Free Guillermo Furniture Store Financial Concepts Essay Sample
Monetary theories, financial markets, and business ethics form a base for the financial decisions that must be made by managers in their daily undertakings. Basically the concepts of monetary issues provide the description of the classic actions in relation to financial transactions and they also provide guidelines in regards to the process of decision-making. Until in the late 1990s, Guillermo Furniture Store was the leader in the market but later due to arrival of new competitors in the market and also as a result of increased labor costs, Guillermo Furniture Store have undergone through unanticipated or unforeseen challenges in regards to financial conditions of the company.
During the year Guillermo developed a confidence and did not consider or study the trends of the market in order to forecast new challenges. With the arrival of new competitors in the market, the company aimed at using some new strategies in improving their level of production and producing products that meets the demands of the customers due to business success. Moreover, labor costs also risen for the financial success of the Sonora area. Guillermo was not capable to realize the precursors of development in the area and the impacts that business was likely to encounter.
Applying Principles of Finance
Competitive Economic Environment
In order to use the financial self-interest guides' rational decision making, the company decided to reestablish it business position to meet the challenges that were brought about by its competitors in the Sonora. Some of the things that have provided economic advantages to its competitors include the availability of market conditions, local labor at economical policies, and brand value. Therefore Guillermo Furniture Store has three alternatives to employ in dealing with the challenges accompanied by new insight and action:
a) The company has bought computer controlled laser lathe that is aimed at improving the production technology of the company. It also aims at adopting some of the successful strategies of leadership styles which will be corollary of behavioral principles.
b) It ha also though of becoming representative (broker) for Norwegian furniture manufacturers and coordinate the distribution channels of that specific firm by applying their expertise of the business in order to create value.
c) Continue with its current financial strategies to ensure that they beat their competitors in the same industry.
Guillermo Furniture Store has various huge financial decisions to make in order to achieve financial stability and growth of the business. As a result of new competitors in the market and sales going down caused by higher labor costs, the company must therefore choose to convert their current production models and reduce the production costs by buying new high-tech machinery or even change the focus of the business from manufacturing to distribution in order to compete effectively in the market.
Generally, it is clear that all financial decisions made by a firm have financial implications that are likely to affect the business' earning potential. According to the case of Guillermo, it has watched his profit decline, operating cost rise, and prices fall since the time competitors entered Sonora market in Mexico. Due to the advanced technologies applied by the competitors, they have been able to produce quality furniture at lower prices. For Guillermo, such a method has proved to lag behind financially.
According to Emery, et al., financial analysis of monetary transaction is amongst the most important aspect of decision-making in business and the company must strive to make an impact on market to become better placed in the market. It must also invest in new technology, creating better furniture and lowering their prices.
In conclusion, financial concept is the act of dealing with business process with the aim of providing the managers with substantial insight in corporation of various elements in a competitive environment. The strategy of Guillermo would thus be aimed at improving its financial condition and for that reason it has to prepare a combat strategy so as to address the challenges and revive financial conditions of the company.