...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 a...
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...Running Head: GUILLERMO FURNITURE STORE RECOMMENDATION Guillermo Furniture Store Recommendation Name: Course; Institution: Instructor: Introduction Guillermo Navallez has for many years operated from Sonara, a city in Mexico making furniture. One of the main reasons for maintaining his operations in this location has been the good supply of quality timber. However, a new competitor entered the market offering the same quality products at a fraction of the price Guillermo was charging. This was possible because of the heavy reliance on high-tech mechanization that the new supplier employed. To further complicate things for Guillermo was the entry into the city of a large retailer, a sudden explosion of workers resulting in a substantial increase in the cost of labor. All things had a negative effect on Guillermo’s bottom line. Discussion: The essence of any business operation is to maximize profits. This is only achieved when the business is able to meet its recurring costs and have a surplus available for reinvestment or payment as dividends to the owners. Guillermo’s case requires a critical investigation into the business operations to determine available to him. Given the current situation, Guillermo has three very viable options to consider. He could either maintain the present business model and continue operations as currently constituted, or adopt a new business model by embracing high technology and thus investing in highly automated machines...
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...Recommendations for Guillermo's Furniture Store Sterling Kroll, Ana De Leon, and Richard Scott FIN/571 February 20, 2012 Dr. Rodney Simmons Recommendations for Guillermo's Furniture Store Guillermo Furniture store faces completion in various formats that threatens the growth of the business. The new competition entering the market forced Guillermo to evaluate his current operation and choose on of three alternatives that best suit him, that would allow him to remain competitive. Guillermo will need to decide if he wants to remain an independent manufacturer of his own furniture and continue his business operation as normal. His other options consist of investing in becoming a hi-tech manufacturer or becoming a broker and distributing furniture for other companies. A detailed analysis on all three of the options will be conducted. This analysis will allow the team to make a decision on which option will be the best for Guillermo’s business. The group will also present a justification for the final decision. Current Course Guillermo Navallez has made furniture for years in his home town of Sonora, Mexico. Sonora has a good supply of raw material and labor is relatively inexpensive. Beginning in the late 1990’s business started to weaken, globalization, mergers, and acquisitions in the worldwide furniture market, businesses, and operations need to change for Guillermo Furniture Company. The market brings together buyers and sellers in many forms (McConnell...
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...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 invest...
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...Phillips Furniture Case Dorothy Decker Baker College Phillips Furniture Case There are many things that need to be done in a small company that has found its business growing, adding more buildings, more employees and locations. This paper will show how to grow the company through the HR department in order to keep the company growing as well as maintaining the same management style in each and every store. In this case furniture store. What to Focus On The first thing should be a mission statement. Mr. Phillips and all of the management should sit down and discuss the purpose and objective of the store. With this it should lay out a goal and objective for the company that will explain to the employees what the company stands for, and where it will and should head into the future. It must lay out the objective that can be reached for each and every employee from management to hourly employees. Develop a Job Description One of the first and foremost things that need to happen from the Human Resource side of things is to lay out employee and management job descriptions. This is very necessary for the furniture retailer to grow. This is something that needs to be clear and concise and across each and every store. These job descriptions must be the same in order for the store to run smoothly. The job description of each position should be laid out clearly so each and every employee know what their job is and what is expected of...
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...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 process...
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...Guillermo Analysis Paper FIN 571 June 11, 2012 Mr. John Kushner Guillermo Furniture Store Analysis Guillermo has a manufacturing company is Mexico. Guillermo has an excellent location for his business because of the supply of timber for his furniture. Inexpensive labor and slight raise in the price of the furniture had Guillermo making a good profit. The business was going well for Guillermo until a new competitor entered the furniture market. The rise in population and jobs increased the cost of labor causing Guillermo’s business to suffer. The success is challenged by the international chain that recently has opened a store in the community. The result has caused a rise in cost, a drop in prices and producing a smaller market share for the smaller company. Guillermo’s owner has explored a number of options for dealing with this challenge. He is unwilling to merge with another company, so he is left with several options one investing in new technology, which is expensive, laser lathe to reduce his production cost, and to focus on marketing his patented furniture coating process. The principle of valuable ideas is to have a new product or services are unique from competitors and will add value to business. Guillermo has a unique patented method for constructing a coating for the furniture. Guillermo should consider making changes to his business, such as coordinating his distributor chain to become a demostrator for this other...
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...Phillips Furniture Case Baker College Phillips Furniture Case There are many things that need to be done in a small company that has found its business growing, adding more buildings, more employees and locations. This paper will show how to grow the company through the HR department in order to keep the company growing as well as maintaining the same management style in each and every store. In this case furniture store. What to Focus On The first thing should be a mission statement. Mr. Phillips and all of the management should sit down and discuss the purpose and objective of the store. With this it should lay out a goal and objective for the company that will explain to the employees what the company stands for, and where it will and should head into the future. It must lay out the objective that can be reached for each and every employee from management to hourly employees. Develop a Job Description One of the first and foremost things that need to happen from the Human Resource side of things is to lay out employee and management job descriptions. This is very necessary for the furniture retailer to grow. This is something that needs to be clear and concise and across each and every store. These job descriptions must be the same in order for the store to run smoothly. The job description of each position should be laid out clearly so each and every employee know what their job is and what is expected of them. As they...
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...Guillermo Furniture Store jhkjhkjhkjhkhkhkjh ACC/543 10/14/2013 Curtis Brooks Guillermo Furniture Store Guillermo is currently an independent furniture maker, however recent advents in technology as well as market conditions in his area have hit his business where it hurts – in the bottom line of his profits. After much research, Guillermo has come up with three viable options for saving his business and his profits. The first is to increase his technology by using a hi-tech machine with a computer programed laser to cut the wood. This option would decrease the labor needed, as well as increase the ability to switch to new custom pieces easily. The downside to this option is that the implementation would be expensive. A second option would be for Guillermo to switch from being a manufacture to a distributor by joining forces with another company. He would be the representative to distribute in North America. His store would no longer manufacture but rather distribute. The third option would be for Guillermo to add/change the product which is uses to the finish of the furniture. Currently Guillermo is using a product which he created which adds a flame resistant and stain resistant coating to the finish product of the furniture. Changing this product for a comparable product which would do the same thing for a cheaper cost might help. Of these options, the recommended option for Guillermo is to go with the new hi-tech machine. While the labor dollar per hour increases...
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...Guillermo’s Furniture Store Joshua B Dean FIN/571 4-15-2013 James Hellmich Guillermo’s Furniture Store Introduction The situation that Guillermo finds himself in is not uncommon. Bigger competitors have moved into his area. He does not want to sell his company and retire and he does not want to take on extra work by buying a competitor. The competition is forcing his hand to either change his production or change completely to distribution. Guillermo has to decide what is best both for his business and his family. There are several financial principles that can be applied to Guillermo’s situation. Two-Sided Transactions The principle of two-sided transactions is that there are two parties involved within a sale, the buyer and the seller. Guillermo had a corner on the market until competition came in. Once competitors came in, prices began to fall which causes a decrease in Guillermo’s bottom line. Since his customers now have choices, his business has lost customers. Principle of Comparative Advantage Comparative Advantage shows how someone with a talent or a business with special product lines is more valuable than companies that offer the same products as everyone else in the market. For Guillermo, he makes his furniture by hand which increases the price and also increases how much a particular piece is worth. One of Guillermo’s competitors has the ability to make furniture at a lower cost because they use a laser to cut the furniture. Guillermo loses some of...
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...Guillermo Furniture Store Student Name Accounting/561 January 17, 2011 Professor Name Guillermo Furniture Store Guillermo has built a successful empire in the furniture business in the beautiful city of Sonora, Mexico. The reason behind his success is due to a large supply of timber that is available to him for producing a variety of tables and chairs. Furthermore, the labor costs for producing his furniture is relatively inexpensive, therefore, he is able to offer high quality furniture. It was smooth sailing for Guillermo’s business until the occurrence of two major events that changed everything. First, a competitor from overseas entered the furniture market offering rock bottom prices for furniture that is produced by a computer-controlled laser lathe to produce exact cuts in the wood. Second, the city of Sonora is suddenly experiencing a high influx of people due to what the city has to offer – beautiful scenery, no traffic, a new international airport, affordable housing, favorable weather, and lots of development. Competition and an increase in people and jobs resulted in a substantial increase in labor costs. Because of these unforeseen circumstances, Guillermo’s business suffers a lost in profit margins. With the occurrence of these sudden challenges, Guillermo must evaluate the situation and come up with the best possible solution so that his business will not only survive, but continue to flourish as it once did. He has a couple of options...
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...Abstract Guillermo’s Furniture Manufacturing Company is in Sonora, Mexico in a gorgeous vacation spot. Guillermo’s is the largest furniture store in the area and made furniture for years, until the late 1990s that a new competitors joined the furniture business that has put a dent into Guillermo’s business. Competitors have new technology when to allow them to come in with lower prices and lure customers but Guillermo has to decide on the best options for the company either upgrade or move forward working as he did making quality products for customer’s expectation. In order for Guillermo to improve his company, Guillermo has to seek other alternatives and make financial decisions to increase sales to make profits. The contents of the paper will examining Sensitivity Analysis, Weighted Average Cost of Capital (WACC), multiple valuation techniques in reducing risks, calculate NPV for future cash flows and work out pro forma cash flow budget for the next five years for the organization and analyze the companies projected earnings (UOP, 2009). Analysis of Different Alternatives Guillermo has three available alternatives to evaluate the furniture store. First alternative is to keep itself in the current position. The current managers use capital budgeting techniques to find the best project among the group of projects. Current budget for Guillermo is $42,577 net income before taxes could observe capital markets for just a short time to convince consumer the...
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...B1. (Choosing financial targets) Bixton Company's new chief financial officer is evaluating Bixton's capital structure. She is concerned that the firm might be underleveraged, even though the firm has larger-than-average research and development and foreign tax credits when compared to other firms in its industry. Her staff prepared the industry comparison shown here. a. Bixton's objective is to achieve a credit standing that falls, in the words of the chief financial officer, "comfortably within the ‘A' range." What target range would you recommend for each of the three credit measures? b. Before settling on these target ranges, what other factors should Bixton's chief financial officer consider? c. Before deciding whether the target ranges are really appropriate for Bixton in its current financial situation, what key issues specific to Bixton must the chief financial officer resolve? a. To be “comfortably” within the range, the firm should stay off the low end of the ratings. Fixed Charge Coverage = 3.40 - 4.30 Cash Flow / Total Debt = 55 - 65 Long-Term Debt / Total Capitalization = 25 - 30 b. Ability to use fully non-interest tax credits and debt management considerations such as issuance costs. The CFO should also consider that the firm’s R&D is an intangible asset and that lenders may not be willing to loan the same percentage of debt to Bixton as to its competitors. c. The CFO needs to consider R&D and foreign tax credits. The additional tax...
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...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...
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...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 alternative...
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