Essay on Clifton Industries

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Clifton Industries
No doubt, you are all aware that we have today received confirmation of the acceptance for what is our first contract with a second U.S. customer. The North American market is large, and breaking into it has been difficult. But hopefully, this success will help to turn more of our tenders into orders [see
Exhibit 1]. It also represents putting into place the second half of our revised marketing strategy. With two major U.S. customers on board we can begin to feel we are getting ourselves established in this market. Our initial entry into electronic products was the first part of our recent marketing decisions and here too we anticipate more orders in the future. [See Exhibit 2.]

Keith Mills, the managing director of Clifton Industries, was commenting upon aspects of marketing strategy at a board meeting in the early part of 1997, as part of a review of corporate strategic direction.
Background

Clifton Industries Ltd. is part of Berbeck Industries Group Pie, a large European-based conglomerate involved in a diverse range of industries including machine equipment, electronics, civil engineering, oil-refining, chemicals, and domestic appliances, besides aerospace. Berbeck Industries Group is a decentralized organization, apart from major capital investments, which have to be sanctioned at group level. Thus Clifton Industries, as with other companies in the group, determines its own corporate strategy, which is presented to the group's board of directors each year. To all intents and purposes, it runs as an independent business with a few group based support services.
Clifton Industries is one of several companies in the Berbeck Group involved in supplying a whole range of products to aircraft manufacturers. Although this range is wide, there also exists a considerable overlap in terms of process capability, labour skills, and manufacturing infrastructure (e.g., design, process engineering, and other support functions) between companies within the group. Clifton Industries is, relative to other aerospace parts of the group, small in terms of sales revenue. Other related companies, with as much as four to five times the annual sales, have similar manufacturing capabilities, but are clearly and consciously kept apart one from another in terms of products manufactured (see Exhibit 4).
To foster this segment of its total business, Berbeck Industries has for some time now had a main board director with executive responsibility for its aerospace companies. In the last 10 years, the group has taken over three U.S. aerospace companies, as much to gain firsthand knowledge of how to enter North American markets as for anything else. In this and in other ways, the aerospace companies have built up a very close understanding of current and future world markets in related products.
A feature of the aerospace business is that it is able (to a considerable extent) to assess its future load. Original equipment (OE) commitments are known and changes in sales levels are usually signalled some time ahead. (Original equipment (OE) contracts refer to sales of products, which form part of the construction of new aircraft. Spares orders are for products that replace original equipment, following a specified number of flying

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hours or due to wear and tear).
Forecast sales for spares are based on past OE sales and historical trends. In September
1996, Keith Mills was appointed managing director of Clifton Industries. His predecessor, who had been with the company for many years, was near retirement age. It seemed opportune for someone new to take on the task of determining the company's future and the anticipated changes that would need to be brought about. The directive to
Keith Mills, who came from another aerospace company within the group, was to maintain the current performance of the company and secure its long-term future. Clifton
Industries had performed well in financial terms, but the fall off in future sales of
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