To :Daniel A Briggs, President & CEO, Clayton Industries Inc.
Simonne Buis, Executive Vice President, Clayton Europe
From: Peter Arnell, Country Manager, Clayton Spa, Italy
Date : 24/11/2010
Subject: Current situation analysis and revival strategies for Clayton Spa, Brescia
BACKGROUND
Clayton Industries Inc. was founded in Milwaukee in 1938. Its business was concentrated
in creating and selling Window- mounted room air conditioners for residential and light-
commercial applications.
In the early 1980’s there were 2 important growth opportunities:
a. North American Commercial Sector
b. Residential and commercial markets in Europe
As per its goal of expanding in Europe it had two major strategies:
A) Inorganic growth through acquisition of 4 companies
1. Corliss, a UK based manufacturer of HVAC systems.
2. Fontaire, a Brussels- based manufacturer of fans and ventilating equipment.
3. Control del Clima, a Barcelona-based manufacturer of climate control products for
industrial and commercial applications.
4. AeroPuro, a Bresica, Italy-based manufacturer of compression chillers for large
commercial, public and institutional installations.
B) Clayton restructured its organisation in 1988.
1. All operations in the United States and Canada were placed under Clayton North
America.
2. The European acquisitions reported to a newly created Clayton Europe. Each of these
being headed by a regional company president.
Clayton Europe Scenario
Brussels became the formal Headquarters for Clayton Europe. Four country mangers were
appointed for by new president who were given responsibility for sales and exports.
Following graph compares the market penetration for Europe countries and US:
Asian producers have gain preferences over European companies, largely on the basis of
price. Simonne Buis became the Clayton Europe President. She wanted to increase
operational efficiency of different plants of Clayton and increase the penetration of entire
product line. Company increased its global market share for Europe from 33 % in 2000 to
45 % in 2009. Following graph shows the break of sales in different countries of Europe:
PROBLEM STATEMENT
Clayton Spa is facing various challenges to meet the new 10/10/10 targets set, in Italy. The
country is lagging in revenue growth which has resulted in receivables and inventories
both being above 120 days sales. Further the headcount reduction target cannot be met due
to stringent local laws and tense union relationships. The following factors contribute to
the problem:
Key reasons for problems at Clayton Spa:
• Many Europeans saw air conditioning as an expensive American luxury that harmed the
environment. Even though Clayton had a slow successful market penetration, most of the
