Airtex Case Study

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1. Discuss the strategic objectives which Ted and Frank want to achieve in the acquisition of AirTex?

Ted and Frank wanted to have the company grow at a rate of 20% per year the-first five year-period. This objective is specific, measurable, acceptable, realizable and timely. The strategies would be to make this financial objective in correlation with the management decision process. In other words, the intention is to work with a cost control system in order to improve the current financial situation of the firm.

Secondly, they want to install and promote a control system that would both support the management and provide information needed in order to make decisions. This is the culture that they want AirTex to adopt as it provides autonomy and support for managers to run their department effectively. When giving no useful information to do the right job, managers feel demotivated; thus, decreased the probability for success of the company.

Lastly, Ted and Frank wanted to build good relationship with the bank and suppliers. Not only does this help them fix the current week financial situation but also maintain and foster the growth of the company in the long-term.

Review the reasoning why Ted and Frank believe AirTex is a good target for their acquisition

1. The company could not cost much: This would save them money to put back into the company for financing as well as limit the risk of them going bankrupt.
2. The company had to need what they had to offer: They were good at managerial skills which were exactly what AirTex was lacking at the moment. Therefore, being able to bring what is missing to the table would turn it around. This is evident that the 1990 income statement showed a trend of increase significantly.
3. They industry had to be fragmented and non-oligopolistic: AirTex also satisfied this because the aviation business is not influenced by any particular large firm. Therefore, Air Tex had an opportunity to grow.
4. The company had to grow at a rate of 20% per year the first five year-period: this goal follows SMART and if communicated clearly to the department heads, would be achievable.  

2. What is important in managing AirTex?

One of the most important thing in managing AirTex is the autonomy and support given to department heads to manage their own department effectively and efficiently. Since AirTex consists of different profit centers, each activity contributed significantly to the overall profitability of the company. There should not be a centrality that prevents each department from getting what they need to bring success to the whole organization.