Air Tex

AirTex Analysis:

When Ted and Frank purchased AirTex Aviation they were faced with the task of addressing several external and internal problems. The deficit between the accounts receivable and the debts owed represented an immediate external problem. Yet, the internal problems which included the company’s inability to effectively disseminate information; the employees lack of involvement in the company’s business development and the employee’s lack of accountability for managing and reporting accounts receivable proved to be equally pressing. Moreover, the management wasn’t properly in touch with suppliers or creditors. As a result, creditors lurked, revenue generation became stagnant, and because of performance, sales, and inventory problems AirTex lost its relationship with its major franchisor, Piper. In addition Sarah Arthur, the de facto manager of AirTex, negatively colored all interactions within the company.

To save the company, the management made several changes. The most important of which was to gain command and control of the business and restructure the information and decision making processes. These changes begin with slowly diminishing Sarah’s role until she was no longer the central repository of information, no longer necessary to business operations and eventually left the company. This move dethroned, “the witch of the North” and improved process and morale. Sarah’s departure was followed by the decentralization of the accounting and credit procedures and the creation of “profit centers” which along with the responsibility of developing, tracking and reporting its own credit and accounts receivable/payable, empowered each department with the responsibility to hire, fire and set salary for each of its employees. The looming effect of this change was seen in the Fuel Department’s small initiative to generate revenue by purchasing a copier and charging the other departments by the page for their use of the copier. Additionally,...