Guillermo Furniture
Abstract The analysis will evaluate options available to Guillermo Furniture Store to remain profitable. The analysis will review three projects the first being the current method of business the second project under consideration is a change to a high tech performance company or the final project under review is a brokerage company. New competition entering the market requires existing companies to evaluate the current business operations Guillermo Furniture Store Inc., once cornered the market for hand crafted furniture and the presence of new competition threatens the financial stability and growth of the company. The company’s options are to remain independent and continue business as usual, invest in hi-tech machinery to reduce labor costs and reduce the price of the products or become a distributor of the product otherwise known as a broker. Guillermo must review the competition, referred to by Emery et al as the “Behavioral Principle” in determining the best financial outcome for his business (Emery, D.R, Finnerty, J.D. & Stowe, J.D., 2007). The behavior principle will assist him in weighing the benefits and drawbacks of each method of business. Analysis of information begins with the review of the three options available, beginning with current operations.
Current
Continuing to produce furniture as normal has the benefit of familiarity. Guillermo Furniture Inc. employees know how to make furniture by hand, the company may have a higher risk of failure with more modern equipment. The company could save money and cut costs by reducing employee pay due to skill level. In comparison to the competition continuing to operate as usual poses the risk of becoming obsolete. As competitors with high-tech equipment sell similar products produced quickly at lower prices, Guillermo risks losing business and closing the doors to a family company.
Hi-Tech
Changing the Guillermo Furniture Store business to high-tech production has the benefit of
Current
Continuing to produce furniture as normal has the benefit of familiarity. Guillermo Furniture Inc. employees know how to make furniture by hand, the company may have a higher risk of failure with more modern equipment. The company could save money and cut costs by reducing employee pay due to skill level. In comparison to the competition continuing to operate as usual poses the risk of becoming obsolete. As competitors with high-tech equipment sell similar products produced quickly at lower prices, Guillermo risks losing business and closing the doors to a family company.
Hi-Tech
Changing the Guillermo Furniture Store business to high-tech production has the benefit of
References: Emery, D. R., Finnerty, J. D., & Stowe, J. D. (2007). Corporate financial management (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall. University of Phoenix. (2009). Guillermo Furniture Store Scenario. FIN 571-Finance Course Website: https://ecampus.phoenix.edu