Guillermo Furniture Store Decision-Making Process

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Date Submitted: 08/24/2011 04:31 PM

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Guillermo Furniture Store Decision-Making Process

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January 31, 2011


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Guillermo Furniture Store Decision-Making Process

Guillermo Navallez owns and operates The Guillermo Furniture Store. The operation is located in Sonora, Mexico where there is ample supply of the timber used to create the tables and chairs he sells. For many years Guillermo had the advantage of relatively inexpensive labor and was able to charge a slight premium for the quality furniture the operation produced. However, in the 1990s two significant events affected Guillermo’s business. A new competitor, using a high-tech approach to manufacturing, provides furniture to exact specifications at very low prices. The manufacturing process employs a high level of automation and very little labor. Second, one of the nation’s largest retailers established headquarters nearby, a new international airport was built, and a number of other developments entered the area. These improvements to the infrastructure resulted in a major increase in people and jobs to the area, resulting in an increase in the cost of labor. Guillermo must reexamine his business operations in an effort to...