Guillermo Furniture

Introduction

Guillermo Navallez has made furniture for years near his Sonora home. The pricing on his handcrafted products is at a slight premium for the quality represented in the craftsmanship. The Guillermo Furniture Store is currently faced with two different events causing his business profit margin to shrink, as his prices fell and costs rose. First a new competitor from overseas recently has entered the furniture market, using high-tech capabilities and rock bottom prices. Second, one of the largest retailer in the nation opened headquarter in Sonora, causing Guillermo's Furniture store to experience some financial problems. Once a thriving business that took advantage of low cost labor and very a dependable supply of wood to craft its products, Guillermo has to consider business changes to continue to survive in the furniture market.

Guillermo has two different courses of actions to proceed with: apply high-tech methods to the production cycle or he could become a representative for another manufacturer. First he has the option to implement high-tech manufacturing into his furniture. If he chooses the high-tech option it would allow the company to increase production while decreasing the amount of labor needed. The high-tech manufacturing will allow Guillermo to produce products more rapidly and at a lower cost that will reduce the operating and production costs. The second option that the business can implement is for Guillermo to become a broker and sale a competitors products based out of Norway. Guillermo Furniture Store could see the benefits from becoming a broker because it will allow him to reach a larger customer base than before. By acquiring a larger customer base he can continue to sell his furniture at a low cost.

Below is a proposal for Guillermo Furniture Store. First the proposal will include a break-even analysis for standard, high-tech and broker scenarios for which Guillermo must choose from. Second, there is a clear and accurate...