December 20, 2012
Guillermo Navallez has been a successful furniture maker in Sonoran, Mexico. In addition, he priced his furniture at a premium price due to the quality the represented. Then, in the 1990s a competitor moved in, that produced faster and cheaper furniture. Guillermo must predict the correct sum of cash flow, how much furniture he must sell and produce, and his expenses. Guillermo needs to figure out what his company’s competitive edge is, and make his edge work to save his company. Guillermo could use his patented process for creating coatings on the furniture to apply the principle of a valuable idea. Guillermo needs to use signaling principle to let the people of Sonora, Mexico know that the company is still going strong.
Guillermo Navallez is a furniture manufacturer, located in Sonora, Mexico. In the 1990’s Guillermo was faced with a new competitor from overseas entering the furniture market in Sonora, Mexico. The new company used a high-tech approach that was more accurate, and provided rock bottom prices. Also, the new company produced furniture faster and cheaper than Guillermo could. “Guillermo wanted his profit margins shrink in his company, as sales dropped, and his costs rose. Guillermo had a dilemma because of the competition with the new furniture company and with his declining profit margin” (Guillermo Furniture Store Scenario, 2012). Guillermo had to find a way to exist and be profitable with this new competition. Guillermo was also faced with the problem of the substantial raise in the cost of labor due to, “an influx of people moving to Sonora, Mexico” (Guillermo Furniture Store Scenario, 2012). Guillermo had to make the right decisions to survive. Guillermo must predict the correct sum of cash flow, how much furniture he must sell and produce, and his expenses. Predicting is a tool that all profitable...