Today’s business industry, business decisions or transactions are implemented under the principles of financial, ethical, and behavioral decisions. Decisions are prompted from the Principle of Self-Interested Behavior, a course of action most financially advantageous for themselves (Emery, et.al, 2007). According to the scenario, Guillermo’s Furniture Store, Guillermo Navellez, owner of local furniture manufacturing plant, has identified several key alternatives which will affect his decision regarding production, labor costs, organizational management, and organizational stability.
After reading this paper, the reader will have an understanding of two key points. The first point is how business decisions are effected by various alternatives. The second point explains how managers analyze and evaluate alternatives to establish the best recommendation for the business operation and cash flow of an organization.
Most organizations are approached with the concept of improving its business strategy, production sales, and even customers services to compete with its competitors. This philosophy is no exception to Guillermo’s Furniture Store. However, considering the Norway furniture company, Guillermo’s overseas competitors, has invaded the turf of Guillermo, Guillermo must acknowledge that he must identify various alternatives to keep himself abreast, and endorse a new approach to maintain the business edge. In the given chart below, Guillermo has acknowledged four key alternatives he must analyze to keep the legacy of Guillermo Furniture Store afloat. These chief alternatives are as follows, consolidate with competitors, become sole distributor, market flame retardant, and implement coating process production.
Alternatives Advantages Disadvantages Forecast Goals
Consolidate with Competitors • Cost Efficiency
• Increase sales and production
• Requires less manpower
• High tech equipment, sales increase
• Maintain partnership with furniture business • Regret the idea of sharing resources/ and reproducing his hand-made material/products.
• Regret the idea of reducing staff
• Guillermo’s furniture will lose its unique quality/ personal appeal
• Personal investment loss
• Current production counts/costs
• Analyze Costs/ Equipment
Become Independent Distributor • Become independent consultant
• Become global representative for other furniture manufacturers
• Continue to invest in hand-made material
• Transition from manufacturing to distributing
• Concentrate on one service field
• Technology may demand for modern equipment and material • Evaluate current finance
• Consider opportunity cost
Market Flame Retardant • Unique chemical patent
• Original product that contributes to the quality of the product
• Opportunity cost • An additional expense
• Product may not sale
• Product not needed with new technology
• Marketing tool for services
Implement coating process • Allow a cash flow
• Revamp business to focus on production as a component of unfinished furniture from other sources • Market may not support this product Self-Assessment to determine the value of the process
After reviewing and analyzing the four key alternatives, Guillermo must make the recommendation to confirm the status of his furniture business. In reviewing the past proposed budget, Guillermo realizes that production in sales, labor cost, and other expenditures have not been productive. The income information spreadsheet indicates a great net operating margins and net income; but there is significant overhead by using high-tech material, proving that consolidating with the competitors may be profitable (UOP, Scenario, 2009).
Guillermo does not value this alternative because this recommendation would cut into a major overhead. In addition, this new approach of management...