Application of Financial Concepts to Guillermo's Furniture Store - Case Study Example

The paper "Application of Financial Concepts to Guillermo's Furniture Store" is an outstanding example of a case study on finance and accounting. Guillermo’s Furniture Store has experienced considerable challenges with the changing nature of his industry. Because of increasing challenges, there has been a strong amount more mergers and acquisitions. Additionally, the industry has witnessed the emergence of organizations that have increasingly implemented automation in their manufacturing processes. The cumulative impact of these elements has necessitated that the furniture store enacts significant change.

            One of the overarching considerations is that of value. While Guillermo’s Furniture Store has long created value through the production and sale of merchandise, the principle of valuable ideas has demonstrated the effectiveness of new ideas (Emery 2007, p. 5). In this specific industry, this is demonstrated through the development of automation processes that produce the furniture more rapidly. In terms of Guillermo Furniture Store’s own situation, it’s clear they must implement new ideas in establishing a competitive advantage. In this way, the patented process of creating a coating for the furniture could potentially constitute a new idea. This notion also extends to the inclusion of capital market efficiency. This is the process where capital markets react to new information. In this situation, the new information regarding automation contributes to a significant change in the market. Within this context of understanding, there is the recognition of the behavioral principle. The behavioral principle indicates that ‘when all else fails, look at what others are doing for guidance’. In this way, Guillermo’s Furniture Store has recognized that the current mode of operations is ineffective. In this way, they must look to the other competing stores, as the competitive environment has changed considerably. 

            In addition to the above elements, there are other financial concepts evident in this process. In developing a strong financial strategy as a means of overcoming these elements, it’s clear that Guillermo’s Furniture Store must think in terms of the principle of self-interested behavior. In this way, people act in their financial self-interest (Garger, 2010). Within this situation, Guillermo’s Furniture Store has its own furniture coating process. This process could be implemented in conjunction with another industry furniture manufacturer. In this way, the principle of self-interested behavior would come into effect. That is, the original furniture manufacturer would gain money from the production of the furniture. Guillermo’s Furniture Store would then apply the flame retardant to the furniture and sell it in its retail outlets. This process would be highly effective, as the original manufacturer would have access to the retail outlets, maximizing their potential. Additionally, Guillermo’s Furniture Store would gain the advantage of mass-produced furniture.