Guillermo Furniture

FIN/571 Corporate Finance
John Kushner, professor
WK 1: Guillermo Furniture Store Concept Paper
June 07, 2010

Guillermo’s furniture store is owned by Guillermo Navallez and is located in Sonora, Mexico. The scenario tells that the furniture company is faced with a few issues. Relating the scenario to this week’s material, it is possible to relate some of Guillermo’s financial issues to his self interest, incremental costs and benefits, and his actions. Throughout the next paragraphs, I will discuss how each of these text related issues are also related to the Guillermo scenario.
One of the issues that were noticed in the Guillermo scenario is that of self-interest behavior. According to text, self interest behavior is when the parties make decisions based on the best interest on oneself (Emery, Finnety, & Stowe, 2007). Guillermo’s idea of coordinating his existing distributor network and essentially becoming a representative for another manufacturer (University of Phoenix, 2010) would have been beneficial to him, not the competitor. Even though the competitor might have looked at this idea as a good one, the only benefit they would have received would have been the ability to distribute in North America. Guillermo’s self interest would have been satisfied by having the ability to raise the competitor’s revenue through the process of networking.
Another financial issue was incremental costs and benefits. Incremental costs and benefits are occurred with particular course of action; but would not occur without that course of action (Emery, Finnety, & Stowe, 2007). If Guillermo is willing to network with competitors then it would be because of the benefit it would have on his profit. If Guillermo’s business was not going to benefit from coordinating existing distributor networks, then there would not have been a need to do business with competitors.
Even though using a competitor to gain profit can be a benefit to Guillermo, he is also taking a...