Week 2 Paper Fin/571

Guillermo Furniture Store Concepts Paper
Teirsen L Davis
Ayneka Bruno
August 27, 2012

Guillermo Furniture Store Concepts Paper
The Guillermo furniture store scenario discusses the different dynamics of running a private business. Small businesses are always at risk when major retail corporations move into the area in which the businesses are located. Guillermo’s furniture business specializes in making premium hand crafted wood furniture. Business for Guillermo’s was abundant until the late 1990s when two major competitors entered the market in Sonora, Mexico. Guillermo has many challenges ahead of him, concerning the future of his business. Other small businesses in the area have joined in partnership with the larger organizations however; Guillermo does not want to join that alliance. He wants to keep his business private with hopes of remaining profitable.
The scenario has a direct correlation to the principles of finance. The principles of finance are divided into three definitive groups. The first group focuses on the competition in an economic environment. The second group of principles focuses on the ways of creating value and economic diversity. The third group of principles focuses on observing financial transactions. Guillermo uses these principles throughout the scenario as he makes decisions regarding his business. The first principle that Guillermo uses is the principle of self-interested behavior. This principle basically states that people act in their own financial self –interest (Emery, Finnerty, Stowe, 2007). Guillermo has to decide if closing his business or fighting through the hardship is the best thing for him financially....