a. Did Altex need a new system? (What are the most critical problems facing Altex at the takeover? what does Ted see as the purpose of a control system? Did Altex meet their objectives?)
Yes, Altex really need a new system, because Altex is facing some critical problems at the takeover by Ted and Franck. The first most critical problem is the actual management system: the system in place was one accountant (Sarah Arthur) who kept everything in her head. The system was incomprehensible and complicated for the employees. Even the department managers knew nothing about their profitability of their operations. If they need anything, they should contact Ms. Sarah Arthur. It's a totally centralized system. So it took lots of time to obtain something for one department. Sarah managed the mail, bills, checks, collected cash from all departments and keeps it. She also managed all receivables and payables.
The second most critical problem is cash crisis.
Altex had a loss of 100,000 dollars on sales of 2,000,000 dollars in fiscal year 1971, this left the company with a negative net worth. They have to pay their suppliers. Their debts are bigger than what they have. So they should find a solution to solve the problem.
So, Ted and Franck should reorganize completely the management system which is completely ineffective. And they should also install a control system that would support the management and provide information needed in order to make the decisions. And the most important thing is take over the control of the company from Sarah Arthur.
Ted thinks that the control system is really important for Altex. Control is a critical function of management. Control problems can lead to large losses and possibly to organizational failure. Here, Ted is using Management control to influence employees' behaviours...