Guillermo Essay

772 Words Nov 9th, 2011 4 Pages
Guillermo’s Furniture Store

Concepts and Principles of Guillermo’s Store
Kendall Norman II
University of Phoenix
Corporate Finance/571

The goal of this paper is to briefly discuss the Guillermo Furniture Store scenario while pointing out and tying key financial concepts and principles discussed in the textbook. The Guillermo Furniture store scenario is about a local furniture manufacturer whose business is located in Sonora, Mexico. He has enjoyed several years of success without any threat of competition. Most recently competition has come about from two different directions. Guillermo has competition via a new international furniture manufacturer who makes the same furniture with better precision, in less time, and at a
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The development of this city in Mexico has put Guillermo’s workforce at odds with staying. It is here where I introduce the Self Interested Behavior. This principle states that when it comes to business, one could expect individuals to act in an economically rational way. Simply put Guillermo can expect his employees to quit their job for a higher wage somewhere else. These larger companies can afford to pay Guillermo’s employees what he just simply cannot.

Guillermo assessed his problem by doing some research on his competition. It is at this point where the Behavior Principle is introduced. Guillermo noticed that most of his competition either merged with a competitor or were acquired. The Behavior Principle expresses the concept of mimicking your competition or at least use their practices as guidance. Guillermo is not interested in merging or being acquired. He realizes that a merger or acquisition would require him to expand his management responsibilities which would decrease the amount of time he would be able to spend with his family. This mentality alone is where I feel Guillermo uses the time value versus money concept. The time lost with his family would exceed the amount of financial gain he would profit.

The fact still remains that Guillermo’s competition is better equipped and a change is inevitable. It is at this point that Guillermo introduces his patented coating process to make the furniture flame

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