Guillermo Furniture Concepts
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Running head: GUILLERMO FURNITURE CONCEPTS
Guillermo Furniture Concepts
University of Phoenix
Guillermo Furniture Concepts
Guillermo Navallez is the owner operator of a furniture company in Sonora, Mexico. His sales and profit have been very good for the company over the past 15 to 20 years. The labor is inexpensive and he has a good resource for the timber and the raw materials for his product. Recently, he has seen a down turn in the sales due to some business factors. A new competitor from overseas entered the market and they are using a high-tech approach which allows them to produce at a higher rate with a lower cost. Guillermo needs to decide what is best for his business financially by looking the financial data and different business aspects such as technology, diversification and competition.
Guillermo Furniture needs to make decisions on whether to keep the business practices the way they are currently or to upgrade equipment to keep up with competition. Being able to forecast future outcomes can help determine if the risk is high or low compared to the outcome. According to the income information data it represents the current total income before taxes which is $42,577, high-tech for $195,564 and Broker $50,955 (University of Phoenix, 2009). The high-tech option looks the best from the two additional options since the return on investment is the highest. There are some drawbacks to upgrading the equipment since it can require additional expenses. The purchase price of the computer controlled laser needs to be addressed along with the additional cost that will be incurred to use the equipment. The start-up cost is also another expense that could be a drawback. The positive outcome from replacing with the laser is that it would eliminate some of the employee expense since fewer employees would be required to operate the factory and most of the work could be done with just the machine.
Monitoring financial statements such as the...
Guillermo Furniture Concepts
University of Phoenix
Guillermo Furniture Concepts
Guillermo Navallez is the owner operator of a furniture company in Sonora, Mexico. His sales and profit have been very good for the company over the past 15 to 20 years. The labor is inexpensive and he has a good resource for the timber and the raw materials for his product. Recently, he has seen a down turn in the sales due to some business factors. A new competitor from overseas entered the market and they are using a high-tech approach which allows them to produce at a higher rate with a lower cost. Guillermo needs to decide what is best for his business financially by looking the financial data and different business aspects such as technology, diversification and competition.
Guillermo Furniture needs to make decisions on whether to keep the business practices the way they are currently or to upgrade equipment to keep up with competition. Being able to forecast future outcomes can help determine if the risk is high or low compared to the outcome. According to the income information data it represents the current total income before taxes which is $42,577, high-tech for $195,564 and Broker $50,955 (University of Phoenix, 2009). The high-tech option looks the best from the two additional options since the return on investment is the highest. There are some drawbacks to upgrading the equipment since it can require additional expenses. The purchase price of the computer controlled laser needs to be addressed along with the additional cost that will be incurred to use the equipment. The start-up cost is also another expense that could be a drawback. The positive outcome from replacing with the laser is that it would eliminate some of the employee expense since fewer employees would be required to operate the factory and most of the work could be done with just the machine.
Monitoring financial statements such as the...