Running Header: Guillermo??™s Furniture Store Scenario
Guillermo??™s Furniture Store
University of Phoenix
In the Guillermo Furniture Store scenario, the owner is faced with several decisions, of which, financial concepts and principles must be applied in the decision-making processes. In this paper, the writer will examine how the financial concepts explored in the required reading assignment relate to the Guillermo scenario. This paper will also, look at different alternatives that are available to the management of Guillermos Furniture Store.
Guillermo??™s Furniture Store
Guillermo Furniture Store in Sonora, Mexico is the largest furniture manufacturing company in the area and has been around for many years. The owner of the store, Guillermo Navallez is now being challenged by competitors. First, a new competitor from overseas entered the furniture market. Using a high-tech approach, this foreign competition provided furniture to exact specifications and did so with rock-bottom prices. Second, the sleepy communities in Sonora woke up. One of the largest retailers in the nation??™s headquarters was just a few miles down the road, and its influence had expanded considerably (University of Phoenix, 2010).
One alternative that was found in the scenario was incremental costs and benefits. The incremental costs and benefits are those that would occur with particular course of action but would not occur without that course of action (Emery, Finnerty, & Stowe, 2007). The principle of incremental benefits states the value derived from choosing a particular alternative is determined by the net extra or incremental benefit the decision provides compared with its alternative. Guillermo presently is concerned about the competitor that has been interrupted by its profit by providing lower prices and able to provide accurate specifications. If Guillermo??™s business were not going to benefit from coordinating existing distributor network, then it wouldn??™t have made sense for them to do business with the competitor.
Another alternative would be to acquire more manager responsibilities. Guillermo is concerned that if he expands his management role then he won??™t have any time with his family. If he does expand his role then he would be able to keep up with his competitors even though he is an independent store. With competition comes harder work and sooner or later he will have to put more responsibility under his belt. A helpful way for managers to determine their decision making behavior is to first make sure that their procedures and a breakdown of their guidelines are displayed to all the workers so that they understand what needs to be done within the company and everyone can be on the same page.
A third alternative was to look at investing into the high-tech system to increase productivity. The cost of the technology is immense, as is the reduction in the labor needed for production (University of Phoenix, 2010). Using the innovative technology will help reduce labor costs, yet can be very costly to invest in. The benefits of information technology (IT) extend far beyond productivity as it is usually understood and measured. Not only can the application of IT provide better ratios of value created to effort expended in established processes for producing goods and delivering services, but it can also reframe and redirect the expenditure of human effort, generating unanticipated payoffs of exceptionally high value (The National Academies Press). The better the technology the more they can produce the exact cut for the wood. I also think that by having a high-tech system longer work hours will be turned into shorter work hours for employees. In the scenario, Guillermo acknowledges that,??? converting the plant into a highly automated facility would be expensive, but he saw how he could also decrease dramatically his production costs.”
In conclusion, Guillermo Furniture Company at this time are exploring options to continue making furniture, and selling it to the community, at the same time making money for the company. When you review the Guillermo scenario, you will find many finance related concepts that can be useful. In my findings I found that Guillermo involved themselves in the principles of finance. Guillermo scenario involves the role and responsibilities of management, incremental cost and benefit, and how to increase productivity using the right technology. These concepts are very common when running a business. These are just some of the concepts that managers at different organizations and/or companies run into when making reasonable decisions concerning their company goals.
Emery, Finnerty, and Stowe. (2007). Corporate Financial Management. 3rd Ed. New
Jersey: Pearson Prentice Hall.
2010. Information Technology, Productivity, and Creativity. The Nation Academies
Press Database. Retrieved March 30, 2010 from, http://www.nap.edu/openbook.phprecord_id=10671&page=15
2010. University of Phoenix Scenario: Guillermo??™s Furniture Store.