Clayton Industries Case Study
Coupled with a strong union in Italy (FILM), these two forces directly nutrient 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 significantly increase its European sales in the chiller market. So far, he has taken some necessary steps In understanding the situation and has made some necessary changes to prepare for a comprehensive overhaul of the division. However, he has yet to make any decisions for the long term future of the company. Review the three possible courses of action outlined on the last page of the 2. Case.
As Earner, which plan would you recommend to Dan Briggs and Someone Bubs ext week? What problems and constraints might limit your strategic recommendation? How could you deal with those issues? The 3 possible courses of action are as follows: 1) Continue to do what they have been doing, except better – Increase efficiency, Improve product line, Increase sales of chiller line outside of Italy 2) Invest and develop absorption technology- high risk, high reward 3) Wait and see approach – improve efficiency and wait 6 months until market trends are clearer I would recommend option 1 as the plan to follow.
Given that time is of significant importance for both the 10/10/10 and four for four plan, it would be difficult to meet either target if we select option 3 as SPA does not have the luxury of sitting around idly without making the necessary changes for a profitable turnaround. The second option is one worth considering but is a major risk at the Inception of this technology. Furthermore, the four for four plan cannot be met If this strategy is instituted.
How would you convince your bosses to back your recommendation? 3.
Prepare your arguments and support them with data. I Delve Tanat ten TLS Upton will nave ten most Immediate, detective, Ana 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 evils to achieve its goals. 4. Plan. How could you implement your recommended strategy? Prepare an action * From the firings, we can see that management does not share Earner’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 conditions to better morale * Community functions/events to generate positive publicity * Recycling program to reuse raw materials and promote a greener production outlook From the company’s perspective, was Earner the right choice to be a country 5. Manager for Clayton SPA? Why or why not? * Earner was the correct immediate choice for country manager.
In other words, Clayton Italy needed drastic changes right away and Earner was Just the man. However, the Jury is still out on whether he will have the foresight and patience needed to maintain a consistent long term plan. His military background may lead him to fast but rash decisions that may have repercussions in the future. 1 . Understand the company and the situation, pay special attention to sequences of events and factual data provided in the case.
2.
Identify a set of problems that are central and/or urgent to address, and possible opportunities that might have been created because of the events. * 10/10/10 and Four for Four * Low sales in Europe and inefficient operation * Market focused on chillers in Italy with good margin only due to contracts and relationships * Must focus on commercial and residential products in Europe overall to expand market International (American) Drawn Image Issue * Expensive vs. Asian competitors * High COGS Unionized workers – difficult to make sweeping HRS decisions * Morale and PR issues 3.
Identify 2-4 management and organizational behavior perspectives (e. G.
, perception, motivation, structure, change, culture) based on which the case can be analyzed. From those perspectives, explain the sources and causes of the problems. * Perception and culture: by which Europeans tend to prefer national brands rather than foreign, up too degree upon which price will shift that preference. * Motivation: previous managers were satisfied with the status quo. In other words they were unwilling to change and were therefore let go on the spot.
First impressions are important and although misunderstandings are possible, the difference in culture and background between Earner and the managers suggest that Earner believed they lacked the motivation needed to improve the company.
4. Propose solutions, and use management theories and principles to Justify why and how your proposed solution can resolve the problems and improve the situation. See #4 from Previous. 5. Prepare an Action Plan for the focal manager to enable her/him to implement of your proposed solutions.
An action plan is a step-wise implementation plan.
