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Clayton Industries Case Study Essay

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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
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Furthermore, the four for four plan cannot be met if this strategy is instituted.

3. How would you convince your bosses to back your recommendation? Prepare your arguments and support them with data.

I believe that the first option will have the most immediate, effective, and guaranteed impact for Clayton SpA. There are significant areas in need of improvement that can all contribute to the long term success of the division and taking a chance on an entirely new product with unproven technology at this point in time is an unnecessary risk.

Given that Net Income is down across the board, we can see that 08-09 has been a rough year mainly due to the decrease in sales and increase in the cost of raw materials: $37.5 to $50.1 million. If it is true that the Italy plant is currently 20-30% overstaffed, then it will be imperative that Italy drives its COGS down from current levels to achieve its goals.

4. How could you implement your recommended strategy? Prepare an action plan.

* From the firings, we can see that management does not share Arnell’s plans for massive changes. * Bad PR right now with regard to FILM and possibly worker morale * Focus should be on improving efficiency while decreasing the number of employees * Systematic evaluation of workplace efficiency, increase incentives for better production * Increase training for management – improve workplace
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