Clayton Industries Essay

5066 Words Mar 3rd, 2012 21 Pages

A Case Analysis

Table of Contents Executive Summary 1 Company Background 3 Problem Statement 5 Internal Factors 5 External Factors 6 Analysis 7 Industry 7 SWOT 7 Alternatives 9 Revitalize Clayton SpA 9 Absorption Chillers 11 Recommendations 13 Considerations of Peter Arnell 13 Reduce Capital Use 14 Reduce Costs 14 Rationalize Product Line 15 Align for Growth 16 Conclusion 18 References 19 Appendix 20

Executive Summary
In the midst of a global recession, Clayton Industries is challenged by a diminishing demand for their product and rising variable costs. These issues are further compounded by stiff market competition that
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Instead of focusing on the entire European region, Lazzaro concentrated his efforts on the chiller line of Italy, successfully growing the business to 85% of the Italian market. However, he failed to expand compression chillers outside of Italy and failed to develop broader marketing (Bartlett et al., p.5). Lazzaro also focused his attention on developing political relationships, which was beneficial in acquiring government contracts, although these same relationships caused him to refuse permanent and temporary layoffs when Italy faced trouble.

External Factors
The union, Federazione dei Lavoratori della Manifatture (FILM), enjoys generous member benefits. Layoffs are permitted only for good cause, but even the temporary layoff provision Cass Ingrazione Guardagni (CIG) has not been utilized. Upon Arnell’s arrival, there was fear of plant closure and mass layoffs. These fears lead to staff concerns and intense political pressure due to government contracts. Moreover, August is vacation season in Italy and leadership changes caused disruption to normal expectations of time off.
Other contributing factors include a 27% increase in steel prices realized over the past two years. Also, Clayton products face stiff competition from Asian competitors whose products are 15% more efficient than Clayton’s and offered more features at lower prices (Bartlett et al., p.5). Clayton SpA also faceds challenges regarding the European view of

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