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Guillermo Furniture Store Concepts Paper

Ernesto D. Pena

FIN/571

April 01, 2013

Dr. Christopher Kubik

Guillermo Furniture Store Concepts Paper

In this paper we will discuss, how Guillermo’s Furniture Store can compete with the new competition of their handcrafted furniture. In addition, how the concepts of Emery, Finnerty, and Stowe relate to the Guillermo’s Furniture Store Scenario to attain survival of the family business.

Initial Change

The principle of self-interested behavior “This principle says that when all else is equal, all parties to a financial transaction will choose the course of action most financially advantageous to themselves (Emery, Finnerty, and Stowe, 2007. Ch. 2 Pg. 20).” As Guillermo’s Furniture Store has seen their profits drop from a new competitor entering their geographical location in Sonora, Mexico, an increase in materials, labor costs, and an international airport. The company has to restructure their business to be competitive with the technology savvy organization that has acquired the customers that once only purchased handmade furniture.

With a possible takeover of the family business, Guillermo must think about how he will have the ability to compete with his new competitor. With rising material costs, labor, and their competitor utilizing precise technology to produce quality furniture there needs to be a shift of thinking about the family business. With the competitor having an advantage of producing furniture at a low cost and selling those products below, what Guillermo’s sells their furniture; they cannot compete without restructuring how they operate their furniture business.

“There is an important corollary to the Principle of Self-Interested Behavior. Frequently, competing desirable actions can be taken. When someone takes an action, that action eliminates other possible actions. Informally, people often refer to an unused opportunity as an opportunity cost. More precisely, an opportunity cost is the...