Guillermo Furniture Store Concepts

Guillermo Navallez is the owner operator of a furniture company in Sonora, Mexico. Over the years, Navallez continues to be profitable in the furniture industry. This is the result of inexpensive labor along with plenty of timber and raw materials available. Unfortunately, Guillermo has begun to see a decrease in his sales, which can be attributed to several factors. In 1999, a new competitor from overseas entered the market using a high-tech approach. This company was able to produce at a higher rate with lower cost. Also Guillermo had to compete with one of the largest retailers in the nation’s headquarters relatively close and expanded quickly. Both events caused Guillermo to evaluate and decide what is best for his business financially. He would begin by reviewing the historical and present financial data in addition to different business aspects such as technology, diversification and competition. This paper will discuss the financial concepts from week one and how they relate to context of the Guillermo Furniture Store Scenario.

The first concept to review is the principle of self-interested behavior: people acting in their own financial self-interest. Although this concept is basic; it is important to understand that when doing business, the other person is attempting to improve their self –interest as well (Emery, Finnerty, & Stowe, 2007). Guillermo strives to remain in competition with his competitors. This easiest way to achieve such a goal would be to either adapt to the new business environment or consider forming a larger organization by merger or acquisition with his competitors. While deciding what the best decision would be for Guillermo professionally and personally, he realized he wants to find a way to keep his business from becoming acquired. The first option is switching from manufacturing to distribution operations. Becoming a primarily distribution company would benefit not only Guillermo but would also help one of his competitors expand....