Clayton Industries Inc.
Lorenzo Mazzeo - 652821 Peter Arnell arrived in Brescia in late September 2009, and suddenly he had to face some daunting challenges due to the global recession: sales recorded a sharp decline of 5.3% in 2008 and a drop of 19.4% in the first half of 2009; Clayton SpA was in the third consecutive year of losses and accumulating more than 1 million US Dollars??per month; receivables and inventories are both above 120 day sales. In addition, the Italian market was split between low-priced foreign imports (Asian products) and Italian brands and offering neither the former, nor the second, Clayton was losing its product share in the market. Overall, the company faced a problem of high prices of its products with no tangible or intangible associated value (such as variable speed technology). In such situation achieving the “top four in four” requirement, and the “10/10/10” plan for all country operations, as proposed by Simonne Buis (EVP Europe) who promoted to cut both inventories and receivables within 10 days, and to reduce headcount by 10%, would have been very difficult. As Dan Briggs (CEO) wanted managers to reduce capital use, in order to bring costs under control focusing on products that could position Clayton in post-recession profitable growth, the three following options are listed below: 1)
Revitalizing the compressor chillers line and adopting a careful marketing plan to promote and boost product in foreign countries. The implementation of this strategy fits Brigg’s belief regarding “the great opportunities always reside inside crisis” and would have been supported by Buis who wasn’t convinced that absorption chillers would ever be more than a niche market and wanted to give Italy a chance to prove itself. There are a lot of advantages arising from the choice to revitalize the compressor chillers line as they are key components in a USD20 Billion European industry and they...
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