Guillermo Furniture Week 1

Guillermo Furniture Store

Robert Bartle



Gordon Floeting, CPA

Guillermo Furniture Store

      Guillermo Navallez has recently had some issues within his custom furniture company (GFS) that will need to be addressed. There has recently been some stiff competition from an overseas producer of furniture that has been able to produce quality comparable to Guillermo’s at lower cost. This has been affecting the business’ profits but it has also given him an opportunity to expand into other directions with the business that was not previously explored. The business has not been managed as effectively as it could have been as evidenced by the financial statements provided by the company. We will attempt to explore Mr. Navallez’s options and make sound recommendations for the business.
      In order for Mr. Nevallez to be competitive in his industry he will need to have a competitive economic advantage. In most cases, the company must have some additional factor that urges the customers to choose his company over one of his competitors. Most common factor for competitive advantage is either price or quality. In Guillermo Furniture Store (GFS)’s case the latter was what drew customers to his company; GFS’s quality of furniture was attractive at the prices the company would sell at. According to Fuhene, one way to retain competitive advantage “is by focusing on three key areas of pricing. Profitability improvements from pricing depend on investing in strategies and tools to examine, rationalize and enforce pricing policies and best practices. The companies that focus on these three key pricing areas will be well rewarded with improved revenue, margin and market share. Since the addition of the competing plant that can produce the same quality of furniture at a lower price the company has lost that advantage” (Fuhene, 2010).
      Another area that the store needs to focus on is the value and economic efficiency of the operation. These are...