Fin 571 Wk 1

Gullermo Furniture Store Concepts

Scott E. Duffield

FIN 571

February 14, 2012

Gary Nakata

Gullermo Furniture Store Concepts

Gullermo Navallez was financially set with a business that was prospering and unchallenged. During the early years, Gullermo had no competition and a perfect location. The perfect location was in the middle of an abundance of resources for the business of his furniture store. Besides the abundance of supplies and no competition, Gullermo had another advantage over other furniture businesses. The advantage was cheap labor. Gullermo can build his furniture with low-cost on supplies and labor. This advantage gave Gullermo the opportunity to set prices that would benefit his revenue. Gullermo can set his prices at a reasonable but profitable price because there was no competition. Gullermo was set for life until the unexpected happen. Competition found its way to Sonora, Mexico. This competition has forced Gullermo to refocus his business and financial status of the business.

To understand Gullermo predicament, a person needs to know some of the financial concepts and the relationships of the concepts to Gullermo’s business. A person needs to understand the past and present to move forward in the future. Gullermo needs to make new financial decisions to continue to prosper in the competitive furniture market.

Financial Concept

Gullermo’s past finance concept falls in the line of the principle of two-sided transaction. With this, one person has the control of setting his or her price because there is no competition. A good way to look at this is the zero-sum game. According to Emery, Finnerty, and Stowe, “A zero-sum game is a situation in which one player can gain only at the expense of another player” (Emery, Finnerty, & Stowe, 2007, p. 22). Because Gullermo had no competition for many years, Gullermo can gain financial security by setting his own price. Because there was no competition, the buyers had no choice but to...