February 20, 2012
Guillermo Furniture Store in Sonora, Mexico has been manufacturing furniture by hand for many years. Guillermo Navallez has used local timber to create the tables and chairs. Using the local supplies and handcrafting the furniture has allowed him to keep labor costs inexpensive, but he has kept the price of the items high due to the premium quality.
For businesses, there are many concepts one should follow. There are three main concepts that will allow success in business.
Competitive economic advantage, Value and economic efficiency, and observing financial transactions are the three main categories this paper will discuss. The concepts will be compared to Guillermo’s furniture business and his competition.
Competitive Economic Advantage
One of the first principles in competitive advantage is Self-interest. “When all is equal, parties in a financial transaction will choose what works best for themselves.” (Emery, Finnerty & Stowe, 2007) In 1990, Guillermo realized there was plenty of competition adding up in his area. One was an overseas competitor, the other, one of the largest furniture retailers.
The competitors used the principle of Self-interest to help their business succeed. They had lower prices, advanced technology and local competition for their business.
Guillermo was used to being successful due to the lack of competition in the area. The customers didn’t have many options.
The next principle to discuss is Behavioral. This is when business owners look at what other businesses are doing, and decide if what they are doing is the best fit for your business.
Guillermo’s competition is using high-tech machines to create their furniture. While, Guillermo is still handcrafting. If he looks at his competition and sees their success, low cost furniture, he may choose to do what they are doing.
The principle of valuable ideas is a... [continues]
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