Guillermo Furnature Store

Guillermo Furniture Store Recommendation

October 17, 2011

Guillermo Furniture Store Recommendation
A strong business plan, a valuable product, a target customer base, and a solid structure financially are the foundation to a successful company.   Guillermo is just one example of with such success.   However, with current changes in the market Guillermo has realized the relevant need for change for his company to remain successful.   The following will provide an analysis of Guillermo’s alternatives along with a financial recommendation to aid Guillermo in the next five years.    
      The first alternative that Guillermo has under consideration is to follow the business market trend of implementing a high-tech solution to increase production capacity and reduce costs. This alternative would require substantial financing for the advanced computer equipment and robots. Selecting the high-tech alternative would also require operations to shut down during plant retooling, equipment installation, and initial training. Despite the significant initial costs involved in a high-tech solution, this alternative has the potential to increase production to maximum levels with minimal need for laborers’. The reduction in labor costs and operating costs would improve Guillermo’s profit margins significantly. To accept this alternative Guillermo must be willing to restructure its financial planning strategy and embrace a long-term investment commitment.
      The second alternative available to Guillermo is to purchase its furniture coating for production instead of producing it to reduce operating costs. This option would reduce its current cost per unit of furniture manufactured and Guillermo could lease use of its patented coating process to other organizations. This alternative will produce only nominal benefit in increasing revenues at current production volumes as per unit savings is small, but at increased production volume the benefits of...