Guillermo

Guillermo Furniture is a furniture store located in Sonora, Mexico and owned by Guillermo Navallez. Guillermo was relatively successful with a good supply of timber in the area and relatively inexpensive labor (Guillermo Scenario) until the 1990s. New competition and increased labor expenses have recently caused Guillermo to examine competitors and how they are handling the new environment. Finance Concepts Guillermo must consider all financial documents available to him to make a good decision for his company. Income information, a budget, asset, equity, and liability information, as well as production information for March are all included in the supplemental information. The principle of comparative advantage should also be known. Comparative advantage is where every company does what they do best. In the case of Guillermo high end custom work is something unique that Guillermo is able to offer, but he can choose to use the Norway competitor to become a distributor for all other items that he may not be the best at currently. Guillermo could also use automation to become a more competitive manufacturer of all types of furniture. Guillermo needs to consider the upfront cost of the automation compared to how much he can save down the line. Guillermo also needs to look at all of the advantages and disadvantages to his returns if he becomes a distributor instead of manufacturing. Finally, Guillermo can use the behavioral principle to look at the financial information of his competitors and even other furniture manufacturers in areas that he may not consider competitors. Using the financial information available from other firms can help him make a more informed decision. Conclusion To remain an industry leader and sustain a competitive advantage Guillermo must continue to focus on the entire chain of activities and make a decision that will return the highest profits in the future. References Emery, D., Finnerty, J., Stowe, J. (2007). Corporate Financial Management, 3ed. Prentice Hall. Supplement: Guillermo Furniture Store Scenario. Retrieved from: https://ecampus.phoenix.edu/classroom/ic/classroom.aspx Supplement: Guillermo Furniture Store Data. Retrieved from: https://ecampus.phoenix.edu/classroom/ic/classroom.aspx