Guillermo Furniture Store
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Guillermo Furniture Store Concepts
Gina Godazchian
University of Phoenix
FIN 571
September, 1 2010
The Guillermo furniture store in Sonora, Mexico is well-known for its handcrafted products at reasonable prices. Guillermo Navallez, owner of the company has been offering a wide variety of products to his customers and the manufacturer has maintained high income levels for the time existing. Fortunately, the cost of labor was fairly inexpensive allowing him to price his handcrafted products in a way that his total profit was considerably high.
Conditions changed for Guillermo manufacturing after a new competitor established its operations in the furniture market as well. This represented a large threat to Guillermo’s business, being unable to compete with his competitor’s lower prices and new technology that allowed them to manufacture more pieces of furniture at a lower cost and better quality using a foreign high technology. The cost of labor became an issue that Guillermo had to face as well, when Sonora with its beautiful weather, scenery, in between other facts that made the city a desirable place to live for every family. This factor increased the cost of labor and affecting the company’s profit. This paper will discuss the financial concepts found in Guillermo furniture store’s case and how they relate to the company’s current situation.
Possible Solutions and advantages
Guillermo Navallez had to choose between three options that could bring profit to the company and may increase the company’s production capacity. The first given option proposed that Guillermo could purchase the new technology that his competitors were using. This was a considerably expensive decision to make taking into account the current financial situation of the company. The second option proposed a change of the company’s primary focus from a manufacturing company to a distributing company, serving as a representative...
Gina Godazchian
University of Phoenix
FIN 571
September, 1 2010
The Guillermo furniture store in Sonora, Mexico is well-known for its handcrafted products at reasonable prices. Guillermo Navallez, owner of the company has been offering a wide variety of products to his customers and the manufacturer has maintained high income levels for the time existing. Fortunately, the cost of labor was fairly inexpensive allowing him to price his handcrafted products in a way that his total profit was considerably high.
Conditions changed for Guillermo manufacturing after a new competitor established its operations in the furniture market as well. This represented a large threat to Guillermo’s business, being unable to compete with his competitor’s lower prices and new technology that allowed them to manufacture more pieces of furniture at a lower cost and better quality using a foreign high technology. The cost of labor became an issue that Guillermo had to face as well, when Sonora with its beautiful weather, scenery, in between other facts that made the city a desirable place to live for every family. This factor increased the cost of labor and affecting the company’s profit. This paper will discuss the financial concepts found in Guillermo furniture store’s case and how they relate to the company’s current situation.
Possible Solutions and advantages
Guillermo Navallez had to choose between three options that could bring profit to the company and may increase the company’s production capacity. The first given option proposed that Guillermo could purchase the new technology that his competitors were using. This was a considerably expensive decision to make taking into account the current financial situation of the company. The second option proposed a change of the company’s primary focus from a manufacturing company to a distributing company, serving as a representative...