Clayton Industries

Clayton Industries

1. Main challenges:

* Global Recession (sales went down 19%)

* Asian competitors

* Struggling in markets outside Italy

2. I would recommend the first option, which is focusing on restoring Brescia's profitability and long term viability; it involves procedures to revitalize plant efficiency, product development initiatives, revitalize the compression chiller by aggressive marketing to expand the sales outside Italy.

Problems and constrains that might limit the recommendation:

* Strategy fails to promote the sales of other product lines in Italy

* Cost cutting strategy will involve layoffs, which would affect the company's political relationships. This would affect Clayton's sales

* More efforts on sales and marketing initiatives will be required

* No immediate results guaranteed by this solution

3. Key issues:

* Divided product strategy: European leadership wants to focus on compression chillers; Spain on the other hand is concentrating on absorption chillers.

* Union of Italian workers

* Consumer preference

4. The option that I recommended, which is restoring Brescia's profitability and long term viability not only targets product promotion in other European markets, but also increases the chiller market share in Italy. Renewed product could target Italian commercial customers and effectively compete against the Asian products; it will increase efficiency; Italian workers' union and the government will not raise any resistance; existing products (compression chillers) will not be affected; investment in this development will be beneficial during the economy growth.

Collaborating with the Spanish company and converting the capacity at Clayton to absorption chillers seems like a great idea, but the company faces a high liquidity crunch and net loss. High investment would not be a viable option; there is no guarantee that absorption chillers will be succesfull. The better move would be if Clayton can hold back this idea for couple of years.

5. Arnell was the right choice to be country manager for Clayton SpA. Vacation time that he had spent in Italy with his grandparents helped him learn Italian and country culture. Concerning education, Arnell attended business school in London and he also had experienced management consulting in the Royal Marines where he served for seven years. Military discipline, propensity for bold actions and sharpness impressed