Guillermo Recommendation

In: Business and Management

Submitted By cbachman22
Words 2095
Pages 9
Guillermo Furniture Store Recommendation Paper
University of Phoenix
Corporate Finance
FIN/571
August 17, 2012

Guillermo Furniture Store Recommendation Paper
Guillermo Navallez lives in Sonoara, Mexico, which is a good location for his furniture making business because of the area’s good supply of timber and inexpensive labor. Guillermo’s handcrafted products are priced at a slight premium for the quality that the products represent. During the 1990s, two different events caused a large dip in Guillermo’s furniture business. First was a new competitor from overseas who used a high-tech approach that created the furniture to exact specifications with low prices. The second event was one of the largest retailers in the nation’s headquarters was just a few miles down the road, and its influence had expanded considerably. Sonora’s inexpensive housing, mild weather, beautiful scenery, un-congested roads, new airport, and plenty of development caused an influx of people and jobs raised the cost of labor substantially. This caused Guillermo’s profit margins to shrink as prices fell and costs rose.
Guillermo has three alternatives available to him that he could choose to increase the profits of his furniture business. The first solution Guillermo could choose is to emulate the same high-tech solution as Guillermo’s foreign competitor that would allow him to produce his furniture with a computer controlled laser to produce exact cuts in the wood. The technology would be very expensive but this uses very little labor as robots perform the movement and assembly functions. The second alternative available to Guillermo would be to pair up with a competitor currently operating only in Norway, who has been looking for channels to distribute in North America. Guillermo could coordinate his existing distributor network to become a representative for this…...

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