Guillermo Furniture Store Concepts

Guillermo Furniture Store Concepts
      Guillermo Furniture Store (GFS) can use the finance concepts to help in the company decision-making process. This paper will show how the 12 finance concepts can relate to GFS and how they can use them in their decision making. After applying these concepts Guillermo Navallez should be able to make some decisions on the future of GFS.
      The first concept is the Principle of Self Interested Behavior. This principle says that people tend to act or do what is best for them. Guillermo Navallez will do what is best for GFS and he based on this concept. This concept relates to GFS because Mr. Navallez is not expanding or merging with another organization because it will take time away from his family and increase his responsibilities. This is an example of an opportunity cost because by not expanding the company could be detrimental to the future of the company because of his own self interest. The second concept is the Principle of Two Sided Transactions. This concept says that there are at least two sides to each transaction. An example of this concept is GFS becoming a distributor for his second competitor. This transaction has two sides and both sides would benefit. GFS would benefit by changing from a primarily manufacturer to a distributor and the competition would have the distributing company they needed. The third concept is the Signaling Principle, which says that actions convey information and the fourth concept is the Behavior Principle, which looks at the industry effect or what others firms are doing in the industry. An example of the third and fourth concept would be Mr. Navallez inquiring about the highly automated systems of his competitors because Mr. Navallez behavior could signal to the employees that the company could be switching to an automated system, which could lead to layoffs. The fifth concept is the Principle of Valuable Ideas, and the sixth concept is the Principle of Comparative Advantage could...