MAY 18, 2010
CHRISTOPHER A. BARTLETT
BENJAMIN H. BARLOW
Peter Arnell, Country Manager for Italy
In late September 2009, Peter Arnell, country manager of Clayton SpA, the Italian subsidiary of U.S.-based Clayton Industries, faced some daunting challenges as the global recession took its toll. Sales were down 19%, and after decades of solid returns, Clayton SpA was in its third year of losses, now accumulating at more than $1 million a month.
Arnell’s attention was sharpened by the imminent visit of Dan Briggs, Clayton’s recently appointed CEO, and Simonne Buis, Arnell’s direct boss and President of Clayton Europe. Both expected him to turn around Clayton SpA and position it for future growth. And although he had only been in Italy for just over two months, Arnell knew that Briggs and Buis would want to know exactly what action he intended to take.
The Parent Company: Clayton Industries
Founded in Milwaukee in 1938, Clayton Industries Inc. had built a successful business around window-mounted room air conditioners which it sold for residential and light-commercial applications. In the early 1980s, management perceived two important growth opportunities—one in the North American commercial sector, and the other in residential and commercial markets in Europe—and took steps to exploit both.
As it expanded abroad, Clayton established its position in Europe by acquiring four companies: Corliss, a U.K.-based manufacturer of home heating, ventilation, and air conditioning (HVAC) systems.
Fontaire, a Brussels-based manufacturer of fans and ventilating equipment.
HBS Professor Christopher A. Bartlett and writer Benjamin H. Barlow prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. The authors thank Sisto Merolla (HBS MBA 2002) of Merloni Termosanitari Spa of Fabriano, Italy, for his helpful contributions to the development of this case. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration.
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4199 | Clayton Industries: Peter Arnell, Country Manager for Italy
Control del Clima, a Barcelona-based manufacturer of climate control products for industrial and commercial applications.
AeroPuro, a Brescia, Italy-based manufacturer of compression chillers for large commercial, public, and institutional installations. (Chillers are the units at the core of most industrial air conditioners.)
To manage international expansion, Clayton restructured its organization in 1988. All operations in the United States and Canada were placed under Clayton North America, while the European acquisitions reported to a newly created Clayton Europe. Each of these entities was headed by a regional company president. (See Exhibit 1 for the organizational chart.)
In 1989, Clayton Europe adopted the Brussels offices formerly occupied by Fontaire as its headquarters. Recognizing the need for strong management in each country where it had a presence, the new...
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