Business Ventur

Foreign Competition and Labor Costs Recommendations

Guillermo is currently losing ground to overseas competition using high-tech approaches to manufacturing furniture. The object for Guillermo is to find another source of income instead of manufacturing. Technological advances in the furniture market have developed to the point where furniture is cut to exact specifications at low costs. Market changes demand Guillermo update his factory with high-tech equipment to remain competitive and relevant.

Moving the company in the direction of hi-tech equipment will allow significant growth for the company, and will allow the company to be adept to future technology. Higher level of technology always allows a company to do more with less and there will be no different out-come with Guillermo. With the hi-tech option, Guillermo will see a significant increase in net assets, even after the initial costs are incurred.This is a significant advantage over the other options the company is facing. These options would require additional capital investment and strategic planning with the business ventures. Unlike the hi-tech option, the other business ventures would need to address various broker options and relationships, brand name, and an in-depth risk analysis with each broker option.The strategy involved in switching from manufacturing to distribution involves Guillermo’s current distributor networks. Guillermo could coordinate his existing distributor network and become a representative for another manufacturer. Conversion to a high-tech approach will result in increases in items such as direct labor costs, salaries, production, utilities, insurance, depreciation, property taxes and income tax expenses. In addition, a conversion to a high-tech approach will result in decreased labor time, direct costs, price per unit, and benefits.

Recommendation Justification

The recommendation that was made is that Guillermo should go with the high tech upgrade to his facility...