Guillermo Furniture Guillermo\'s Furniture Guillermo

Guillermo Furniture

Guillermo's Furniture

Guillermo is faced with a complex set of decisions in determining how best to move forward in his business, with a need to remain competitive yet with desires to retain the basic level of operations of the company at its current level, and with his own level of involvement also minimally impacted. This precludes the notion of Guillermo either merging with or acquiring competitors, or of allowing his company to be acquired by larger competitors; the former would require a great deal of extra time and energy on Guillermo's part when it comes to management, and the latter would likely end up removing him from his business entirely, and would certainly require at least some relinquishing of control of a business that Guillermo built literally from the ground up, beginning by manufacturing furniture in his home and creating a company with a factory and a full staff.

In reaching his decision, there are several major concepts that Guillermo must address. The first of these are the basic financial principles that affect Guillermo's business and its bottom line. Issues such as the cost of labor, shipping costs, the availability and cost of capital (i.e. interest and taxation rates/deductions, etc.), value added by the additional furniture treatments that Guillermo has patented, and other financial considerations will form a major part of the decision Guillermo must make. As he is considering becoming a distributor for a Norwegian furniture manufacturer, he must also look into the costs of importation -- again, including transportation and taxation costs -- and other issues that will affect the business's cash flow and ability to generate both profits and working capital.

These financial principles will be impacted in major ways, both directly and indirectly, by the workings of financial markets. The volatility of these markets in recent years will necessitate careful and lengthy consideration by Guillermo before a decision is reached; these markets can have a huge impact on the operating capital for many companies -- including many of Guillermo's larger competitors -- and this in turn will affect the cost and availability of capital for Guillermo's operations. The workings of financial markets can also be heavily influenced by consumer behavior, and by perceptions and predictions of future consumer behavior, requiring that Guillermo attempt to discern future trends in the furniture industry as well. The decision that he makes must make sense for his bottom line both in the present and over the long-term, as much as he is able to predict the shifts in financial markets and consumer trends that will influence his business over this period.