Fin/Gm 571 Week 4 Paper

Ongko Furniture Store Concepts

FIN/GM571

Don Furman

October 10, 2011

With an effective supply of timber for the various types of furniture and relatively inexpensive labor cost, Ongko’s Furniture Store enjoyed not only the beautiful location in Bali, Indonesia, but also a competitive economic advantage by reason of these benefits. Economic changes are swiftly forcing itself upon Ongko with new overseas competition utilizing high-tech approaches to furniture manufacturing and one of the nation’s largest retailer’s headquarters presences just a few blocks from Ongko’s location. Future decisions regarding financial alternatives and proper sensitivity analyses will be crucial to the success of the organization.

Alternatives for Ongko’s Furniture Store

The initial review of Ongko’s budget with alternative scenarios including maintaining the status quo, the high tech path of manufacturing or operating as a broker will allow for an informed decision to be processed and assist in determining which avenue of approach best suits the needs of Ongko Furniture. In order to consider the current operation methods, Ongko should realize competition will cause the competitive economic advantages they have enjoyed to decrease. This will have a direct impact on operational and sales cost, which will further reduce the bottom line currently established. The next alternative for Ongko Furniture would be to access the implementation of technology and its manufacturing cost advantages and disadvantages. Understanding the cost involved with restructuring the plant to accommodate large equipment purchases and the maintenance and use thereof will cause the cost of production units to decrease but have the opposite effect on total overhead cost which will definitely have an impact on the margins and overhead expenses before the actual net income is revealed. The final alternative that should be explored by Ongko Furniture would be the need for a broker for outside competition...