Guillermo's Furniture Store Concepts

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (Eds.). (2011). Essentials of corporate finance (7th ed., Rev.). New York, NY: McGraw-Hill Irwin.

The questions that follow and the article Comparing the Accuracy and Explainability of Dividend, Free Cash Flow, and Abnormal Earnings Equity Value Estimates will inform your completion of Milestone Three. An understanding of the models in this assignment will assist you in hypothesizing the incremental impact of a new investment project for the company. The understanding of these models will contribute to your ability to look toward the future when considering the direction of an organization. This activity is worth a total of 75 points. See the distribution of points listed before each question.

Guillermo Navallaz is the proud owner of Guillermo’s Furniture Store located in Sonora, Mexico. He chose this area because of its excellent supply of timber for the variety of tables and chairs produced by his company. Business was going well until the late 1990s’ when two events caused a decline in Guillermo’s business. First, a new overseas competitor entered the Sonora furniture market with their high-tech approach that provided furniture to exact customer specifications at low prices. The second event was that the community of Sonora began to grow. The increase of people and jobs

That given that we have a favourable lease decision, we are better off on average developing the resort, but in the absence of a certainty on lease decision, its unclear whether we should exercise out option or not in the first place.

After IKEA did the low cost strategy in furniture industry and it is growth so fast recently. More than 3 franchise retailer as IKEA competitors.

For years, the only local business was Guillermo’s furniture store, until an overseas competitor came into the furniture market introducing a technology allowing precise specifications to their furniture at a much lower cost. More retailers began moving into the area creating an increase to the cost of labor, more people and more jobs while Guillermo’s profit margins began to decrease due to reduced prices and increase cost.

• Propose an approach for how profitable decisions can be made by using cost of capital consideration within the corporate environment.

Fred Weston is Professor of Finance Emeritus Recalled, the Anderson School at the University of California Los Angeles. Thanks to Matthias Kahl, Samuel C. Weaver, Juan Siu, Brian Johnson, and Kelley Coleman for contributions. The paper also benefited from comments at its presentation to the 1999 Financial Management Association Meetings (Orlando).

REFERENCES•Ross, S.A., Westerfield, R.W., Jaffe, J., Jordan, B.D. "Modern Financial Management". McGraw-Hill, Eighth Edition, (2008)•R.A. Brealey and S.C. Myers, "Principles of Corporate Finance", McGraw-Hill, Seventh Edition, (2003).

Asset turnover rate of our company Andrews is above the average turnover rate of all 6 companies (teams) in our industry. Industry average is 1.12 and our team Andrews Asset Turnover rate is 0.5 and unfortunately we are in last position. This shows our quality of investment and effectiveness of our team leadership team are not up to the mark in making decisions. Our share market statistics shows Andrews’s market cap from round 0 to round 5 and its improvement over a period of 5 rounds. At the beginning of round 0 our market share price was $12.3 and a market cap of $22 million, but over a period of 5 rounds we have increased our share price $22.16 with a market capitalization of $81 million.

Throughout my research of discovering whether to take Ferrer Custom Furniture to the next level of business by globalizing I will provide the organization with my findings. In order to expand the business globally we have to strategically plan a way to formulate the business in a way that would be conducive to explore the benefits of doing business in a multinational platform. As a way of remaining competitive, strategic planning and knowing what is needed to maintain our competitive edge in the furniture industry is the key to whether globalizing will be good for this organization. Effective and proper strategies help companies increase their customer base and provide opportunities to support the need to doing business local

The structural changes needs to address the progress of the furniture industry which is already matured.. By 2001, the company had opened foreign subsidiaries in 32 nations. Currently, the group operates in 43 nations and has 328 stores in 28 states across the globe (Inter IKEA Systems B.V. 2016). This include geographical location such as the West Europe, Scandnavia, North America, East Europe, Asia and Australia. The expansion strategy of the company intends to venture into the Japanese market. Currently, the group is led by Peter Adgnefjail who is the president and the CEO. Agnefjäll t ishe Group Management of IKEA (White, 2004). Following the ambitious intention of the IKEA to expand globally, the leaders of the group ought to adopt an innovative geographical area organizational structure to support its international operations and administrative process.

Known as one the largest global home-furnishing retailers, IKEA currently has over 139,000 employees located in 53 countries and generates roughly 39.3 billion US dollars in annual sales (IKEA, 2014). Ingvar Kamprad began selling different types of items and founded the company in Agunnaryd, Sweden in 1943. Kamprad found that his greatest entrepreneurial opportunity was in furniture. Many households at that time were changing from receiving furniture that was handed down to desiring new, inexpensive, and stylish furniture. Kamprad was able to find a business opportunity to change the current social situation since a lot of the furniture was priced high at the time. He wanted to be able to offer his customers a wide

Comparative advantage: it is one of the most important concepts in economic theories. It is referring to the ability of any country to produced goods at a lower opportunity cost than other county. If there is the trade-off between the 2 products when determined time is limited country must give up labor units of one product to produce other product at this time this country has a comparative advantage proportional with relatively more effective.

Jonsson & Foss stated combination of cost leadership and differentiation strategy of targeting all kinds of people age help them to extend the business globally over 70 countries (e.g. America, Europe, Asia Ukraine and Russia). Whereas, applying the hybrid focus strategy IKEA managed to reduce the cost (expenses) about £27m across it stores in UK which the profit able to open new store in such areas like Sheffield, Greenwich, Exeter and other strategic location (Titcomb, 2014).