Guillermo Furniture Store Concepts

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Guillermo Furniture Store Financial Concepts

Financial principles, financial markets, and business ethics form a base for the financial decisions that a manager has to make daily. The principles of finance describe the classic actions in financial transactions and provide direction for decision-making (Emery, Finnerty, & Stowe, 2007). Until late in the 1990s, Guillermo Furniture Store was the leader in his market but the arrival of a new competitor and the increases of labor cost have put unexpected challenges on the financial condition of the company (University of Phoenix, 2009).

During the years, Guillermo created a confidence and he did not consider or study the market to forecast new challenges. As new competitors arrived, they started applying new technologies to produce a customized product to meet the demands of the customers due to the business success. In addition to that, labor cost rose for the economic prosperity of the Sonora area. Guillermo did not realize the signs of development in the area and the impact that his business would encounter.

Applying Principles of Finance

Competitive Economic Environment

To apply the financial self-interest guides’ rational decision-making, Guillermo has to reestablish its position to meet the challenges from overseas competitors in Sonora. The availability of local labor at economical prices, market conditions and brand value has given economic advantages to competitors over the Guillermo Furniture Store. Guillermo has three alternatives to approach the challenges with new insight and action.

1. Purchase of a computer controlled laser lathe to improve the production technology of the company. Adopting the successful strategies of the leader which is corollary of the behavioral principle.

2. Become a representative (broker) for a Norwegian furniture manufacturer and coordinate the distribution channels for that firm. Using their expertise of the business to create value.

3. Continue with his current...