Guillermo Furniture Store Analysis

Guillermo Furniture Store Concepts

Guillermo furniture store is entering a competitive market and will make some serious decisions about their financial future. The store makes custom made furniture for its customers. Recently the furniture market is outsourcing to overseas countries because the labor and cost is cheaper. According to the Guillermo furniture simulation, the company has to decide if merging with other furniture companies would keep them from losing business or becoming a distributor to other furniture stores. The purpose of this paper is to explain the finance concepts found in the readings and how they relate to the context of the scenario (University of Phoenix, 2009).

Concepts and Principles

The behavioral principle of signaling entails “when all else fails, look at what other are doing for guidance.” Some companies will look into competitor’s principles on how they are operating to find ideas to enhance their own company. Guillermo can use this principle to see how other competitors are operating to gain knowledge.

Another principle to go by is diversification. To make multiple investments in different entities can benefit the company because the more firms investing in will have a better outcome in case a firm fails (Emery et al. 2007). The principle of self-interested behavior helps to understand the human behavior behind making good decisions (Emery et al. 2007). This principle will help Guillermo Furniture to be competitive in the furniture market. Becoming a distributor for the competition would be in the best self-interest for the company.

The principle of valuable ideas is a way to introduce new products and services (Emery et al. 2007). Because Guillermo has a patented product of a flame-retardant to coat his furniture could help raise profits. The coating applied to his furniture is not in demand. Guillermo’s idea of the flame-retardant would be profitable business and very competitive.

The final concept...