Guillermo Furniture Store is a manufacturing business which produces furniture in Mexico led by Guillermo Navallez. The positive aspects which lead this business is their location which enables Navallez to conduct mass production of furniture by hiring employees for less, running the business out of inexpensive housing and excellent weather conditions. These factors allowed Navallez to run his business successfully without the fear of competition over a long period of time; however, this is no longer the case. Competition has increased in the past few years and currently there are two competitors who are fighting to put Guillermo Navallez out of business by taking over his production of furniture.
Therefore, Guillermo reached a point in his business career where he had to implement financial changes within his organization to ensure his business could survive. Clearly, he was at a point in his career where he felt comfortable and did not want to make changes. The redistribution of finances within the business including a better use of cash flow and money movements were essential in the success of the business. The overall question Guillermo was faced with was if he wanted his business to remain as a manufacturer or a distributor This business is faced with an opportunity cost based on decision-making by Guillermo. The infusion of cash from other entities into the company would help by preventing Guillermo from depleting his on hand cash that is needed for daily operations of the business.
If Guillermo wanted, he could become a public traded company and choose to exchange stock to other investors at a reasonable interest rate. This would be an excellent financial opportunity for him to increase his net worth and business assets leading his business to positive financial growth:
Success is also largely influenced by the opportunities and threats present in the external environment, i.e. industry growth, competition, and economic stability, which alter the impact of core resources. (Bratianu, C., Dima, A., Vasilache, S., & Talvescu, D, p. 292)
Most financial investors would be more willing to invest into a business that is continuously growing rather than a business that remains constant and does not increase in profit strength. In addition, he must prepare to adapt to different market segments because one market can vary from another market in terms of trade/exchange, supply and demand, advertisement, regulations and growth. Choosing which type of market segment he wishes to invest his product into would be an important decision. Moreover, understanding his competitors as to what products they specialize in, who they sell to (clients) and how their employees are treated (internal) will assist Guillermo to get a basic understanding of how operations and finance is operated. Based on his brief analysis, he can develop a short-term and long-term plan to assist his business to grow and stay in adequate financial shape to lead into the future as a successful furniture business. If he could develop furniture faster than his competitors it would definitely assist him to have a better chance at acquiring more clients, retaining clients and possibly taking clients from the competitors.
Nonetheless, Guillermo must review the income entering into the company based on his financial statements and also review his financial notes to understand how these decisions were made. In other words, he must understand his past to revamp his structure to lead as a strong competitor into the market. Revenues and expenses produced by the company would be the first step to review. Then reviewing the income statement would illustrate before and after taxes regarding equipment to produce the finished products. He must also review the time taken by the equipment to produce the finished products. This will allow him to understand and make appropriate changes to his business. The redistribution of resources used within the business would enable Guillermo reduce his expenses and increase sales and cash flows of his operations. By evaluating his financial status of his business, he can also have the capability to predict forecasts and deliver a time-frame which would be feasible to achieve short-term and long-term goals. He would be able to understand financial risks and prepare for them too.
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