Guillermo Furniture Store

Guillermo article of furniture Store For many social classs, Guillermo Nav each(prenominal)ez has owned and operated a small and profitable forest furniture making company in beautiful Sonora, Mexico. He has enjoyed an abundance of raw materials, low outwear salutes, and limited competition. This has recently changed due to a few significant events (1) new competitors from overseas, using high-tech automation manufacturing processes, resulting in exact furniture specifications at rock fag prices and (2) Sonora, Mexico labor cost digest dramatically increased due to emerging new industries and companies.Guillermo furniture has been forced to reconsider his menstruation business model and implement a change in strategy to remain in business and free-enterprise(a) (ACC561, Guillermo, 2009). Guillermo article of furniture pulverization Analysis Prior to addressing the outlined questions we must bring in Guillermo Furniture Stores current Strengths, Weaknesses, Opport unit of m easurementies and Threats (SWOT). Managers use accounting info for many distinct types of decisions. Information uncovered in accounting provides s shopping mallkeeping, management directing and/or problem solving, but we first need to catch our current environment (Horngren, 2008).The first course of action for Guillermo Furniture is to have an objective SWOT analysis performed in order to have a clear picture of the companys current come in in the commercialise and among the competition. Of course, a more detailed SWOT analysis would be needed for a more specific focus and direction. Strengths Strengths identified during the SWOT analysis is an abundant supply of raw materials, inexpensive labor, and a commercialise that allowed a price premium for quality. WeaknessesThe Guillermo Furniture Company was shown to be wishy-washy in manufacturing process and technology when a larger competitor started trading operations in direct competition. This made the companys market po sition uncompetitive due to lack of manufacturing automation and labor be. Guillermo also would similar to remain independent, thus he would not well-being from the strengths of merging or having his small company acquired to facilitate growth. Opportunities Guillermo has multiple opportunities to mend his companys future.First, the company could expand the selection of furniture produced through new manufacturing processes. Second, the patent furniture coating product, could easily become the driving force place Guillermo growth and competitive advantage. And finally, Guillermo could develop a new business unit division, and combine it with an investment in technology for the coating manufacturing to further improve his unique selling proposition. Threats The Guillermo Furniture Company faces a myriad of threats. A new and large competitor that uses advanced technology and automation.Rising labor costs, declining sales due to competition, eroding margins, and declining revenu es with sales losses. The current climate of mergers and acquisitions in the furniture industry is producing stronger competition with more economies of scale and leveraging of queen in the marketplace. Budgets and Performance Reports The basic purpose of accounting randomness is to champion make strategic decisions. Regardless of who is making the decisions, examineing accounting selective information allows for a more informed, and better decision (Horngren, 2008).Accounting reports are categorise into two types Accounting and Financial reports. Budgets and performance reports are vital information for a company that is looking to survive, compete and expand in their marketplace. Guillermo would benefit immensely by using these reports to see data trends in different business segments. For example, a performance report showing real versus budgeted sales would notice the most viable and profitable business segments in some(prenominal) short and long-term.Guillermo could the n use these data trends to build a 5-10 year forecast for exclusive business segment manufacturing viability. Guillermo must evaluate distributively business unit taking into account fixed and variable costs associated with the fixed assets required for operation. Once this evaluation is completed, business models for revenue, costs, profit margin, and imaginativeness investment could be compared for each of the proposed business units. Manufacturing as currently in place Manufacturing with investment in new technology Broker argumentation Segment Product Coatings Business Segment Lastly, Guillermo could use performance reports to identify growth segments for immediate and future resource investment. He could identify declining segments and produce to diversify or limit future investment in these segments. For example, film for moderate furniture is growing while the demand for high-end furniture is on the decline. While limiting further investments in declining segments, u se them as sources of income for the higher(prenominal) profit margins they do produce.The proceeds from this could be re-invested in the growing market segments. Ethics and Accounting closes Regulation of accounting systems seeks to ensure the reliability of the information that accounts provide. However, no regulation can be as effective in ensuring liability as holding accountants to high ethical standards (Horngren, 2008). Organizational and individual ethics influence critical decision-making processes, with potencely negative results affecting the pervade line. Ethics are based in part on core values imparted on individuals throughout a lifetime.Each person perceives mighty and wrong based upon ethics and consequently his or her actions get out find out these parameters. Technology also promotes organizational ethics however, ethical and moral conflicts will increase work-related stress amongst employees. This behavior negatively influences organizational behavior. Guille rmo must determine whether to transition from manufacturing to distribution, and if he does remain in manufacturing, are there potential ethical violations if he continues to broker as well.This author believes Guillermo would have the individualized ethical dilemma of continuing to employ human labor from his city, or transition to a more automated achievement thus deliverance him money from his bottom line, and making the company more efficient and effective. The current economy has been shaped with bad ethical decisions in accounting practices. whiz only needs to look as far as Tyco, Enron and WorldCom to understand how pressure to perform and expand can corrupt a company. The bottom line for Guillermo Furniture Company will be how Guillermo responds to the competition and how his impulse to remain ndependent affects his decision making process. Relevant Accounting Information and Decision Making The most relevant accounting information for Guillermo to consider would be th e following examples. Short and Long-Term Demand Forecasts, Revenue Generation, Pricing, Cost, and Profit boundary line for each Business Segment. ROI in months / break even when determining the ROI on New Technology Investment Compare Expected Revenue, Margins and Net Income from all three business opportunities.Forecasting demand for each segment, pricing and production costs for each opportunity Assets Management. Develop a course of study to support assets that are profitable, and a plan to divest the underperforming. Conclusion The Guillermo Furniture Company has enjoyed years of profitability without constructing a business dynamic plan. With the larger direct competition moving in, this has shown the weaknesses in the Guillermo Furniture Company. Guillermo must in a flash change the course of direction in order to remain firmness in the current marketplace.The statistics available through accounting practices will exit him the necessary tools to make both short and l ong-term decisions to remain a viable company in todays global economy. References ACC 561 scarper handout Scenario The Guillermo Furniture Store. Retrieved July 19, 2009 from the material section of the course description page. Brealey, R. ., Myers, S. . & Marcus, A. J. (2007). basic principle of Corporate Finance (5th ed. ). Boston McGraw-Hill Irwin. Horngren Sundem Stratton. (2008). Introduction to Management Accounting (14th ed. ). pep pill Saddle River, NJ Pearson / Prentice Hall.