Guillermo

Guillermo Furniture Store Scenario

Introduction

The business climate has changed dramatically for Guillermo Furniture over the last 10-15 years. The market share that was once seen in Sonora Mexico has now shrunk and has increased competition. The company must look to reduce cost while at the same time making a profit. The company has several options and ideas on the table, but Guillermo needs to look at the financial documentation to make sound business decisions.

Guillermo Furniture has not done the best job of looking at the data and creating a business and production plan for the company. With increased competition and also the influx of machine cut furniture, the market for his product has been reduced over the years. The company must decide soon to keep things as they are, or spend the money needed to buy the appropriate machinery to produce the high quality products they desire. Although the machinery will be expensive from the start, they would eventually pay for themselves over time on the amount of labor saved. There has also seemed to be a lack of budgets and performance reports in the decision-making process.

The company could use these reports in many areas to keep the company making profit, as well as shift the company in the proper direction for the future. One thing that can be taken away from the current data is that the company produced over budget on its mid-grade products, while failing to meet the budget on the high-end products. If there was a proper understanding of the demand for their products, money could have been saved on inventory and overhead while shifting focus to the mid-grade products that consistently produced above budget. The company needs to shift their focus on being a distribution chain for other manufactures while focusing on their profit potential for their current lineup. This can be done by creating a budget and performance report to show what needs to be produced by Guillermo Furniture to make the...