Guillermo Furniture Store Concepts

Guillermo Furniture Store Concepts
      Business owners like Guillermo Navallez are responsible for making good business decisions.   Guillermo’s furniture manufacturing business was doing great with a good supply of timber and inexpensive labor.   Afterwards, a new competitor with high-tech approach offering lower prices entered the furniture market.   In addition, the communities in the town of Sonora began to soar.   The town had an influx of people and jobs raising the cost of labor.   Guillermo’s profit margin consequently diminished (University of Phoenix, 2010).   This paper will explore useful financial principles relating to competitive economic advantage, value and economic efficiency and observing financial transactions to guide Guillermo’s decision making process.   Principles of finance are the foundations on which financial management is built (Emery, Finnerty & Stowe, 2007).
      The principle of self-interested behavior says that when all else is equal, all parties to a financial his business model to primarily distribution or use his patented furniture coating.   For example, if Guillermo decides to use the high-tech solution he would cut labor costs but converting his production to this model would be expensive.   This opportunity costs is large and the cost of not making the best choice is large.   The principle of self-interest behavior poses a conflict of interest in principal-agent relationship.   Guillermo’s (principal) decision to cut labor costs in the high-tech approach with robots will ultimately affect the employees (agents) as their jobs will be price to avoid over or under pricing the product.   It was a wise choice for Guillermo to use the behavior principle and examine a foreign competitor and their high solution.   Business owners are constantly in search of ways to create value and economic efficiency.
      The principle of valuable ideas means new...