Introduction
Guillermo furniture store is one of the largest furniture manufacturing companies in the world. In the areas like Sonora, Mexico, etc it has been operating for many years. For producing a covering for the company’s furniture Guillermo has a patented procedure. Guillermo wants to make a change in overall business through which there can achieve perfection in the part as financial position cost of production etc. The company has to reinforce its strength to increase its present productivity and control events to stay financially safe and avoid unfavorable responses from the limited community. The first idea Guillermo will be involved in is opportunity costs. Guillermo has lots of choices that were established when the company evaluated the different possibilities and the company has had a lot of compensation over the competitors.
The Finance Concepts found in the Context of the Scenario
Guillermo’s case study provides the possibility of innovative competitors from overseas setting unpredicted challenges on the financial situation of the company. The attitude of selfish performance occurs when all else is equal, and all parties to a financial process will decide a course of achievement which financially is most advantageous. This explains the real performance because most of the businesses connections are arm’s-length transactions.
This type of self-interested behavior is shown in the Direct Materials High-End cost. It is the same in the current technical and dealer columns in the setting up of information. The principle of bilateral contact occurs when each side is on behalf of its own financial self-interest. This occurs in Guillermo’s situation when two forces combine to put a dent in the financial status of the company in the furniture market. Guillermo can use budgets and presentation reports to help its decision-making procedure.
“By using management accounting procedures, Guillermo can identify measure and analyze information to help him fulfill his business objectives. He needs to answer three questions using the accounting information. First, he needs to address whether the company is doing well or poorly. This is obtained by “scorekeeping.” Scorekeeping is the process of accumulating and classifying the data collected. Data included in this process is usually a combination of income statements, balance sheets, cash flow statements, and income tax filings” (Tucci,2009, para.2).
Financial concepts explain the characteristics in financial transactions and they provide the leadership necessary information for decision making in the case of Guillermo. This case study explains that the coming of new competitor from management have put startling challenges on the financial condition of the company. But due to the financial wealth of the city, Guillermo considers rising the labor price. Since economic self-interest shows ordinary decision-making, it contain to reestablish its location to assemble the challenge from foreign competitors in Sonora. There are decision making is not a separate purpose from management.
Decision-making is jointly with other purposes, for example, Coordinating, Planning, and Controlling. For each of these purposes Guillermo needs that decisions is made. “The high-tech manufacturing will allow Guillermo to produce products more rapidly and at a lower cost that will reduce the operating and production costs. The second option that the business can implement is for Guillermo to become a broker and sale a competitors products based out of Norway” (Guillermo furtuniter, 2010, para.)
It will enable them to get more benefits from brokers and help them gain a wider customer base. Because of the better percentage of profits will go to the company they will be merging under Guillermo be given less money. Through the cost of technology is huge, on the other hand it facilitates lowering of labour costs. Thus the production can move up considerable and make up for by the reduction in work. “Converting his production to this model would be expensive, but he saw how he could also decrease dramatically his production costs” (Admin, 2010, para.4). Financial transaction provides the basis for preparing business strategy due to the sound assumption and reasonable factors to prefer the right option. Besides, business ethics, values of conduct, and ethical judgment in the operations can result in productivity of several businesses.
Conclusion
In this case Guillermo’s financial idea is probable that it needs to create changes in the way it controls its business. Then the managers can achieve adequate success to incorporate the different elements of spirited surroundings with the help of financial ideas dealing with business processes which will provide helpful environment for preparing the strategy to meet the challenges of stimulating financial condition of Guillermo Furniture Store.
Reference List
Admin, A. (2010). Guillermo’s furniture store scenario. The Court Appeals Insider. Web.
Guillermo furtuniter. (2010). Papercamp. Web.
Tucci, D. (2009). Guillermo furniture store week 1. Oppapers. Web.