Financial Concepts
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Financial Concepts
Christine Fields
Professor Thomas Jemison
June 25, 2012
Financial Concepts
Three categories of financial concepts exist: competitive economic environment, value, and financial transactions. The company used in this examination of financial concepts is Guillermo’s Furniture Store. Guillermo’s Furniture Store is in Mexico and creates handcrafted products. With the changes occurring in the area and the advancements in technology Guillermo’s Furniture Store needs to evaluate his company to figure out a more productive profit margin using the financial concepts.
The Competitive Economic Environment
The competitive economic environment has four principles: the principle of self-interest behavior, the principle of two-sided transactions, the signaling principle, and the behavior principle. All four principles will be used to evaluate Guillermo’s Furniture Store.
The principle of self-interest behavior is self-explanatory and often the case used by many people. One will usually act in their own financial interest first. Mr. Guillermo’s decision will be based on what is in the best interest of his business.
The principle of two-sided transactions is every transaction has two sides; do not get self-centered. While Mr. Guillermo is acting in his business interest first; others are working in their own self-interest.
The signaling principle involves the company’s decision to enter into a new line of business will expose the company’s position and belief in the venture’s potential. A competitor of Guillermo’s Furniture Store has been looking for a distributor in North America for its furniture. Guillermo could use his established distribution network for the other manufacturer.
The behavioral principle implicates what others in the same industry are doing. The best choice is to choose the company likely to be the best guide. A new competitor that has entered the furniture market is using a high-tech approach, providing...
Christine Fields
Professor Thomas Jemison
June 25, 2012
Financial Concepts
Three categories of financial concepts exist: competitive economic environment, value, and financial transactions. The company used in this examination of financial concepts is Guillermo’s Furniture Store. Guillermo’s Furniture Store is in Mexico and creates handcrafted products. With the changes occurring in the area and the advancements in technology Guillermo’s Furniture Store needs to evaluate his company to figure out a more productive profit margin using the financial concepts.
The Competitive Economic Environment
The competitive economic environment has four principles: the principle of self-interest behavior, the principle of two-sided transactions, the signaling principle, and the behavior principle. All four principles will be used to evaluate Guillermo’s Furniture Store.
The principle of self-interest behavior is self-explanatory and often the case used by many people. One will usually act in their own financial interest first. Mr. Guillermo’s decision will be based on what is in the best interest of his business.
The principle of two-sided transactions is every transaction has two sides; do not get self-centered. While Mr. Guillermo is acting in his business interest first; others are working in their own self-interest.
The signaling principle involves the company’s decision to enter into a new line of business will expose the company’s position and belief in the venture’s potential. A competitor of Guillermo’s Furniture Store has been looking for a distributor in North America for its furniture. Guillermo could use his established distribution network for the other manufacturer.
The behavioral principle implicates what others in the same industry are doing. The best choice is to choose the company likely to be the best guide. A new competitor that has entered the furniture market is using a high-tech approach, providing...