Guillermo Concepts Essay

629 Words3 Pages
Guillermo Furniture Store is an independent company located in Mexico, and it has been brought to the management’s attention that competitors have come into the area. The management has some reservations about the changes that occur and does not like the idea of sharing the market segment with these competitors. Several financial concepts should be reviewed and thought about when making decisions for any company will be discussed. The principle of self-interested behavior is the first that comes to mind. With a privately owned company the managers or owners tend to base business decisions around his or her personal gain or loss. For instance, the profit margin was looked upon as having a possible decline with the influx of new companies and positions that will be available. The job market will require a competitive wage in order for Guillermo to hire the help that is needed to make the products offered by the company. If Guillermo does not increase the company pay scale, then the company will not be able to compete in the job market and hire the qualified employees required. Along with this principle are the incremental benefits of making whatever decision that needs to be made. For instance, the cost of purchasing new and more efficient equipment to improve the quality of the product along with lowering the labor rate could benefit the company by increasing the profit margin. The behavioral principle concept, when all else fails look at what others are doing for guidance says when in doubt look at the other privately owned companies in the same market and see what they are doing to adjust to the changes of the larger competitors arriving in the area. The management did do research and found that competitor companies are selling out to the corporate companies to survive the market changes. The owner did not like the idea of adding management to the
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