Fin/571 Guillermo Furniture Store Concepts Paper

Guillermo Furniture Store Concepts Paper

FIN/571 - Corporate Finance

Guillermo Furniture Store Concepts Paper

Guillermo Furniture Store produced custom made furniture of tables and chairs with a dependable supply of local timber. In late 1990s, Guillermo has faced two issues that caused dent to his business. First, a new competitor that uses high-tech approaches has entered into the market. Second, the cost of doing business has risen (University of Phoenix, 2011). In helping business owners and managers to make effective and informed financial decision, there are many concepts and principles were formed in the business culture. In fact, there are six principles out of the 12 were found in Guillermo Furniture Store scenario. Therefore, this paper will address the main ideas of these six concepts.

The Principle of Self-Interested Behavior

Human behavior is essential when consider a good business decisions. Correspond to the principle of Self-Interested Behavior Emery, Finnerty, and Stowe (2007) stated that “People Act in Their Own Financial Self-Interest.” Mr. Navallez’s desire of remain in control of his business and enjoy the comfortable private life are the behavior of Principle of Self-Interested. This desired forced Guillermo to seek further alternative such as become a representative of a plant in Norway that use highly automated technology. The new technology can help reduce production cost and enhance production sufficiency as well as improve company profitability.

The Signaling Principle

“Actions Conveys Information” (Emery, Finnerty & Stowe, 2007, p. 23). The signaling reveal when looks at the industry effect and behavior of Mr. Navallez of inquiring a highly automated systems to enhance his business. This behavior provides signal to Guillermo’s employees that should Mr. Navallez considers the option, the big employees layoffs are lie ahead.

The Behavioral Principle

“When All Else Fails, Look at What Others Are Doing for Guidance”...