Guillermo Furniture Store Recommendation

Guillermo Furniture Store Recommendation

Team D

University of Phoenix

FIN 571

Instructor: Paul Andoh

May 4, 2010

Guillermo Furniture Store Recommendation

Guillermo’s Furniture Store is a manufacturer of premium handmade furniture located in Sonora, Mexico. Over the years, the owner Guillermo has enjoyed the benefits of operating a successful business based on the quality, convenience, and competitiveness of his products. Recently, Guillermo has started to see a decline in furniture sales because of competition from manufacturers in other countries and the opening of a new furniture store in the neighboring city. The reduction in sales and subsequent decline in profits has motivated the owner to investigate different alternatives to increase sales and profits. Guillermo has several viable alternatives that may potentially improve sales and the overall financial position of the organization. The focus of this paper will involve a discussion of the available alternatives, a pro forma cash flow budget, and a final recommendation regarding which alternative would yield the greatest results to Guillermo Furniture Store’s profits and sales. The three alternatives available to Guillermo involve the purchase of high tech equipment, becoming a broker of an external manufacturer’s product and elimination of the custom coating option. This paper will discuss the quantitative and qualitative analysis techniques used to achieve an effective recommendation. The goal of this recommendation is to increase sales, improve efficiency in production of goods, and allow Guillermo to compete with the foreign manufacturers.

Investigation of Guillermo’s Furniture store revealed that the first alternative available to the struggling manufacturer involved the purchase of a computerized lathe. This alternative will increase the speed and enhance the competiveness of Guillermo’s mid-grade line of furniture products....