Guillermo has established a custom furniture company in Sonoma, Mexico. His handcrafted furniture has served customers for many years, until the growth of the area due to continued development has increased competition. The reality of the growth for Guillermo is that the cost of labor has increased because of higher salary demands from employees, as well as the ability for these new competitors to manufacture products at a much lower cost with the help of robotics. Although the highly automated technology is very expensive, the costs are offset by a reduction in labor.   Shrinking profit margins have forced Guillermo to look at other means of operating.
Guillermo is not interested in merging with another company in order to compete, as this could result in his early retirement, and acquiring another company in order to expand is not his desired plan either. After doing a bit of homework, an appealing long term plan could be to re-align his company with a Norwegian company looking for a means of distribution in North America. For Guillermo, this would mean moving from the manufacturing side of the business to utilizing his distributor network, built over years in the industry. He could retain his high-end custom work, and investigate a new process for protecting his furniture, at a cost savings.
Assuming Guillermo converts his custom furniture store from manufacturing to distribution for the Norwegian company, he could realize an immediate cost-savings in labor costs as a result of increasing salaries expected by local workers. Acting in his own financial self-interest, he would be able to maintain his self-sufficiency and management, while at the same time aligning his business to compete with the new high-tech businesses that have cropped up in his local market. By analyzing what other methods of continued operation some of the other local businesses have adopted using the behavioral principle, Guillermo would better understand what business model...