Airtex Case

1. Did AirTex need a new control system at the time of the takeover?

Yes AirTex needed it. AirTex needed a new control system because the problem in It was associated with the state of mind of the staff: there was a lack of motivation. The company was on the verge of bankruptcy because of Sarah Arthur's accounting system and accounting statements. She always monopolized the decisions and the power.

the inexistence of accounting system, a non-clear and defined financial statements, retention of information, great power in the same hands and lack of management skills. It provoked a lack of information for the departments and of a motivation because they

are not involved in the decision making process.

The issues of autonomy, cost allocations and transfer pricing are those which have an important impact on Air Tex profitability and its strategic vision. 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.

2. Evaluate the control system that Frank and Ted implemented. Should anything have been done differently?

After Ted and Frank's takeover, AirTex was changed radically. Some relevant control systems that were put into use were:

Decentralization - Managers had more freedom in managing their respective departments.

Accounts receivable managed by department managers and they were charged for an aging factor of their receivables.

The Daily Department Report - Forces managers to keep track of their business, giving them awareness of their operations

I think that they should do something different, because they had not a knowledge about this market, so they should have been done research about this market before purchasing the company, because it was in a bad situación both in the financial system by large debts and the control system. Also they have another problema because their first goal was descentralize the departments but they didn't know nothing about the employees and many employees had the basic studies and they didn't feel sure about put the company in their hands.