Aplicacion de Conceptos En Guillermo Furniture Store

In: Business and Management

Submitted By milkacruz
Words 819
Pages 4
Aplicación de conceptos al escenario de Guillermo’s Furniture Store
Este documento tiene como propósito aplicar los conceptos de finanza y objetivos encontrados en las lecturas asignadas para así relacionarlos con el contexto del escenario propuesto. Hoy día las empresas desean ampliar el alcance de sus negocios y adquirir una mayor cuota en el mercado. Según Emery, Finnerty, & Stowe (2007), la finanza se compone de unos principios importantes que ayudarán a entender la práctica en ella y en la solución de situaciones complejas que se presenten.
Guillermo Navallez, es propietario de la tienda de muebles y dedicado a la manufactura de mesas y sillas de alta calidad teniendo como ventaja un suministro de madera cercano a él. Por años disfrutó de una mano de obra relativamente económica y sin tener competencia en el mercado que lo forzara a realizar cambios significativos. El panorama para Guillermo cambió, surgió un nuevo competidor fabricando un producto de alta tecnología a precios módicos y el alza en los costos de mano de obra, por lo tanto su margen de ganancia fue disminuyendo. Para afrontar esta situación, Guillermo debe evaluar las alternativas más eficientes y examinar los registros financieros para así tener la seguridad de tomar la mejor solución y que siga teniendo el mismo éxito.
El principio del comportamiento financiero egoísta, es una buena aplicación a este escenario ya que el propietario de la tienda debe analizar el entorno competitivo y estudiar el éxito financiero de las empresas similares. Guillermo debe prestar mayor atención a cómo otras organizaciones que fabriquen su mismo tipo de producto están manejando sus finanzas. Se considera que debe tener un enfoque razonable en buscar orientación de lo que está haciendo actualmente su competencia y porqué han tenido éxito. Debe buscar su propio interés financiero para obtener como…...

Similar Documents

Guillermo Furniture Store Concepts

...Guillermo Furniture Store Concepts Student Name FIN/571 December 17, 2012 Instructor’s Name Guillermo Furniture Store Concepts According to University of Phoenix (2012), Guillermo Furniture has been successfully owned and operated by Guillermo Navallez in Sonora, Mexico for several years. The Sonora location has offered a good supply of timber and relatively inexpensive labor costs up until recently. Mr. Navallez is faced with business challenges as a result of increased global competition and increased labor costs in Sonora. He has the opportunity to apply the principles of foundational corporate finance to aid him in charting the future course for his company in turn securing the company’s financial health Mr. Navallez must make decisions that will enhance his market and financial position. His first option is “consolidating into larger organizations by merger or acquisition” (University of Phoenix, 2012). His second option is moving toward an automated assembly line that would increase fixed costs substantially but some of the increased costs would be offset by decreased labor expense and the ability to continue production around the clock. A third option available to him is to become a representative for a Norwegian manufacturer who is looking to expand into North America. Finally, Mr. Navallez could increase the quality and value of his furniture by applying a coating to the finished product making......

Words: 867 - Pages: 4

The Guillermo Furniture Store Scenario

...Guillermo’s Furniture 1 GUILLERMO’S FURNITURE Guillermo’s Furniture Michelle Pate Sundar Shankar Mani Vannan Osvaldo Perez Niaz Tavakoli FIN571 University of Phoenix November 2009 Guillermo’s Furniture 2 Introduction During the history of furniture, designing trends have correlated to society’s changes. Today, because we have access to different fabrics, textures and technology advancements, people have a variety of furniture to choose from. Historians have a record of the year and technique in which furniture was made. Presently, you can find hand-made furniture at auctions, historic places and museums. They have a higher value and are looked at as a work of art because they are created by an artist’s imagination. Furniture makers often use oak wood in their furniture, since it is stronger and will last longer than other wood. It would be more difficult to create custom hand-made furniture using an automated machine because it takes the art out of the furniture, though it is less expensive. It takes more time and money to create hand-made furniture and get it ready for the selling stages than to create automated furniture or become a distributor. Guillermo’s Furniture Store is going through changes and he needs to adapt new strategies that would help him overcome the market’s competitors and stay in business. Guillermo’s Furniture Store is located in Sonora, Mexico and is one of the biggest companies that manufacture furniture in North America. This area has......

Words: 2353 - Pages: 10

Guillermo Furniture Store

...Guillermo’s Furniture Store Aleshia Huffman FIN 571 John Kushner April 29, 2013 Guillermo’s Furniture Store Guillermo’s Furniture Store, a once profitable business in Sonora, Mexico, has recently experienced some new competition and a decrease in profits. By using three different financial principles, Guillermo has been able to identify several possible solutions to his problem. While there is no clear “right” answer for his company, he has found three viable solutions to his loss of profits situation, including imitation, diversification, and using the theory of comparative advantage. The Behavioral Principle The behavioral principle states that you can “look for guidance in what other firms similar to your firm are currently doing and have done in the recent past” (Emery, Finnerty, & Stowe, Chapter 2, 2007). Basically, this principle says that you should look at others in your industry for direction on how you should proceed. In Guillermo’s case, he has researched his competition to see how they have managed to thrive in this new market situation. After finding out that many other companies are consolidating, he decided that was not the option for him; he does not want to lose his independence. Still, by looking at the competition, he was able to identify one solution to his profit loss: consolidation. The Principle of Diversification A second financial principle is the principle of diversification. The idea here is that investors do not want to......

Words: 644 - Pages: 3

Guillermo Furniture Store Analyis

...Guillermo Furniture Store Case Study The aim of this paper is to examine the Guillermo Furniture case study. It begins with a description of the store, the current market challenges it faces, and the options that its owner, Guillermo Navallez, has in meeting those challenges. It then explores these options in the context of the business’ budget, performance reports and accounting information, as well as from an ethical perspective. Located in Sonora, Mexico, Guillermo Furniture has historically done well as a furniture retailer. Its success, however, has been challenged by the introduction of a major competitor, an international chain that has recently opened a store in the community. The result has been a rise in costs, a drop in prices and a smaller market share for the smaller company. Navallez, Guillermo’s owner, has explored a number of options for dealing with these challenges. Unwilling to merge with another company, he is left with three remaining options: investing in expensive new technology – in the form of a laser lathe – in order to reduce production costs, choosing to represent a Norwegian furniture manufacturer or focusing his efforts on marketing his patented furniture coating process. Budget, Performance and Accounting In order to make an informed decision, Navallez should begin by evaluating his budget. A budget is a quantitative action plan based on a company’s performance. A performance report provides information about variances in a company’s......

Words: 671 - Pages: 3

Guillermo Furniture Store

...RUNNING HEAD: GUILLERMO FURNITURE STORE University of Phoenix Guillermo Furniture Store Guillermo Furniture Store Guillermo Furniture Store has undergone a major critical change within its industry. In order for this organization to stay focused there should be a change that can provide the organization with the best possible ambition to recap the profit and stability that the organization is use to. This paper will recap the cost relationship and behavior, management control systems that will help achieve Guillermo’s goals, also this paper will provide the break-even analysis for Guillermo’s current situation, and compute the Return on Investment. Cost Relationship and Behavior Cost relationships and behaviors can affect Guillermo’s decision making prerogatives for the manager. Cost behavior is defined as, “how the activities of an organization affect its costs” (Burgstahler, Horngren, Schatzberg, Stratton, and Sundem, 2008). Cost behavior consists of variable costs and fixed costs. Variable costs are, “costs that change in direct proportion to changes in the costs driver” (Burgstahler et al., 2008). Examples of variable costs for Guillermo are materials, equipment, and labor (Guillermo, 2009). Fixed costs are, “costs that is not immediately affected by changes in the cost-driver level” (Burgstahler et al., 2008). Examples of fixed costs for Guillermo are labor, utilities, taxes, and etc (Guillermo, 2009). Cost behavior can affect the choice of the......

Words: 1445 - Pages: 6

Guillermo Furniture Store Analysis

...Guillermo Furniture Store Analysis Guillermo Furniture Store Analysis An account system is nice to have, but is the system is worthless unless it can produce data that is useful to managers, employees, lenders vendors, owners, investors and other individual firms that have a financial stake in your business (Nelson & Economy, 2010). Guillermo flex budget must contain accurate information. When computing the numbers on the flex budget the information must make sense. The numbers must be computed correctly and information shared to lenders and vendors must have no errors. Lenders and vendors need to know your company’s financial health to decided whether to extend credit (Nelson & Economy, 2010) . Ethics is important when preparing a budget because integrity is essential to accountants because they provide information that users must trust to be right. User of the accounting information cannot directly assess the quality of that information (Horngren, Sundem, Stratton, Burgstahler, & Schatzberg, 2008 p. 30) . If the information provide is biased then the information is no use or value to the user. Ethical considerations in the preparation and subsequent use of the budget Code of ethics requires an ethics analysis for performance tool to avoid any conflict of interest and bias within a budget. Conflict of interest, include the use of position for personal gain and solicitation or receipt (Menson, 1990). Budgeting process is to be conduct in a correct......

Words: 354 - Pages: 2

Guillermo Furniture Store Scenario

...Guillermo Furniture Store Scenario Accounting is a daily function in many areas in our lives. Whether it is budgeting in our homes, or business, accounting services are useful and necessary. Guillermo Navallez has a very successful furniture business near his home in Sonora, Mexico. In the 1990’s Guillermo’s business was facing new competition. Rising costs and falling prices were causing Guillermo’s profit margin to shrink (University of Phoenix Guillermo Furniture Store Scenario, 2011). In this paper discussion topics will include how Guillermo can use budget and performance reports in his decision-making process, how ethics can play a role in the process, and relevant accounting information in the decision-making process. Budget Reports Budget reports help control spending. The definition of a budget is “quantitative expression of a plan of action” (Horngren, Sundem, Stratton, Burgstahler, and Schatzberg, 2008). Using a budget report, Guillermo can keep track of all business expenditures. The budget report can also reflect if there is any excessive or wrongful spending. Budget reports are also relevant accounts for business earnings based on product sales. Guillermo can have an idea of which products are best sellers versus those products that are not doing so well allowing him to make any necessary adjustments to his inventory. Performance Reports “Performance reports provide feedback by company results with plans and by highlighting variances, which are......

Words: 621 - Pages: 3

Guillermo Furniture Store Analysis

...uillermo Furniture Store Analysis Week one individual paper was centered on Guillermo Furniture Store location, the production of work and the company finance. Week three individual paper will state three alternative measures for Guillermo Furniture Store working capital policy by weighting the average cost of capital, and by implementing multiple valuation techniques toward reducing the business risk. Business within Guillermo Furniture Store started to decline in the early part of 1900s. The effect of outside influences has opened up a new era of business for foreign competitors. The competitors have allowed their customers to crave the new technology of produced furniture by creating a lower price range. The simulation stated that housing were inexpensive, the location of business had mild weather, and beautiful scenery, along with uncongested roads a new International Airport and plenty of new development (University Of Phoenix, 2011). Alternatives To make a profitable decision the implementation of alternative needs to be considered. The three alternatives investment projects (the currently used approach, the high-tech approach, and the broker approach) needs to be categorized in a distinct order. The currently used approach consists of the company not changing their position, they will continue with their business lifestyle since the 1900s. High-tech alternative will allow the company to produce more custom furniture at a lower cost. The broker......

Words: 1578 - Pages: 7

The Guillermo Furniture Store Scenario

...The Guillermo Furniture Store Scenario Susie Smith FIN/571- Corporate Finance September 26, 2011 Danica Djordjevich, Instructor The Guillermo Furniture Store Scenario Guillermo Navallez is the owner of a furniture manufacturing company located near his New Sonora, Mexico home. This company specialized is handcraft products priced at a slight premium for the quality they represent. This scenario presents a challenge from the arrival of new competition from overseas that has entered the furniture market with headquarters a few miles from Guillermo’s location. This new competitor uses a high-tech approach and provides furniture to exact specifications at rock-bottom prices. In addition one of the largest retailers located a few miles from Guillermo Furniture Store. This factor had a impact on the company because of the growth in development, influx of people, and increase in jobs. The influence from new competition and an increase in labor cost resulted in profit margins at Guillermo shrinking as prices fell and the cost to operation increased substantially (University of Phoenix, 2011). Alternatives Three alternatives that Guillermo must meet head-on to adapt to the current changing market environment are obvious to remain competitive. The first is to continue what he is currently doing. The second alternative is to go high-tech this would produce his custom furniture at a lower cost by reducing labor cost, and the third is to consider operation as a......

Words: 1084 - Pages: 5

Guillermo Furniture Store - Recommendation

...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......

Words: 1447 - Pages: 6

Guillermo Furniture Store Concepts

...Guillermo Furniture Store Concepts Paper Eric Eif FIN/571 07 March 2012 Instructor: Uzell Freeman Guillermo Furniture Store Concepts Paper Guillermo Navallez and his furniture manufacturing business in Sonora, Mexico, are experiencing common occurrences for a small business: the arrival of a new, bigger competitor to his local market, and an increase in his labor costs, as the local community expands and grows. During times of financial turmoil, it is essential for small business owners to remember the twelve basic concepts and principles of finance. In the following paragraphs, these principles are reviewed with Guillermo’s Furniture Store (GFS) scenario as the illustration. (University of Phoenix, 2012) Principles Concerning Competition in the Economic Environment The first four principles to be looked at deal with competition in economic environments. The Principle of Self-Interested Behavior This first principle establishes that people and businesses will act in their own self-interest. With respect to Guillermo, this would mean that he can be assumed to want to take action in order to correct the lower income he is experiencing due to the increased competition and higher labor costs. It is understood he wants to protect his income, and defend his company’s market share. (Emery, Finnerty & Stowe, 2007) The Principle of Two-Sided Transactions Establishing that there are two sides to every transaction – a buyer and a......

Words: 1093 - Pages: 5

Guillermo Furniture Store Analysis

...The Guillermo Furniture Store has been struggling to remain profitable. Guillermo Navallez needs to make some changes to turn things around. One of his options is to go through a merger or acquisition but Navallez does not prefer this option. An alternative option is for the company to invest in a high-tech solution which will greatly reduce production costs (University of Phoenix, 2011). Lastly, Navallez has the option of becoming a representative for another furniture manufacturer and moving his company from primarily manufacturing to primarily distribution (University of Phoenix, 2011). This paper will analyze the various alternatives, while looking at the optimal weighted average cost of capital (WACC), net present value (NPV), and reviewing a sensitivity analysis and valuation techniques. Weighted Average Cost of Capital (WACC) The Guillermo Furniture Store should choose the option that will give it the best competitive advantage. The company needs to determine the WACC in order to determine the minimum return needed on an investment. WACC is the, “weighted average cost of the components of any financing package that will allow the project to be undertaken,” (Emery, Finnerty, & Stowe, 2007, p. 197). For example, if the WACC is 5% a company should not invest in any projects that will provide a return lower than 5%. The WACC of the Guillermo Furniture Store is calculated as follows: Capital: Bank loans: $936,628 + $29,238 = $965,866 at 7.5% = 80.4% of Capital and 6.03%...

Words: 1216 - Pages: 5

Guillermo Furniture Store Analysis

...FIN/571 July 23 Guillermo Furniture Store Analysis , 2012 Guillermo Furniture Store Analysis Guillermo Navallez has done quite well for himself as owner manager of Guillermo Furniture store. Guillermo has been manufacturing quality furniture in Sonora, Mexico, making high-end and mid-end grade furniture. Several factors including a competitor who utilizes a high tech process and and a increase in businesses and people made the price of doing business more expensive for Mr. Navallez. He has watched as his profits have declined and his costs progressively increased. There are several options which Mr.Navallez has considered in an effort to return to being profitable. The three options he is strongly considering are investing in a high tech facility with laser lathes to cut the wood. This option is going to be expensive but with the robots doing the work on a 24 hour basis, it may be a viable option to cut costs. His second consideration is to become a broker for another manufacturer. He would have to adapt to becoming a distributor and not a manufacturer. The last option that Mr. Navallez has is to continue on the current path. There are several ways of determining the optimal choice for Mr. Navallez. A sensitivity analysis, and calculated net value for each option was conducted and the results are as follows. As we know that, the weighted average cost of capital is: WACC=Kd * 1-T * Wd + Ke * We This is defined as: Kd Cost of debt before tax 7.5% T Tax rate......

Words: 1598 - Pages: 7

Guillermo Furniture Store

...Introduction Guillermo Furniture Store has 3 possible choices such as they can evolve into broker or can make high- tech. They can break their project into current, high tech and broker. Guillermo’s furniture store needs to select the option which is good for them and can provide competitive advantage to the store. It has been clear that managers are responsible for the use of capital budgeting techniques to find out exclusive project. We have different types of capital budgeting techniques. “These capital budgeting techniques are: i) Simple Payback, and ii) Discounted Payback iii) Net Present Value (NPV) iv) Internal Rate Of Return (IRR) i) The simple payback period: We can define the simple payback period as the expected number of years required to recover the original investment by Guillermo’s Furniture Store” (Brown, et. al, (2006), i.e. how much time a company needs to compensate their investment, if their invested amount is 300 million dollars. Evaluating capital budget projects, payback period is the approved method. Here is the payback period for Guillermo’s Furniture Store. The cumulative cash flow of Guillermo’s Furniture store at t = 0 is just the initial cost of -$300,000. At Year 1 the cumulative cash flow is the previous cumulative of $300,000 plus the Year 1 cash flow of $500: -$300,000 + $42,573=-$257,427. Similarly, the cumulative for Year 2 is the previous cumulative of -$257,427 plus the Year 2 inflow of $42,573,......

Words: 2176 - Pages: 9

Guillermo Furniture Store Concepts

...Guillermo Furniture Store Concepts Introduction Guillermo’s Furniture Manufacturing facility has been located in Sonora, Mexico successfully until the late 1990’s. Guillermo Navallez noticed a decline in profit and found that he would need to make changes to his manufacturing establishment in order to financially stay in business. Navallez used concepts from staying in the competitive economic environment and using accounting and research to establish some potential changes in Guillermo’s future endeavors. The Competitive Economic Environment Navallez saw through his loss of profit that there was competition for his manufacturing facility. Through researching his competitors he came up with future options for his manufacturing facility to stay in business and grow. Several of the concepts and principles of the financial environment were used. Navallez obtained information about the overseas competitor using high-tech machinery compared to the labor force. Profit margins were shrinking and decisions were going to be necessary. Navallez had options of consolidating into a larger organization through acquisition or merger. Navallez wanted to stay in business and be active but not take any more time away from his family. Principles Used The Principle of Self-Interested Behavior: People Act in Their Own Financial Self-Interest. (Emery, 2007, p. 20). This principle uses the theory of choosing the most financially opportunity. “In such impersonal transactions, getting the......

Words: 672 - Pages: 3