Guillermo Furniture Store Concepts

Guillermo Furniture Store Concepts

FIN-571/Corporate Finance

14 November 2011

The purpose of the paper is to explain the finance concepts found in the reading of the scenario of Guillermo’s Furniture Store. Financial principles, financial markets, and business ethics form a foundation for the financial decisions that managers routinely make according to the reading of author of Corporate Financial Management (Emery, 2007). Financial tools can be used to analyze, identify and problem solve techniques within an organizations. Organizations can use the financial concepts to make short-term or long-term decisions for organizations goals and objectives. In the scenario, Guillermo Navallez has a business called Guillermo’s Furniture Store. Guillermo’s Furniture Store is located in Sonora, Mexico where he produces a variety of tables and chairs products. Currently, Guillermo is experiencing several forces that are starting to effect profit margin of his furniture business. One is a new competitor from overseas entering into the furniture market along with the use of high-tech approach. Second, the development of the area has increased the cost of labor because of increased of more skillful works within the growing community. Guillermo watched his profit margins shrink as prices fell and cost rose (Univesity of Phoenix, 2011). Guillermo must consider options to improve his efficiency and changes in the industry that effect his competitive in the market.

Guillermo spent some time researching the foreign competition and the high-tech solution (Univesity of Phoenix, 2011). It is important for Guillermo to be mindful of what is new going on in his industry because it will affect his future success of his furniture business. Guillermo enjoys being an independent retailer which allows him the freedom to spend personal time with his family. Guillermo is using the Principle of Self-Interest Behavior that states that when all else is equal, all parties to...