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Finance Concepts
There are a number of finance concepts that Guillermo should consider regarding the decisions that need to be made to maintain the company's financial viability. The first concept that leaps to mind is the supply and demand concept. This supply and demand of a product will, for the most part, determine how much profitability (if any) a company can project on certain products. Guillermo has been pricing his products at a 'slight premium' knowing that the quality product manufactured by the company would sell at a certain volume. However, when a competitor was able to supply the same quality product at a lower price, demand for Guillermo's product dropped to a lower level. Guillermo's response would likely have to be a lower price (with less profitability) or an answer to the drop in demand.
While the demand for Guillermo's product dropped due to the pricing and quality,...
Guillermo still had the same workers, working at the same rate, producing the same product, so the labor costs remained the same. Guillermo was being introduced to the concept of revenues less expenses equal profits. If revenues drop due to lack of demand, yet expenses remain the same, then profitability will suffer.
Guillermo is also learning that a going-concern concept could apply in this situation.
The going-concern concept is when an assumption can be made that a business or business unit will be in business for a long time. The key in making this assumption is that the company will be viable at least long enough to use all its existing resources. Since Guillermo's demand has fallen due to lower prices for the same quality from a competitor, his first thought should be to determine whether the company would…
Guillermo Furniture Store Scenario organization, approval instructor, assignment Write a paper 2,000 words analyzes Guillermo's alternatives. Select alternatives justify recommendation discussing financial business advantages disadvantages solution vs. alternatives. The Guillermo Furniture Store Scenario The Guillermo Furniture Store is currently facing severe challenges from the external environment. As competition intensifies and as the forces in the micro and macro environments become more pressing, the economic agent is forced to reconsider its strategic
Guillermo Furniture Store is facing a difficult operating environment. The cost of labor -- a key input -- is increasing rapidly. The company is facing intense competition from a foreign competitor that has the ability to undercut Guillermo's low-end lines with better-quality goods. In order to save his business, Guillermo has sought out three different alternatives and is subjecting these alternatives to financial analysis. The results of the financial analysis
Guillermo has a number of choices and will have to decide whether to implement the same technology as his competitors (which will result in a decrease of employees, an ethical conundrum he does not wish to face). A different choice might be to parlay his distributor network for another competitor who wishes to expand its base, and a third choice might be to diversify his offerings away from the custom
Gullermo Guillermo Furniture Store Analysis Situation Overview Guillermo's furniture manufacturing company is located in Sonora, Mexico which was formerly a quiet vacation spot but has undergone a significant amount of development including an international airport. The organization is the largest furniture manufacturing company in this area and has been manufacturing furniture for some time now. Although the company was profitable until the late 1990's, the industry began to change. The competition was composed
The basic premise of IRR is that if the IRR is higher than the discount rate, the project will be profitable over its life, whereas if the IRR is lower, the project will not be profitable. The IRR calculation is normally done in Excel, but can be rendered as The IRR for the patent coating option is 6.9%; for the automation technology it is 64.7%; for the brokerage option it
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