AirTex Aviation
The purchase Ted Richard and Frank Edwards were best friend and both graduated from Harvard Business School. Because of personal goals, they decided to operate business together. They spent $100,000 to purchase Airtex Aviation that was lower than the market value.
Airtex Aviation prior to purchase Airtex was on of eight fixed-base operations at San Miguel Airport that composed of six informal departments.
-Fuel line activity: Will Leonard, who had no experience and appropriately diploma, managed Fuel line department. Moreover, the fuel line activity composed of five different operations: Retail Fueling, Wholesale Fueling, Fuel Hauling, Rental Cars and Tie-Downs.
-Service and parts: Carl Green, who had appropriately abilities and diploma, managed entirely service activity.
-Flight training
-Avionics: Avionics was a single-person management department that was managed by Leon Praxis.
-Aircraft sales: Aircraft sales department was closed by mismanagement.
-Accounting: It was the major problem of Airtex Aviation. Sarah Arthur managed accounting department without any accounting training. Moreover, even though Sarah collected all financial information, she would not let managers know.
Reorganization Company There were three most important tasks that company needed to reorganize. (a) Revamping the management of AirTex (b) Installing a control system (c) Wresting Sarah Arthur authority
For cash management, Ted tried to limit Sarah’s work to other assistant. In addition, Ted gave every department the credit-granting authority and the responsibility that required each department manage their accounts receivable by themselves. Moreover, Ted established an Administration Profit Center that each department could easily control their expenses. For accounting system, AirTex started to require each department producing a profit and