REPORT ON CLAYTON INDUSTRIES CASE
PETER ARNELL, COUNTRY MANAGER FOR ITALY
Indian institute of Management Lucknow
Written Executive Communication
SUBMITTED TO: PROFESSOR Dr .PAYAL MEHRA
A.Venkatesan
PGP26380
Section F
To,
Daniel A Briggs,
President & CEO,
Headquarters,
Clayton Industries Inc.,
Milwaukee, Wisconsin.
From,
Peter Arnell,
XX, YYYY,
ZZZZ.
Date: 24th November 24, 2010
Subject: Growth strategy and market analysis for Clayton SpA. Strategy that can help
Clayton turn its loss in to a profit making business.
OBJECTIVE
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.
BRIEF BACKGROUND:
Clayton Industries, a sixty-year-old U.S.-based firm in the HVAC industry (Heating,
ventilation, and air conditioning), with nearly $1 billion in revenue. As it expanded abroad,
it has positioned itself in the European market by acquiring four companies namely
Corliss, a UK based manufacturer of home heating, ventilation and air
conditioning(HVAC)systems, Fontaire ,a Brussels-based manufacturer of fansand
ventilating equipment, Control del clima ,a Barcelona-based manufacturer of climate
control products for industrial and commercial applications, and Aero Puro ,a Brescia, Italy
based manufacturer of compression chillers for large commercial public and institutional
installations. It has its head quarter for European operation in Brussels (Belgium) and each
of the entities country is headed by a regional company president.
As the economic crisis hit the entire Europe in 2009, Clayton company suffered huge
losses. Clayton restructured its top level management and Peter Arnell, previously
Claytons successful country manager for the U.K., has been asked to take over the Italian
subsidiary which was incurring huge losses. The company VP Simoone Buis had set the
following targets for the company:
1. To cut the both receivables and inventories by 10% also reduce the headcount by 10%
2. Positioned the company’s products in top four in European market
About Clayton Europe & European Market conditions:
European market for air conditioners began to grow from a much lower base in 1990 .In
1998 air conditioners were present in only 7% of the total homes in Italy. Europeans
perceived air conditioners as an expensive American luxury that harmed the
environment.Clayton struggled to pierce the window unit market because of the presence
of familiar local brands that Europeans seemed to prefer.
Chart1: Industry sales of air treatment products
Determined to create a more integrated European organization, Bius first priority was to
increase the operational efficiency of Clayton.An additional responsibility of Europe-wide
