Guillermo_Scenario

Guillermo’s Furniture Store Scenario FIN571 Guillermo’s Furniture Store Scenario Guillermo Navallez operates a furniture manufacturing business in Sonora, Mexico. Sonora is known as a beautiful vacation spot in Mexico. Guillermo furniture produces a wide variety of tables, and chairs hand crafted. The area of Sonora offers a good supply of timber to produce Guillermo’s products (University of Phoenix, n.d.). In the late 1990s the business faced two challenges that together made operating the business much tougher. The two challenges included new competition from an overseas company that produces furniture using high-tech machinery. The other challenge came from the expansion of one of the largest retailers in the nation. The expansion brought an influx of people, and jobs, resulting in the rise in labor cost ultimately reducing profit margins for the company. With these challenges Guillermo needed to re-evaluate the business processes needed to make the necessary decisions to continue and overcome. Options In any company’s life cycle, for continual success and improvement, it is imperative that the managers inspect and reevaluate their system and their process. In the case of Guillermo’s Furniture, evaluation of their new competition to include the high-tech processing was done. Would the change to their process enable to keep the company in the furniture game, though labor cost would be drastically be reduced would the cost of transition to this technology provide a business opportunity cost benefit. Assuming the transition to this technology would be beneficial, how long would it take Guillermo to break even or even begin profiting. Another area of consideration would be whether or not Guillermo’s Furniture Manufacturing is willing to take the risk of growth for success or failure. During Guillermo’s evaluation he gathered from his distributors what their wants were, during this process he came up with the idea to become possibly a distributor representative for other manufacturers. This would allow Guillermo to continue his furniture operation and expand into the distribution arena. Again this evaluation process would require Guillermo to weigh the cost benefit opportunity (Emery, Finnerty, & Stowe,  2007). Guillermo also has a patented process for his furniture coating under the Behavioral Principle this would prevent others to duplicate his coating process thereby protecting his innovation for furniture coating with the hopes of eliminating any free riders. Conclusion Faced with these current challenges, and armed with the knowledge of finance concepts as well a process to come to a business decision beneficial for his business. Guillermo’s Furniture Manufacturing has a tough road ahead but a road that can be overcome. Along that road there will be bumps encountered but as long as the goal is stated and a thorough decision making process is in place success can become a reality. References Emery, D. R., Finnerty, J. D., & Stowe, J. D. (2007). Corporate financial management (3rd ed.). Morristown, NJ Wohl Publishing Inc.. University of Phoenix. (n.d.). Guillermo Furniture Store Concepts. Retrieved from University of Phoenix, FIN571 website.