Guillermo Paper 4

Guillermo Furniture Store Scenario

Fin/571 Corporate Finance

June 18, 2012

Susanne Elliott

The Guillermo Furniture Store enjoyed great success manufacturing handcrafted furniture in North America. Guillermo Navallez the owner of Guillermo Furniture specialized in a wide variety of tables and chairs, which was produced at a low cost as considered by industry standards. The company access to cheap labor cost helped to propel its quality products while increasing the profits for the Guillermo's furniture business.

Guillermo's success continued to peak until the 90s when the Guillermo business began to experience formal competition from overseas companies. The foreign competitors stormed the market using high-tech machinery to produce furniture to exact measurements. The use of this technology brought the price of their product very low. The Sonora community began to grow from the influence of technology. The population grew along with the expansion of housing, roads and an international airport.

The furniture store profits started to dwindle as labor cost steadily increased. Guillermo Navallez relish being independent and resisted the consideration to merge into a larger competitor company and then electing to retire.

The new company takes the financial resources from the new company overhead cost. Guillermo's business preference indicates a willingness to operate as an owner instead as a merger company.

Competitive economic advantage

Guillermo Navallez Company has a competitive economic advantage because it owns a patented process for coating furniture. Having this asset gives Guillermo's furniture away to attract new investors in order to finance the present-day equipment and growing technology for expansion of the company. Since the Guillermo, Company has to address the emerging competition that has settled in North America region along with challenges that it...