Fin 571

Guillermo Furniture Store is a manufacturing business which produces furniture in Mexico led by Guillermo Navallez. The positive aspects which lead this business is their location which enables Navallez to conduct mass production of furniture by hiring employees for less, running the business out of inexpensive housing and excellent weather conditions.   These factors allowed Navallez to run his business successfully without the fear of competition over a long period of time; however, this is no longer the case.   Competition has increased in the past few years and currently there are two competitors who are fighting to put Guillermo Navallez out of business by taking over his production of furniture.

Therefore, Guillermo reached a point in his business career where he had to implement financial changes within his organization to ensure his business could survive.   Clearly, he was at a point in his career where he felt comfortable and did not want to make changes.   The redistribution of finances within the business including a better use of cash flow and money movements were essential in the success of the business.   The overall question Guillermo was faced with was if he wanted his business to remain as a manufacturer or a distributor?   This business is faced with an opportunity cost based on decision-making by Guillermo.   The infusion of cash from other entities into the company would help by preventing Guillermo from depleting his on hand cash that is needed for daily operations of the business.

If Guillermo wanted, he could become a public traded company and choose to exchange stock to other investors at a reasonable interest rate.   This would be an excellent financial opportunity for him to increase his net worth and business assets leading his business to positive financial growth:

Success is also largely influenced by the opportunities and threats present in the external environment, i.e. industry growth, competition, and economic stability, which...