Guillermo Furniture Store Scenario Essay Example | Topics and Well Written Essays - 500 words

Guillermo Furniture Store Scenario - Essay Example This case study concerns the strategic challenges faced by a relatively small but successful local furniture maker in the face of a large foreign competitor with superior technology and lower prices. The salient facts are as follows. a. A new competitor entered from overseas, with high tech methods and low prices. The plant in Norway was highly automated, used very little labour (used robotics). Production could move between products quickly, and runs on a 24- hour basis (shift-differentials could be more than offset by reduction in labor). 1. Guillermo may tie up with a Norwegian competitor which did not want to operate retail outlets locally but preferred to rely on chain distributors. Guillermo, while retaining the high-end custom work, intends to represent the Norwegian company, converting his company’s primary focus from manufacturing to distribution. 2. Guillermo had a patented process for creating a coating for his furniture which was flame-retardant and, with further processing, stain resistant. There was market for the flame-retardant but not the finished coating. Budgets represent short-term financial forecast, particularly of expected cash flows, based on the business plans drawn by the company, to see if forecasted cash outflows and their timing could be sufficiently covered by cash inflows (revenues and liabilities), and if not, to allocate for future financing at the time they would be needed. Past performance reports to see the history of costs and sales, and to draw insights as to the behavior of costs and revenues given the environmental indicators. Ratios, trends and sensitivity analyses of costs and revenues compared to each other and to economic indicators is important in determining how the company will be affected by a prospective decision. Ratio analysis of historical and cross-sectional accounts are helpful