Guillermo

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Guillermo Furniture Finances Concepts
Jayden Ha Huynh
FIN-571-Corporate Finance
May 20th, 2013
Professor Dennis Carver
Introduction

This paper will analyze Guillermo Furniture Scenario and explain the finances concepts that found in the chapter 2 and 3 of Corporate Financial Management how they relate to the context of Guillermo Furniture Scenario. There are 4 principles that Guillermo uses to save his business and keeps it going when overseas competitors happened. These principles are principle of self-interest behavior, the principle of two-sided transactions, signaling principle, and behavioral principle,

Guillermo Furniture Scenario Analyses

Guillermo Navallez had a furniture business in Sonora, Mexico for years. The business was doing very well that provided Guillermo’s family an eassy life. The location was ideal. Labor cost was inexpensive. Supply timbers were great. There was not much competition. Guillermo’s products were known as high quality and slight premium prices. Things went well until late 1990s, foreigner competitors entered the furniture market. The competitors brought in better business strategies, higher technology, different finances concepts, and cheaper prices. They had more locations all over the town. The development effected Guillermo’s furniture business. His profit margins shrank when prices collapsed (University of Phoenix. (20113).

Principle of self-interest behavior

Unlike competitors, Guillermo focused on researching and changing his strategies to fit in with the new changes. As an independent business, Guillermo is more careful making business decision. Instead of going out there to expand business, reducing prices or consolidating into big organization like competitors, Guillermo used the principle of self-interest behavior concept to understand the competition and their high-tech solution. Guillermo wanted to know how they are handling changes before he...
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