Week 1 Guillermo Furniture Store Concepts

Guillermo Furniture Store Concepts

Guillermo Furniture Store Concepts

Fierce competition in the market and increased labor costs cause companies to make business decisions to continue to stay in business. Guillermo Navallez enjoyed a profitable and viable business until the late 1990s when competition and costs forced him to make necessary financial management decisions to stay in the market and be competitive. Important concepts such as a competitive economic environment, value, and proper transitions must be analyzed to adapt to the situation at hand. This paper focuses on financial concepts and decisions to generate value and retain a competitive edge in the current market conditions (University of Phoenix, 2012).

Economic Environment

Financial principle markets and business ethics are the basis for proper financial management decisions (Emery, Finnerty, & Stowe, 2007). Unfortunately, Guillermo Navellez, independent owner of Guillermo’s Furniture Store, did not foresee and proactively plan for changing economic factors in the furniture industry. Competition using current technology advances with customer customization at low prices affected the profitability of Guillermo’s revenue. Further, Sonora’s influx of people and jobs due to city expansion and a large retailer located in the city caused labor costs to rise. Guillermo must take advantage of the economic situations in the community and make the proper business decisions to increase profits again.

New ideas and knowledge is discovered by analyzing the competition and leveraging from the information obtained during the analysis. The foreign competition in the industry creates interesting ideas of growth and innovation that involve capital investment up front, but dramatically reduce production costs. Guillermo also analyzed the idea of changing the business altogether by becoming a distributor of a foreign competitor and absolve the manufacturing business altogether. Business decisions...