Clayton Industries Case Study

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Clayton Industries was founded in 1938 and became very successful in the United States for manufacturing room air conditioners. The company was able to establish a strong position in Europe by acquiring four companies in that continent. Clayton separated operations between the United States and Europe to better manage its expansion. As a result of the 2008-2009 economic crisis the Board of Directors replaced the CEO with Dan Briggs. Briggs was promoted from within the company and had a reputation for being a “no-nonsense” manager. His two priorities were reducing capital use and controlling costs. Peter Arnell is the country manager of Clayton SpA, the Italian subsidiary of U.S.-based Clayton Industries. Simone Buis is Arnell’s direct manager and President of Clayton Europe. Buis and the CEO, Briggs expected Arnell to turn around Clayton SpA and position it for future growth. Clayton’s slow market penetration reflected Europeans’ different needs and national brand preferences. Many Europeans saw air conditioning as an expensive American luxury that harmed the environment. No product represented this geographic concentration more strongly than the chiller line built in Italy. In 2001 when Buis was promoted to president of Clayton Europe she made increasing operational efficiency her priority. During the next seven years Europe became the major growth engine for Clayton, and increased the company’s global seven from 33% to 45% by 2009. Europe’s growth became stagnant when the recession hit in 2008/2009. This crisis triggered strategic adjustments and management changes in the U.S. and European operations. The CEO, Briggs told Buis that “he saw Europe as a continued source of growth. Buis felt that the company should be positioning for a post-recession expansion. As a result, Buis set out to cut receivables, inventories and reduce the headcount.
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