Guillermo's Furniture Store Scenario

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Guillermo's Furniture Store Scenario
Financial principles, financial markets, and business ethics construct a major infrastructure for financial decisions that all managers or supervisors must make on a constant basis. The purpose of this paper is to explain the financial concepts found in this week’s readings and how these concepts relate to the Guillermo’s Furniture Store Scenario. According to the text reading, “the principles of finance, described in this section and the two that follow, are based on logical deduction and on empirical observation” (Chapter 2, p. 20). Until the late 1990s, Guillermo’s Furniture Store retained its competitive advantage in the furniture market. The arrival of a new overseas competitor entering the furniture market, decreased furniture prices, and increased labor costs posed as a new challenge for the organization (University of Phoenix, 2009). For several years, Guillermo’s Furniture Store dominated the furniture manufacturing market with the ideal supply of timber to create a variation of types of furniture. As a result, the owner did not know how to forecast the new challenges that faced the company. As the new competition starts to enter the furniture market, these competitors have developed an advanced technology that produces a more customized product to meet consumer demand. With labor costs rising, Guillermo did not realize these changes and how this would affect his current business. Guillermo’s Furniture Store will need to consider the principle of self-interested behavior to help minimize the risks associated with the changes in the furniture business to meet customer expectations. The concept of the principle of self-interested behavior basically implies that with a level playing field in the furniture business meaning all aspects of the business equals one another, then Guillermo will need to act or perform in the best financial interest of his own company. One option for Guillermo’s Furniture Store would...
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