Italian business of Clayton includes Production and distribution of compressor chillers to Italy and the rest of Europe. These units are used In large Commercial, Public and Institutional Installations. Though Claytons European Market grew fairly with greater market share the compressor chiller units were lagging behind In terms of the overall market share and the revenue generated. The President of Clayton Europe Someone Bubs, has set up aggressive targets for the country managers to sustain and stabilize Claytons Operations and Market share in Europe.
She had wanted all the country managers to cut their receivables and inventories by 10 days and reduce the head count by 10%. She also asked her managers for a plan to increase market share and e within the top four competitors in Europe within four years. Earner, being new to the geography faced challenges due to highly unionized and over staffed labor in his plant in Brussels. Further the low penetration of the product in the rest of Europe and outdated features of Clayton SPA’s compressor chiller were serious concerns looming ahead of the Italian Operations.
These have made the targets set by the President very difficult to attain. Clayton Europe Scenario Brussels became the formal Headquarters for Clayton Europe. Four country mangers were appointed for by new president who were given responsibility for ales and exports. Following graph compares the market penetration for Europe countries and US in year 1998 : Asian producers have gain preferences over European companies, largely on the basis of price. Someone Bubs became the Clayton Europe President. She wanted to increase operational efficiency of different plants of Clayton and increase the penetration of entire product line.
Company increased its global market share for Europe from 33 % in 2000 to 45 % In 2009. Following graph shows the break of sales In different countries of Europe: Dan Briggs, the new CEO of Clayton brought about two priorities: a) reducing capital SE and b) bringing cost under control. He quoted ‘Great opportunities always reside inside crises’. He saw growth opportunities in Europe. He said that it in this business only ten top tenure or Tour competitors could make money. I nee alarm controlling market was growing due to changing consumer attitude and very hot summers. She brought a plan of 10/10/10 I. . , to cut receivables, to cut inventories by 10 days and head count by 10 %. She announced to work on ‘Four on Four’ initiative. Case Analysis Major problem : Recession in Europe has hit the company badly its sales has gone down drastically. In Italy situation is far more challenging as compare to the other regions of the Europe. First half of the FYI 2009 has witnessed a 19. 4% drop in the sales, receivables and inventories are both above 120 day sales. Company is neither able to reduce its cost nor it has a product which is readily acceptable by the climate friendly people.
So the company is finding to make profits in the time of recession when its sales are going southward very rapidly. Company is aiming to be in top four in each product category which is quite a difficult task ahead for Peter Earner, the new country manager. Some of the reasons that the company is facing problem in European market are following; * European people saw air conditioning as an luxury item which is harming environment so they resist to purchase it. This has been a real problem for company to expand its market share in Europe.
Compression chiller produced by the company are not so climate friendly visit-a-visit absorption chillers so company is facing a huge challenge to make people accept their product who are climate sensitive. * European people also have a emotional attachment and preference towards their local national brand. Product which had a local presence before are able to sustain well in the market even in the bad economic conditions. * In past most of the company policies were centered towards getting large projects from government in Italy so it is not only losing potential commercial customer but also losing the chance to reach in other parts of Europe. Because of its inefficient operations the compression chillers produced by the company are too expensive which are facing tough competition from the cheap Asian products. * Its air conditioners are not suitably designed according to the Italian buildings which lacked the duct work. As the company is neither offering low price products nor able to cope up with the perception of Discussion on Alternatives * climate friendly product. Company is struggling in the European market where it is not a familiar local brand. Evaluation of alternatives larger- a.