Financial Concepts of Guillermo Furnture

RUNNING HEAD:   Financial Concepts in Guillermo Furniture Store

Financial Concepts in Guillermo Furniture Store

FIN 571
Professor Tim Overton
April 19th,2010

      In examining the scenario of Guillermo’s Furniture Store we find several concepts of finance which include economic competition, economic efficiency, and the analysis of financial transactions. The following text will discuss these concepts as well as how they relate and may apply to Guillermo’s financial situation. The idea is to create a certain value that represents the correct application financial efficiency.
Financial Concepts in Guillermo Furniture Store

The principles of finance which include the financial market and business ethics set the groundwork for financial assessments customarily made by managers in any field. In the case of Guillermo’s Furniture Store we find a business that seemingly had a competitive advantage in their landscape.   The catalyst for Guillermo’s new financial decision making came at the entrance of a foreign competitor who brought innovative technology which allowed for a more productive cost efficient means of operation. In addition to this the competitor was able to run their operation and sell their furniture at inexpensive prices. In the financial self interest of his own company Guillermo is faced with reestablishing his position in the market to meet with the challenges presented by the foreign competition.
The concept of opportunity cost is of great importance to Guillermo as it addresses the idea of alternatives. Opportunity cost can be useful in differentiating between the value of a certain action and the value of the best alternative. Guillermo can opt to invest in new technology which would much like his competitors allow for more automated accurate furniture production. This option would incur almost no labor costs. Another option available to Guillermo is the option to continue with his current business layout while...