The Guillermo Furniture Store Scenerio

The Guillermo Furniture Store Scenario

Ramon Solabi

ACC / 561

07/10/2010

James M. Carlin

Guillermo Furniture is the largest furniture manufacturing company in the region. The production of a variety of unique handcrafted tables and chairs are the result of an abundance of available resources that include a vast supply of timber and inexpensive labor. Guillermo has been making furniture for many years and his business has been thriving until the late 1990s.

Issue One – The Influence of Globalization and Technology

The globalization of business and the emergence of foreign competitors are threatening Guillermo’s current organization procedures. This is putting him in a position of assessing how to maintain a successful business practice and remain competitive in a global market. A highly automated plant in Norway employs the use of new sophisticated technology - a computer controlled laser lathe to produce exact cuts in the wood that provides furniture to precise specifications. They can produce and offer a better quality of merchandise at the lowest possible prices and still incur profit. This situation is one of the causes decreasing Guillermo’s revenue. For him to continue to remain in competition with others in the industry, he must reduce his current operating expenses and lower his prices without sacrificing quality.

Issue Two – Increase in Labor Costs

Another issue that Guillermo is enduring is that a large retailer’s headquarter has moved in just a few miles down the road from Guillermo’s plant. Its influence expands over the vicinity and brought with it an influx of people and jobs, thus causing an increase in the relatively inexpensive labor costs. As a result, Guillermo’s profit margins are shrinking as the prices on his merchandise are falling and his production costs are rising at a very fast pace.

A quick review of the budget statement has also shown a steady downward trend of decreasing sales of his high end furniture. In addition,...