Week One, Acc/561 Guillermo Furniture Store
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- Date Submitted: 04/06/2010 08:51 PM
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Introduction
Guillermo’s Furniture Store is a manufacturing company in Sonora, Mexico. Guillermo Navallez has been in the area for years and built the company into the area’s largest furniture manufacturing company. The business has been very successful, offering quality handcrafted products at a premium price. The location is perfect as it offers inexpensive labor, affordable housing and ideal weather with an abundance of timber. Guillermo’s has faced few competitors, until the 1990s when an overseas distributor entered the market and one of the largest retailers in the nation located their headquarters nearby. These factors and others combined to result in an increase in labor costs and reduced revenue for Guillermo (Guillermo, 2010).
Possible Business Alternatives
After completing research, Guillermo determines there are three business alternatives to consider (Guillermo, 2010):
• Use of high-tech methods
• Create a stain resistant coating, adding to the furniture’s value
• Become a distributor
Numerous variables will affect bottom line and by using the proper tools, a more informed decision will be made.
Use of Budgets and Performance Reports in Decision Making
Successful planning for a small business when facing stiff competition should include good decisions and great information. Key factors in determining financial differences between the alternatives are to identify the differential costs and revenues (Horngren, Sundem, Stratton, Burgstahler and Schatzberg, 2008). Deciding on the future goals of the business is vitally important. Development of a plan will support reaching the identified goals.
A budget is a “quantitative expression of a plan of action and an aid to coordinating and implementing the plan” (Horngren, et al, 2008, p. 13) and a performance report provides feedback by comparing the plan with the actual results and highlighting any variances that may have taken place (Horngren, et al. 2008). One major area of concern...
Guillermo’s Furniture Store is a manufacturing company in Sonora, Mexico. Guillermo Navallez has been in the area for years and built the company into the area’s largest furniture manufacturing company. The business has been very successful, offering quality handcrafted products at a premium price. The location is perfect as it offers inexpensive labor, affordable housing and ideal weather with an abundance of timber. Guillermo’s has faced few competitors, until the 1990s when an overseas distributor entered the market and one of the largest retailers in the nation located their headquarters nearby. These factors and others combined to result in an increase in labor costs and reduced revenue for Guillermo (Guillermo, 2010).
Possible Business Alternatives
After completing research, Guillermo determines there are three business alternatives to consider (Guillermo, 2010):
• Use of high-tech methods
• Create a stain resistant coating, adding to the furniture’s value
• Become a distributor
Numerous variables will affect bottom line and by using the proper tools, a more informed decision will be made.
Use of Budgets and Performance Reports in Decision Making
Successful planning for a small business when facing stiff competition should include good decisions and great information. Key factors in determining financial differences between the alternatives are to identify the differential costs and revenues (Horngren, Sundem, Stratton, Burgstahler and Schatzberg, 2008). Deciding on the future goals of the business is vitally important. Development of a plan will support reaching the identified goals.
A budget is a “quantitative expression of a plan of action and an aid to coordinating and implementing the plan” (Horngren, et al, 2008, p. 13) and a performance report provides feedback by comparing the plan with the actual results and highlighting any variances that may have taken place (Horngren, et al. 2008). One major area of concern...