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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…

Nevertheless, cost estimates were about 5 million, with almost all the investment in the first 12 months. Such investment would have been in contrast with the CEO’s and EVP’s guidelines and would have been very difficult considering the condition of the balance sheet, as Clayton lost 24.2 million in the last six months, with the only Clayton SpA loosing 6.7 million. Overmore, the company is currently losing more than 1 million per month as a consequence of a 27% increase in steel prices in the past two years. A a cost that would still affect the company by choosing this option and that could not be recouped due to foreign competitors’ aggressive pricing. In this sense it will be very difficult to compete with Asian low prices because both of the initial 5 million investment and the higher manufacturing costs. Hence, Clayton SpA is not going to develop a new product line able to acquire new market share in the post-recession profitable growth, it will be almost impossible to achieve the “top four in four” plan and to increase the low percentage (7%) of the overall market share, as compressor chillers have generated in 2009 only the 12% of sales for the rest of Europe. Finally this option would imply a greater layoff , counteracting the FILM, unions and local laws and affecting the company’s political relationship. However it would be very difficult to achieve a downsizing owing to

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