Guillermo Scenario

Guillermo Scenario Competitive Economic Environment

According to University of Phoenix, (2012), located in beautiful scenic Sonora, Mexico Guillermo Furniture has for years enjoyed the benefits of cost efficient labor, abundant quality local materials and the luxury of premium pricing of its high end products. However, in the late 1990’s Guillermo’s seemingly perfect world began to change; the effects of globalization began to take root. Foreign competition with less labor intensive high tech manufacturing capabilities moved in to take advantage of the many resources that the Sonora area has to offer. At the same time the Sonora area began to commercialize in every way. Sonora’s many amenities including inexpensive housing, mild weather, beautiful scenery, a new airport, and uncongested roads attracted an influx of people looking for work and in turn have driven up the price of labor. Not to mention the nation’s largest retailers headquarters located in Sonora has had far reaching affects upon the pricing of all retail businesses in the area and this has put pressure on Guillermo’s bottom line. Guillermo is in a position of assessing how to maintain a successful business practice and remain competitive in a global market.

Principle of Self-Interested Behavior and Principle Extensions

According to Emery, Finnerty, and Stowe, (2007), Guillermo must apply the “principle of self-interested behavior.” This principle simply states that people generally act in their own self- interest and “when all else is equal, all parties to a financial transaction will choose the course of action that is most advantageous to themselves.”

According to Emery, Finnerty, and Stowe, (2007), Guillermo must also apply an extension of the “signal principle” that states that “actions convey information.”

The extension is the “behavioral principle,” which states “that when all else fails look at what others are doing for guidance.” The behavioral principle also states “in essence...