AirTex Aviation’s performance was very bad before the acquisition was made - Air/Tex Aviation introduction. The acquisition resulted into new management and new controls which lead to the success of AirTex Aviation. Frank and Ted, new college graduates took over the company and made some control changes. These control changes saved the firm from the financial breakdown which was going to happen. Yes, AirTex needed some new controls when Frank and Ted took over. There were a few problems before the takeover took place which makes it evident that new controls should have been implemented.
Firstly, there was lack of direction because the president of the company was not very regular in showing his presence. He left the firm to an untrained and unskilled accountant. Secondly, there was a problem in centralization of resources. Thirdly, there was a lack in action control. The managers didn’t know what and how to perform as there was no feedback given to them. They also lacked in Personnel controls in terms of motivation given to employees. After the takeover, Frank and Ted applied some control measures which resulted AirTex into a more better and profitable firm.
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They restructured the whole organization by decentralizing certain authorities and delegating responsibilities to managers. They installed a whole new accounting system which would take care of the accounts payable problem. The new controls came along with the daily reporting procedure which managers had to follow. There were some profit centers developed in order to centralize certain activities. Profit centers kept a balance between centralization and decentralization.