...Guillermo Furniture Store Concepts Paper Eric Eif FIN/571 07 March 2012 Instructor: Uzell Freeman Guillermo Furniture Store Concepts Paper Guillermo Navallez and his furniture manufacturing business in Sonora, Mexico, are experiencing common occurrences for a small business: the arrival of a new, bigger competitor to his local market, and an increase in his labor costs, as the local community expands and grows. During times of financial turmoil, it is essential for small business owners to remember the twelve basic concepts and principles of finance. In the following paragraphs, these principles are reviewed with Guillermo’s Furniture Store (GFS) scenario as the illustration. (University of Phoenix, 2012) Principles Concerning Competition in the Economic Environment The first four principles to be looked at deal with competition in economic environments. The Principle of Self-Interested Behavior This first principle establishes that people and businesses will act in their own self-interest. With respect to Guillermo, this would mean that he can be assumed to want to take action in order to correct the lower income he is experiencing due to the increased competition and higher labor costs. It is understood he wants to protect his income, and defend his company’s market share. (Emery, Finnerty & Stowe, 2007) The Principle of Two-Sided Transactions Establishing that there are two sides to every transaction – a buyer and a seller...
Words: 1093 - Pages: 5
...Guillermo Furniture Store Concepts Introduction Guillermo’s Furniture Manufacturing facility has been located in Sonora, Mexico successfully until the late 1990’s. Guillermo Navallez noticed a decline in profit and found that he would need to make changes to his manufacturing establishment in order to financially stay in business. Navallez used concepts from staying in the competitive economic environment and using accounting and research to establish some potential changes in Guillermo’s future endeavors. The Competitive Economic Environment Navallez saw through his loss of profit that there was competition for his manufacturing facility. Through researching his competitors he came up with future options for his manufacturing facility to stay in business and grow. Several of the concepts and principles of the financial environment were used. Navallez obtained information about the overseas competitor using high-tech machinery compared to the labor force. Profit margins were shrinking and decisions were going to be necessary. Navallez had options of consolidating into a larger organization through acquisition or merger. Navallez wanted to stay in business and be active but not take any more time away from his family. Principles Used The Principle of Self-Interested Behavior: People Act in Their Own Financial Self-Interest. (Emery, 2007, p. 20). This principle uses the theory of choosing the most financially opportunity. “In such impersonal transactions, getting the most...
Words: 672 - Pages: 3
...GUILLERMO FURNITURE STORE CONCEPTS Marithza Jorqueras University of Phoenix Corporate Finance FIN/571 Glenn Alan October 17, 2012 Finance as many other business filed is ruled by fundamental principles and laws that help understand the investment world which might be chaotic and sometimes confusing, to help clarify the field, this individual will go through the concepts that have been developed and briefly explain how they are related to the given scenario of Guillermo Furniture Store. These concepts are divided into three sections. The economic environment and competition conforms the first group, followed by the ways of creating values and economic efficiency and the last group correspond to the principles of observing financial transactions. First Group of Concepts The Principle of Self-Interested Behavior. In order to make good decisions in business the human behavior needs to be understood. According to Emery, Finnerty, and Stowe (2007), “this principle says that when all else is equal, all parties to a financial transaction will choose the course of action most financially advantageous to themselves”. In other words, since finance is governed by the human behavior, generally people act by the own self-interest to obtain their financial goals. The principle of Two-sided Transactions. In theory, the Principle of Two-Sided Transactions seems quite simple; certainly investors understand that for every...
Words: 1008 - Pages: 5
...Guillermo Furniture Store Concepts Student Name FIN/571 December 17, 2012 Instructor’s Name Guillermo Furniture Store Concepts According to University of Phoenix (2012), Guillermo Furniture has been successfully owned and operated by Guillermo Navallez in Sonora, Mexico for several years. The Sonora location has offered a good supply of timber and relatively inexpensive labor costs up until recently. Mr. Navallez is faced with business challenges as a result of increased global competition and increased labor costs in Sonora. He has the opportunity to apply the principles of foundational corporate finance to aid him in charting the future course for his company in turn securing the company’s financial health Mr. Navallez must make decisions that will enhance his market and financial position. His first option is “consolidating into larger organizations by merger or acquisition” (University of Phoenix, 2012). His second option is moving toward an automated assembly line that would increase fixed costs substantially but some of the increased costs would be offset by decreased labor expense and the ability to continue production around the clock. A third option available to him is to become a representative for a Norwegian manufacturer who is looking to expand into North America. Finally, Mr. Navallez could increase the quality and value of his furniture by applying a coating to the finished product making the...
Words: 867 - Pages: 4
...Guillermo Furniture Store Concepts FIN/571 February 27, 2012 Guillermo Furniture Store Concepts Guillermo Navallez lived a good life in Sonora, Mexico. He owned a successful furniture store in a beautiful vacation spot known for furniture manufacturing. The area afforded him a good supply of timber and inexpensive labor (University of Phoenix, n.d.). Guillermo produced a variety of tables and chairs, plus handcrafted products, at great quality allowing him to set premium prices. Business was good until the late 1990s when two things happened. One, overseas competitors entered the market. Two, an influx of people and jobs developed in Sonora causing a rise in the cost of labor. As prices fell and costs rose, Guillermo’s company profit margins have shrunk (University of Phoenix, n.d.) To turn his business around and to make him a top competitor in the market, Guillermo has to figure out how to attack these issues. Guillermo will use the principles of competitive economic environment advantage, value and economic efficiency, and observing financial transactions to map out a new and improved business plan to help his business. The principles of competitive economic environment deal with competition. They consist of: 1. The Principle of Self-Interested Behavior: People Act in their own Financial Self-Interest. This means that “when all else is equal, all parties to a financial transaction will choose the course of action most financially advantageous to themselves.” (Emery...
Words: 957 - Pages: 4
...FIN/571 January 09, 2012 Danica Djordjevich Guillermo Furniture Store Concepts Guillermo has a furniture manufacturing company is Sonora, Mexico. Guillermo has a good location for his business because of the supply of timber for his furniture. Inexpensive labor and slight raise in the price of the furniture had Guillermo making a good profit. The business was going well for Guillermo until a new competitor entered the furniture market. At the same time one of the largest retailers in the nation’s headquarters had a considerable influence on the communities in Sonora. The rise in population and jobs increased the cost of labor causing Guillermo’s business to suffer. This paper will discuss and define the six foundational principles associated with the context of this scenario. The six foundational principles related to the context of the scenario are: the behavioral principle, principle of valuable ideas, options principle, principle of incremental benefits, principle of risk-return trade-off, and the principle of diversification. The Behavioral Principle The behavioral principle states if a person is unsure of what to do look at what everyone else is doing for guidance. Guillermo needs to determine what would be best for his business to be just as successful as or better than his competitors. Guillermo should consider making changes to his business, such as coordinating his existing distributor network and essentially becomes a representative for this other manufacturer...
Words: 875 - Pages: 4
...Guillermo Furniture Store Concepts Roberta Myrick FIN/571 November 1, 2010 Jason Bruno Guillermo Furniture Store Concepts Principles and concepts are used in many ways in the financial community. When dealing with the assets and liabilities that can be found in a business, a company will use the principles and concepts that occur at the time (Emery, Finnerty, & Stowe, 2007, pp. 32-33). The concepts a business uses are as follows: “The Risk/Return Tradeoff,” “Diversification,” “Dollar Cost Averaging,” “Asset Allocation,” “Random Walk Theory,” “Efficient Market Hypothesis,” “The Optimal Portfolio,” and “Capital Asset Pricing Model” (Investopedia, 2010, p. 1-8). The Risk/Return Tradeoff concept is also known by another name. This name is “the ability-to-sleep-at-night-test.” Although some individuals can deal with the ups and downs of the financial market, some fear that they may fall off the ladder. With this, the investment’s risk will come into play. The company needs to decide how much risk will be necessary for them to be comfortable with their investments. The definition of risk in the investing world is the chance that in point of fact the return on the investment will be different from expected. Standard Deviation in statistics is the measurement used in this instant. In other words, risk means that there is a possibility of losing part or all of the original investment. So if this is the meaning of risk, then risk/return tradeoff means that there must...
Words: 952 - Pages: 4
...Guillermo Furniture Store Concepts Elloise Johnson University of Phoenix FIN 571 Charles Marchand December 17, 2012 Guillermo Furniture Store Concepts Sonora is a location chosen by Guillermo furniture because of its low-priced labor and the excellent supply of timber used to produce the different chairs and tables for the company. Even though the company had a competitive advantage for quality products and low pricing over other furniture companies, currently Guillermo furniture is not experiencing the success once experienced. According to Bryant (2012), the use of technology by business can increase productivity while lowering cost in some areas, and make improvements in how the company presents its overall image. A new overseas company has a competitive advantage over Guillermo Furniture store because of its high-tech use; as a result, they are offering consumers better pricing on the same furniture’s Guillermo offered. Sonora started to develop because of the increase in technology that led to the expansion of the largest retail in the nation’s headquarters. With the new structure and technological developments, resulted in an influx of people that increase cost and labor; as a result, Guillermo had a setback (University of Phoenix, 2012). Merger and acquisition is an excellent way for companies to maintain its competitive advantage by reducing cost on capital, generating tax gain while increasing its revenue. In addition, companies can restructure...
Words: 566 - Pages: 3
...Guillermo Furniture Store Financial Concepts FIN 571 Abstract This paper will give a description of the financial principles; compare the accounting net income, cash flows, and the market value of Guillermo Furniture Store. This scenario provides an opportunity to in developing a financial plan for Guillermo to compete in an economic environment. This paper will provide information on some ethical and moral decisions that Guillermo can use to become competitive with companies in the furniture business. Business ethical and moral decisions should be used when a company is competing with another company to establish a reputable reputation for obtaining customers growth. The Financial principles and the market will give companies an opportunity to become competitive. The Guillermo’s scenario demonstrates how new completion from overseas can present a challenge that could put a company in financial crisis. Financial principles entail behaviors of financial transitions and guidance in decisions for making new technology to customize new products faster and efficient. Guillermo is noticing that completion is coming to his own community and realizes that this could become an economic disaster. Because of interest in financial-decision making can lead to rational decision - making, Guillermo will need to reestablish its position to meet the challenges from companies abroad. Immediate Financial decisions is necessary to become a competitor. Guillermo has the advantage in...
Words: 662 - Pages: 3
...Organizational Behavior and Teamwork Introduction Organizational Behavior (OB) is the study and application of knowledge about how people, individuals, and groups act in organizations by taking a system approach. That is, it interprets people-organization relationships in terms of the whole person, whole group, whole organization, and whole social system. Workplace diversity can be defined as difference between people within an organization. It might sound simple but it encompasses: gender, race, ethnic group, age, cognitive style personality, tenure, organizational function, education, background among other. Diversity not only involves how individual perceive themselves but the manner in which they perceive others. The perception is likely to affect the interactions. For wide assortment of employees to function effectively within a given organization, human resource management professionals must deal with issues of diversity appropriately. Such issues include adaptability, change, and communication. This is due to the fact that diversity is likely to increase significantly in the coming years. Successful organizations recognize the need for immediate action and are ready and willing to spend resources on managing diversity at workplace. Challenges of diversity in the workplace Taking full advantage of the benefits of diversity in an organization or workplace is not without its challenges, some of these challenges include: Communication – Perpetual, cultural, and...
Words: 1003 - Pages: 5
...Guillermo Furniture Store Concepts Paper 1 Guillermo Furniture Store Concepts Paper 2 Introduction In the world of business, we have many financial concepts and principles that help and allow business managers to make financial decisions that give them the greatest advantage in the market. The Guillermo Furniture Store is located in one of North America’s most popular vacation spots of Sonora, Mexico. Guillermo manufactured custom made furniture with an excessive supply of local timber. Guillermo faces a new competitor within industry that uses hi-tech strategies to manufacture furniture. This paper will highlight financial concepts that will relate to the gist of the Guillermo Furniture Scenario. Outlining The Principle of Self-Interested Behavior Human behavior defines that people (act in an economically rational way people act in their own financial self-interest) (Emery, Finnerty & Stowe, 2007). Mr. Guillermo displays his desire to gain control of his business while not being pushed out of the market by a competitor that has enhanced and expanded their operation within the furniture industry. One main focus that Guillermo’s Furniture has overcome would be analyzing the benefit with advancing toward being a distributor hopefully becoming a representative operation in Norway using an automated system...
Words: 636 - Pages: 3
...Guillermo Furniture Store Concepts Paper Guillermo Furniture Store in Sonora, Mexico is the largest manufacturing company in the area ("GFS Scenario," n.d.). Guillermo Navallez, the owner, is now facing the challenges of competition. With competitors on the rise, Guillermo Navallez needs to evaluate current processes and determine where “change or improvements” are required to remain competitive and financially stable. This paper will explain at least four finance concepts and how they relate to the scenario for the Guillermo Furniture Store. Finance Concepts The first concept noticed in this scenario is the Principle of Self-Interest Behavior. This principle states that people tend to act or do what is best for them. The concept relates to the Guillermo Furniture Store scenario because Mr. Navallez is not considering expanding by acquiring or merging with another company for various reasons. Mr. Navallez fears expanding or merging would drain overhead costs, increase management responsibilities, and negatively affect family time (Emery, Finnerty, & Stowe, 2007). By not considering expansion or merger Mr. Navallez could put his business future in jeopardy which is an example of opportunity cost. Another concept noticed is the Principle of Two Sided Transaction. This principle states that there are two sides to every transaction (Emery et al., 2007). The concept relates to the scenario by Mr. Navallez becoming a distributor for his second competitor, who operates...
Words: 558 - Pages: 3
...Guillermo’s Furniture Store Concepts and Principles of Guillermo’s Store Kendall Norman II University of Phoenix Corporate Finance/571 The goal of this paper is to briefly discuss the Guillermo Furniture Store scenario while pointing out and tying key financial concepts and principles discussed in the textbook. The Guillermo Furniture store scenario is about a local furniture manufacturer whose business is located in Sonora, Mexico. He has enjoyed several years of success without any threat of competition. Most recently competition has come about from two different directions. Guillermo has competition via a new international furniture manufacturer who makes the same furniture with better precision, in less time, and at a much cheaper price. The next type of competition comes through the way of development of a new international airport. This is a problem because this airport development will need labor workers. This need will surely drive up the cost of wages, and thus force Guillermo’s hand in the way of increasing his wages for his employees. This is one concept from the text that will be discussed in correlation to Guillermo’s furniture store. Some of the other concepts and/or principles that will be branched into are the concepts of risk aversion, diversification, specification, and time value of money, as well as, the behavior principle, the self interested behavior, and finally the Comparative Advantage Principle. The combination of two forces of...
Words: 778 - Pages: 4
...Guillermo Furniture Store Concepts Paper Guillermo Furniture Store Concepts Paper Many businesses face circumstances that require concepts and principles. There are many principles that should be applied to running a good business. Competitors are looking for the competition and as a business person one cannot expect the other party to be economically rational with the competition (Emery, Finnerty, & Stowe, 2007). The Guillermo Navallez owner of Guillermo Furniture Store located in Sonora, Mexico has been in business for years making furniture with a good supply of timber for the variety of tables and chairs, relatively inexpensive labor prices, and its handcrafted products, is known as one of the largest furniture manufacturing stores in North America. In the late 1990’s the furniture store took a shocking turn due to the competition from overseas that entered the business using a high tech approach causing a decrease in Guillermo’s business. In addition, Guillermo watched how his competitor woke up the community from its rock-bottom prices, and how one of the largest retailers in the nation’s headquarters down the road influenced and expanded considerably which raised the cost of labor substantially causing Guillermo’s profit margin to shrink as prices fell and costs rose (University of Phoenix, 2009). Guillermo is now faced with making some decisions to help his business. Guillermo should be wise about his decisions. It may be hard to swallow...
Words: 932 - Pages: 4
...Guillermo Furniture Store Lori A. Poole FIN-571 Marcel A. Santiz December 12, 2011 Guillermo Navallez resides in Sonora, Mexico and has made a living for a number of years creating his own style of furniture. The area of Sonora, Mexico is not only known as a beautiful vacation spot, but it is also large furniture manufacturing location in North America. A good supply of timber is an available in this area that allows Guillermo to have access to a variety of wood to create tables and chairs for his company. For years, Guillermo has had the advantage of inexpensive labor cost and charged a premium for the quality of his handcrafted pieces of furniture (Guillermo’s Furniture Store, 2011). Guillermo eventually faced a challenge during the 1990s when two obstacles caused a dent in his business. The first obstacle was the entrance of a competitor located overseas into the furniture market. The second obstacle was the opening of a large retailer causing...
Words: 1426 - Pages: 6
