FIN 571 Week 1 Guillermo Furniture Store Concept Paper

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Guillermo Furniture Store Concepts Temeka L. Green FIN/571 October 15, 2012 Chris Kubik Guillermo’s Furniture Store Concepts In efforts to acquire a full understanding of the many fields of occupation within the business sector, every field incorporates specific fundamental laws, principles or rules which provide guidance in understanding every individual field. To ensure proper understanding, this paper will briefly discuss and explain the importance of such concepts through analyzing and elaborating on a scenario covering Guillermo’s Furniture Store, provided by University of Phoenix. Focusing on the field of corporate finance the contents of this paper will explain the finance concepts found in the readings provided, and how…show more content…
While Sonora is well known as a beautiful North America vacation getaway, it also serves its purpose as a large furniture manufacturing location. Residing in Sonora, Guillermo began his company near his home taking advantage of the good supply of timber surrounding him, in which his company used to produce a variety of handcrafted tables and chairs. These products were priced at a slight premium for the quality presented. The finance concept that can be applied here can be the principle of self-interested behavior as Guillermo seemed to have made the decision to begin his business based on his own financial…show more content…
However, when he was suddenly faced with new competition in the late 1990’s, Guillermo slowly watched his business slowly deteriorate as two forces combined and causing a huge dent in the business. These competitors caused the cost of labor to rise substantially, resulting in profit margin shrinkage for Guillermo’s Furniture Store as prices continued to fall and costs continued to rise. Concerned about continuous loses, Guillermo conducted some research on his competition and carefully analyzed competing desirable actions that could be taken while also considering the opportunity costs. While the competition seemed to benefit from merging, Guillermo did not find it beneficial for his company as that would affect his time to spend with his family. And on the other hand, considering the effect on overhead costs, remaining independent would also deem to be unbeneficial as

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