Guillermo Furniture Recommendation

Topics: Costs, Net present value, Economics Pages: 2 (358 words) Published: January 25, 2013
Guillermo Furniture Store Recommendation

Guillermo Furniture Store Scenario
The Guillermo Furniture Store Scenario has many alternatives that impact business planning and decisions. To effectively choose the best alternative, Guillermo must carefully examine the quantitative and qualitative information. The chart displays three alternatives that will allow Guillermo to make the best business decision for the furniture store. Alternative| Pros| Cons| Needed information|

Keep company the same| Continue with their same styleMore time with family| Not able to keep up with competitions and the demands| Compare current profits with forecasted info of other alternatives to increase profits| High-tech| Produce more unique furnitureDecrease production cost| Shifts from manufacturing to distributing Expensive initial cost| Forecast of potential profits versus current profit marginConsider opportunity cost for different production| Merger| Efficient, cost effective production – more capital Requires less manpowerDiversification| Shared controlNot looking for expansionSignificant equipment costs| Current production counts/costs Determine cost of equipment upgrades | | | | |

Guillermo can begin reviewing budget and performance information. This is a very critical decision to be made. Business is not as successful as it once was; therefore there is very limited room for bad decisions. Net present value plays a considerable role because it compares what something is worth to what it costs. In this case, NPV would focus heavily on the new hi tech machinery. In its current state, the company has enough capital to maintain at the moment, but for a new project, the company will need to raise more capital. The high tech machinery will increase cash flow as well. This may seem like a wise decision, but Team A agrees that the company is not in a stable enough position financially to take on the high tech machinery project....
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