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Clayton Industries Case Study

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Case Analysis Report

Clayton Industries: Peter Arnell, Country Manager for Italy (HBS Case # 4199)

1. Evaluate Peter Arnell’s first two months as general manager of Clayton SpA. What are the main challenges he faces? How well is he dealing with them?

The biggest challenge Peter faces is the stagnant growth that Clayton SpA has experienced in recent years, especially with a 5.3% decline in 2008 and 19.4% drop in the first quarter of 2009 for Italy. This lack of sales directly affects receivables and inventory. Coupled with a strong union in Italy (FILM), these two forces directly contribute to the difficulty of fulfilling the 10/10/10 plan. Based on these trends, a “top four in four” years is unlikely unless SpA can significantly increase its European sales in the chiller market.

So far, he has taken some necessary steps in understanding the situation and has made some necessary changes to prepare for a comprehensive overhaul of the division. However, he has yet to make any decisions for the long term future of the company. 2. Review the three possible courses of action outlined on the last page of the case. As Arnell, which plan would you recommend to Dan Briggs and Simonne Buis next week? What problems and constraints might limit your strategic recommendation? How could you deal with those issues?

The 3 possible courses of action are as follows:

1) Continue to do what they have been doing, except better – increase efficiency, improve product line, increase sales of chiller line outside of Italy 2) Invest and develop absorption technology – high risk, high reward 3) Wait and see approach – improve efficiency and wait 6 months until market trends are clearer

I would recommend option 1 as the plan to follow. Given that time is of significant importance for both the 10/10/10 and four for four plan, it would be difficult to…...

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