CLAYTON INDUSTRIES: Peter Arnell, Country Manager for Italy
The purpose of this report is to analyze the daunting challenges faced by Clayton SpA the Italian subsidiary of US based Clayton Industries Inc. Peter Arnell has just taken charge of the Clayton SpA to turn around the current loss making status of the company losing around $1 million a month after decades of solid returns.
The company faces many challenges while operating in Europe. The market for air conditioners is well developed as consumers view Air conditioners as a symbol of American extravagance. However, the company did reasonably well through local brands Corliss and Fontaire.
Apart from recession there are several other factors that are adding to the company’s troubles. The company due to its uncompetitive product profile found itself struggling in markets outside Italy. The poor sales and rising input costs hurt both the bottom line as well as the top line of the company. The company faced labor union problems, and it was very difficult to fire anyone owing to the norms of Italy. To top it the company also has a high wage bill and a very limited customer base in Italy. The company also faced stiff competition from Asian firms in other markets of Europe, which provided better value for money products to the customers. Overall the company faces a problem of high prices of its products with no tangible or intangible value associated. The company is thus confronted by the upward task of restructuring its product line, reducing costs and build scale.
Evaluation of alternatives “target” The first alternative “relieve the compression chiller line” The implementation of the strategy suggested by the Italian management who thoroughly understand the industry constraints.The size of the compression chiller industry 20 bn dollars.The compression chiller comprise of 85% of the total market. New methods of the new leadership can be put to test in this crisis. First Brigg´s belief of opportunity in crisis...