Guillermo Furniture Store Concepts Paper
FIN 571

Guillermo Furniture Store Concepts Paper Sonora, Mexico was the ideal location for Guillermo’s Furniture Store. An abundant supply of cheap timber and relatively cheap labor costs, Guillermo’s had been producing high quality products, mainly chairs and tables, selling at premium prices. Guillermo’s exclusivity came to an end; competition from overseas using high-tech manufacturing equipment eroded his business market share through lower prices. Sonora, once a sleepy village, has grown. Along with this growth has come is the influx of people, increased labor rates and material costs. Higher costs to produce, lower prices to sell, Guillermo’s Furniture Store faces the recurring problem through the market place, change.
Guillermo’s looked at his competition, his operations, his customer base, and the potential for business into the future. Guillermo’s needed to re-establish their competitive advantage; a strategy and methodology to ensure increase in value through economic efficiency. Guillermo’s discovered many smaller companies were consolidating with larger companies through mergers or acquisitions. Large organization offer scale of magnitude and ability to adjust available resources resulting in consolidation of costs and efficiency with manufacturing. Guillermo’s was not interested in purchasing smaller locations or being acquired by another company.
Guillermo’s could opt for the advantages of the lower manufacturing costs by obtaining new technology. These lathes operate 24 hours a day requiring less labor per shift. The down side is the cost to re-tool with the new expensive equipment. This would be a long run strategy as the return on investment would take some time to realize. Operation of the new lathes might require higher wages. Foreign competition using the new technology to streamline the