Fin 571 - Week 1 - Guillermo Furniture Store

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Guillermo Furniture Store Concepts Paper
FIN 571

Guillermo Furniture Store Concepts Paper
Sonora, Mexico was the ideal location for Guillermo’s Furniture Store to thrive due to the abundant supply of cheap timber paired with relatively cheap labor costs. Guillermo has been producing high quality products, mainly chairs and tables, which would sell at premium prices. Unfortunately, Guillermo’s exclusively did not last; a competitor from overseas using a high-tech manufacturing approach could sell similar products at lower prices. In addition, Sonora began to expand and grow due to a large retailer whose nation’s headquarters were located from Guillermo. With the increase in infrastructure came an influx of people. This lead to increase labor rates as well as costs. This lead to a decrease in Guillermo’s profits as his costs rose and his prices were forced to fall. In order for Guillermo’s Furniture Store to regain their place in the furniture Industry changes would need to be made.

Like many companies facing similar problems Guillermo decided to look at his competition and how they operate for insight into how he would be able to save his furniture business. Guillermo needed to establish a competitive advantage, this change needed to ensure an increase in value or economic efficiency for the company. Guillermo’s first found out that many smaller companies were consolidating with larger companies through mergers or acquisitions. Being a part of a larger organization typically leads to an increase in efficiency by consolidating costs as well as manufacturing. This option was undesirable to Guillermo; he was not interested in purchasing smaller locations as well as did not like the ideas of being acquired by a larger company.

Guillermo’s second option came from one of the very companies, who were responsible for his troubles. The Foreign company use of technology to streamline the manufacturing process was not only efficient but was also effective in...
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