Guillermo Furniture Store Case Study
The aim of this paper is to examine the Guillermo Furniture case study. It begins with a description of the store, the current market challenges it faces, and the options that its owner, Guillermo Navallez, has in meeting those challenges. It then explores these options in the context of the business’ budget, performance reports and accounting information, as well as from an ethical perspective.
Located in Sonora, Mexico, Guillermo Furniture has historically done well as a furniture retailer. Its success, however, has been challenged by the introduction of a major competitor, an international chain that has recently opened a store in the community. The result has been a rise in costs, a drop in…show more content… Equally important, though, is a careful evaluation of how much each option would cost him in terms of initial investments. This is especially true with the laser lathe, as the initial investment would be high should he choose to pursue this option. Additional accounting information necessary to make an informed decision is to compare potential capital and investment costs to potential net income before taxes on each available option.
According to the Encyclopedia of Business and Finance, it is essential that accounting be accurate and honestly represented both by accounting professionals and by those who depend on their services. Navallez must be honest with himself and his investors if he is to conduct his business and make his decisions ethically. His evaluation of his options should be based on accurate accounting and honest projections of potential profits.
Faced with rising costs, falling prices and the loss of market share, the proprietor of Guillermo Furniture must adapt to the reality of competition from an international retailer. To offset his losses and maintain competitiveness he can implement expensive equipment upgrades, become a representative for another furniture manufacturer or capitalize on a processing patent that he currently holds. To choose the option that would be most beneficial to