Analysis of Peter Arnell's Leadership at Clayton Industries Italy

This case study analysis focuses on Peter Arnell, the country manager of Clayton SpA, the Italian subsidiary of Clayton Industries. The analysis addresses three key questions related to Arnell's leadership style, strategic decisions, and the challenges faced by the company during the global recession of 2009. The study examines Arnell's autocratic leadership approach, its merits, and demerits, considering the impact on employee relations and organizational performance. It further explores different courses of action for Clayton SpA, evaluating the revitalization of the compression chiller line, the introduction of a new production line for absorption chillers, and a focus on operational cost reduction. The analysis recommends introducing the new production line of manufacturing absorption chillers. Finally, the case study evaluates whether Arnell was the right choice for the job, considering his experience and leadership style in the context of the challenges faced by Clayton SpA in Italy. The analysis emphasizes Arnell's effectiveness in dealing with challenges and his ability to involve stakeholders in finding solutions.

Running head: GLOBAL MANAGEMENT
Global management
Name of the student
Name of the university
Author note

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Question: 1 (page no. 8)
Scenario in the global business is different to that of the businesses based on the national
factors. This is due to the fact that global business trends are more complex and diverse in
nature. There are larger challenges and factors should be considered in getting succeeded in the
international business along with the effectiveness in the decision making process. The decision
making process should be based on the consideration of the different factors, which will be
acceptable among the worldwide operations. Peter Arnell was appointed as the general manager
of Clayton Spa in their Italian operations and he is already an existing employee of Clayton Spa
and is associated with their UK based operations. It is identified that Arnell is majorly following
autocratic style of leadership and proof for that is the termination of the three managers upon not
agreeing with the cancellation of leaves. It is also identified that lack of consideration of the
opinions of others is also evident in the case of Arnell because from the very first meeting he
conducted in Clayton Spa, he asked the managers to help him in achieving the planned objectives
rather asking them in how to do it. There are probabilities of a few disadvantages to be faced by
Arnell due to his autocratic approach. One of the major disadvantages will be in terms of getting
the supports from other stakeholders. This is due to the reason that immediate termination of the
three managers will create unfavorable environment for the existing internal stakeholders and
level of dissatisfaction will increased. It should also be noted that the military style of leadership
of Arnell might not be able to gain the maximum from the side of the employees in Clayton Spa.
However, on the other hand, it is also identified that in the first two months of operation
of Arnell in Clayton Spa, he individually met with each of the top managers in Clayton Spa and
asked for their work plans for the next 60 days. This is a positive attitude from the side of Arnell
because he is being able to have the idea about the thinking approach of the existing managers at

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Clayton Spa. It is more important because Arnell is relatively new to Clayton Spa and thus it s
beneficial for him to gain the feedback from the existing managers. Hence, it can be concluded
that performance of Arnell as the general manager for first two months of Clayton Spa is
comprises of both merits and demerits.
One of the major challenges being faced by Arnell in Clayton Spa is the resistances from
the side of the employee union. This is due to the fact that autocratic approach of Arnell and
immediate layoff of the three top managers conveyed the fact that Brescia plant of Clayton will
get closed and Arnell is assigned for that. Thus, the employee union requires the assurance of no
further layoffs of the employees. In this case, the key challenge for Arnell is meet the resistances
of the union along with continuing with the cost cutting measures. Another challenge identified
for Arnell is to maintain the cash flow and liquidity level in the organization. This is a challenge
because added investment is required for change in the production technology along with gaining
higher credit line from the financial institutions. It is also a major challenge for Arnell to increase
the cost cutting initiatives with the increasing resistances. This is due to the reason that the more
will be the activities in relation to the cost cutting approaches, the more will be the resistances
from the side of other stakeholders. In addition, the current success achieved in this case is not
enough also and Arnell is going to face higher sets of challenges in the coming years. This is
because of the fact that business complexities will get increased with time and shorter work
shifts are not the permanent solution. Thus, in order to achieve the permanent cost effectiveness,
layoffs of the employees should be initiated and probability of the resistances from the side of
the employee union will also get increased. Thus, it can be concluded that there are more diverse
challenges to be faced by Arnell in the coming years for Clayton Spa.

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Dealing with the challenges is effective for Arnell because he has involved all the
associated stakeholders in determining the solutions. For instance, Arnel discussed the issues;
Clayton Spa is facing with the employee unions directly. He communicated the cash shortages
being faced by Clayton Spa to the employee union and why it is important to reduce the current
workforce strength. The transparency being followed by Arnell in negotiating with the employee
union helped in convincing them and making them agreed in shortened shifts for the employees.
This denotes the effectiveness of Arnell in dealing with the challenges in Clayton Spa. In terms
of dealing with the cash shortages, he negotiated with the banks in increasing the credit line. His
approach of involving all the associated stakeholders is evident in this case also, where the
representatives from the employee union are also involved in negotiating with the banks. Hence,
the entire process of negotiating with the bank got more authentic and reliable and transparent.
This can be concluded that Arnell is effective enough in dealing with the challenges being faced
by him in Clayton Spa.
Question 2 (page no. 11)
In the given case study, there are different courses of action identified. One of the options
is the revitalization of the compression chiller line. Clayton Spa is having expertise in
manufacturing compression chillers and revitalizing them will take less time for them. It is also
identified as the most cost effective option with estimation of investment of about $5 million.
The next option available is introduction of new production line of manufacturing absorption
chillers. This might have long term potentiality because of emergence of the popularity of this
type of chillers. However, the cost involved is also the highest, which is estimated at $15 million
and restructuring of the existing organizational processes (Driessen & Hillebrand, 2013). The last

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option available is the tight focus on the operational costs and reducing the input costs in order to
increase the profitability. Thus, this is another defensive option available for Clayton Spa.
It is recommended that Clayton Spa should take the maximum risks in the market and
introduce the new production line for manufacturing adsorption chillers. This is due to the reason
that these chillers are having lower environmental impacts compared to the compression chillers.
While compression based chillers are using CNC as the coolant, absorption chillers are using
water and thus they are more environment friendly. With the growing awareness among the
customers, the market potentiality of absorption chillers is more. Thus, this option is
recommended for Clayton Spa because it will help Arnell to gain the long term potentiality. In
the case study, it is also stated that that Clayton Spa is having the access of a patented technology
that will help them to gain competitive advantages from this new product.
One of the major problems in implementing this action for Arnell will be the higher
involvement of cost. This is due to the reason that change in the entire production process will
cause issues in retraining the employees and making them accustomed with the new process. It
will be time consuming to gain the profits from the process and also Arnell will face the
uncertainties in regards to the market acceptances. It is estimated that more than $15 million will
be required as investments in this case, which is increasing the risks of return on investments. It
is recommended that prior to the initiation of this strategy; Arnell should review the exact
potentiality of the absorption chiller in the market. This will help him to calculate the time for
break even and how the cost will be adjusted. In addition, Arnell should also introduce the new
production process in phased manner along with the continuation of the existing process. This is
due to the reason that implementation of the new process in phased manner will help Arnell to
face less risks from the market. It is concluded that this process will help Arnell to gain the

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maximum from the side of the markets and business perspectives without having to take the
major risks. This same scenario is applicable for Clayton Spa because they are also facing the
challenges of meeting the diverse market demands and trend. In the given case, it is identified
that Clayton is facing the challenge of ensuring the profits from the European operations and
deciding between the most efficient manufacturing facilities.
Question 3 (page no. 7)
As stated in the case, Arnell is an existing employee of Clayton and is working for years
in their United Kingdom operations. Prior to his corporate stint, Arnell was in military and thus
he maintains the military style leadership in the workplace. Prior to the appointment as the
country head of Clayton Spa, Arnell was having years of managerial experiences. He is also
known for initiating bold actions in the business. Now, after his appointment as the country head
of Clayton Spa, the question is whether he is the right choice for the job or not. From the
information in the given case, it is analyzed that there are few advantages as well as
disadvantages to be gained from appointing him. One of the major advantages to be gained is the
increase in transparency due to the fact that Arnell follows military style of managing things and
it promotes fairness and transparency in the process. In addition, it is identified that Arnell has
already served the different managerial posts in Clayton including marketing manager and head
of the United Kingdom operations of Clayton. Thus, Arnell is having the idea and understanding
about the business process and trends of Clayton and he will be able to manage accordingly to
gain maximum. As per the available information, Clayton Spa is incurring losses from the last
few months and touch decisions are required. Issues such as surplus employees should be
mitigated only by taking touch decisions and Arnell is having the ability to take the same. He is
known for taking touch decisions in closing down the old Carliss boiler plant for cost cutting.

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Hence, on the basis of these factors, it can be concluded that Arnell is the most effective choice
for the post of country manager of Clayton Spa Italy.
However, on the other hand, the military style of leadership of Arnell might also create
issues in the workplace due to the reason that involvement of the organizational stakeholders will
get reduced. With the autocratic style of leadership being practiced by Arnell, it is highly
unlikely that involvement and satisfaction level of all the employees will be at par the desired
level. In addition, it should also be noted that the business situations in the United Kingdom and
Italy are different and success in the United Kingdom is not denoting the fact that the same can
be gained in Italy as well. Thus, even though Arnell is having years of experience in Clayton, he
is not having the understanding of the industrial trends in Italy. It can be concluded that Arnell is
not the most effective choice as the country manager in Clayton Spa. It concludes that Arnell
performed moderately in the first two months as the general manager of Clayton Spa. There are
few challenges being faced by him and he initiated autocratic style of leadership in dealing with
them. In addition, it is also identified that introducing the absorption chiller will be the most
potent course of action for Clayton. However, still Arnell will face challenge in terms of cost and
time period, which should be dealt accordingly. This report concluded that there are both merits
and demerits are associated with Arnell in selecting Arnell as the country head of Clayton Spa.