The Furniture business is highly competitive and depends on steady financial growth to survive. Guillermo furniture store had carved out a niche of offering quality furniture at an affordable price to his hometown community, until technology advancements changed the way he conducted business. Guillermo must create a plan for longevity, if he is going to be able to continue with his furniture business in the midst of change. Financial Trends
Guillermo long term success was due to a couple of factors, such as low cost of operations, the ability to purchase supplies at a reasonable rate and low competition. Guillermo has created a successful business run on principles of looking out for the consumer. As with most companies the consumer is not the first person that they look out for, it’s an a6ll for me mentality in today’s business world.
A good principle of finance is to understand human behavior in order to make good business decisions (Emery, Finnerty & Stowe, 2007). Money is not everything and in the long run cannot make you happy the quality of a successful business is contingent on consumer loyalty and quality products.
Sunk Cost/Opportunity Costs
The ability to maintain his furniture business in a time of change is dependent on available opportunity cost that Guillermo is willing to take. He has spent time with members of the foreign competitor gaining knowledge on their business processes and their high tech utilization. Guillermo must decide what opportunity would best benefit him and his company, would the action of a merger work or would investments in new technology be the best alternative.
The sunk cost would be the merchandise that he has already manufactured should he decide to merge with a larger company and they decide that they cannot use current inventory. The money and investments have already been made therefore Guillermo would lose out on this investment.
Guillermo is seeking opportunities to remain in business and to insure that his furniture store can remain a relevant competitor in his community. The opportunity of Guillermo combining his products and services with another competitor who has more to offer technology wise will be extremely beneficial to his business. Competitors are seeking to…