Ongko Furniture Store Concept Paper

Ongko Furniture Store Concepts Paper

      Jaya Ongko built hand-crafted premium furniture in Bali, Indonesia because of the island’s effective supply of timber, inexpensive labor, and proximity to his home.   Ongko priced his furniture at a slight premium for the quality they represented and supplied furniture to more than 20 countries worldwide.   In the late 1990s a new foreign competitor emerged in the furniture market that used high-tech approaches that provided furniture to exact specifications at rock-bottom prices. Finally, the Bali communities began to develop, which increased the cost of labor substantially. Mr. Ongko “watched his profit margins shrink as prices fell and costs rose” (University of Phoenix, n.d.). This paper will identify the financial concepts presented in the Ongko furniture scenario.
Competitive Economic Environment
A competitive economic environment is simply competition in the economic environment (Emery, Finnerty, & Stowe, 2007). In the Ongko furniture scenario, Mr. Ongko had enjoyed an environment that had little competition until the late 1990s. When faced with the increased competition and increased costs, Mr. Ongko was faced with the principle of self-interested behavior that states people will act in their own financial self-interest (Emery, Finnerty, & Stowe, 2007). Mr. Ongko had to choose what would be the best action to ensure his company would continue making a profit.
Ongko began to make decisions on his best interest and considered what other companies were doing in his industry that could keep his business profitable. Mr. Ongko began to convey his position by looking into other ways his business could function in the current environment. Mr. Ongko was signaling to his competitors his company’s condition or what is known as the signaling principle (Emery, Finnerty, & Stowe, 2007).
Value and Economic Efficiency
New products or services can create value and may transform it into extraordinary positive value (Emery,...