Corporate Strategies: Clayton Industries Inc.

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Corporate Strategies Clayton Industries Inc. Lorenzo Mazzeo - 652821 Peter Arnell arrived in Brescia in late September 2009, and suddenly he had to face some daunting challenges due to the global recession: sales recorded a sharp decline of 5.3% in 2008 and a drop of 19.4% in the first half of 2009; Clayton SpA was in the third consecutive year of losses and accumulating more than 1 million US Dollars??per month; receivables and inventories are both above 120 day sales. In addition, the Italian market was split between low-priced foreign imports (Asian products) and Italian brands and offering neither the former, nor the second, Clayton was losing its product share in the market. Overall, the company…show more content…
Absorption chillers can therefore be considered as a fast-growth segment and as Clayton already offers a proven “first-class” technology, the company can easily become a market leader in this niche segment, especially exploiting the first mover advantages. In this way, it is possible to state that by developing this excellent product, it will be possible to both, placing Clayton in the very first place in its challenge with his competitors and achieving the “Top four in four” plan proposed by Simonne Buis. Obviously, in order to cope with the important investment that this project requires, a cost reduction is necessary and essential, starting from downsizing. Brescia’s staffing levels are in fact still 20 to 30% higher than due. Even if this choice would be followed by a strong opposition by FILM, unions and workers, dismissals are unavoidable. On top of this, the company would reduce its overall cost due to lower manufacturing expenses, and because of the exploitation of the synergy with Spain, it will be feasible to rely on economies of scale, thus increasing the production capacity. Even if it would be difficult to get immediate positive cash flows, since the fixed costs would go down in the long run, it makes sense to shift production to absorption chillers. 3) Focusing on efficiency measures to

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