether their performance was improving. Furthermore, their financial reporting was very basic and catered to Piper Aircraft, their aircraft dealer.
* AirTex needs to provide transparent information to all its stakeholders, such as their employees, their suppliers, and the bank, with whom they had short-term bank notes payable of $300,000.
* Old owner wasn’t very involved and was absent most of the time. He was only there strategically. It lacked a lot of the controls. There wasn’t a motivation
1. Did AirTex need a new control system at the time of the takeover?
* “The management system that was in place was one woman who magically kept everything in her head. There was limited and almost incomprehensible formal system.” Sarah Arthur, the company’s accountant, had complete autonomy over the company’s information, and she kept this information private.
* AirTex was in need of a more formalized accounting system, since accounting was a central department of the company, and profitability was a key measure to ensure the success of the company at the time of the takeover.
* Also, Ted and Frank had plans to dispose of Sarah Arthur, who was acting manager upon their arrival. However, given her central role within the company for 20 years, she possessed a plethora of information, which was undocumented and she retained in her head
* AirTex should make an effort to document and provide proper procedure for all major processes. It will ensure that knowledge is not lost with the departure of key personnel. However, Ted and Frank should be cautious about “rubbing people the wrong way”, especially their employees who have worked at the company for 10+ years. These individuals will be the most resistant to change and will perceive Ted and Frank as new and disruptive.
* Managers were unaware of their department’s profitability. It was kept very secretive by Sarah Arthur, the accountant. As a result, managers didn’t know how big their receivables were and whether their performance was improving. Furthermore, their financial reporting was very basic and catered to Piper Aircraft, their aircraft dealer.
* AirTex needs to provide transparent information to all its stakeholders, such as their employees, their suppliers, and the bank, with whom they had short-term bank notes payable of $300,000.
* Old owner wasn’t very involved and was absent most of the time. He was only there strategically. It lacked a lot of the controls. There wasn’t a motivation