Guillermo Furniture Store Scenario Essay

1028 words - 5 pages

Accounting-MMB/1009 |
Guillermo Furniture Store Scenario |
University of Phoenix |
|
Malaika C. Williams |
8/18/2010 |

|

Abstract
This document reviews the Guillermo Furniture Store Scenario where the author discusses how Guillermo use budges and performance reports in his decision making process, how ethics might influence his accounting decisions, and what accounting information is most relevant for Guillermo to consider when making decisions. In this scenario Guillermo is faced with having to make several decisions, which financial principals and concepts have to be applied during his decision making process. In this document the writer will examine how the ...view middle of the document...

The business landscape has changed, competitors are becoming more prevelant and the necessity to either expand by acquisition or merger Guillermo has no other option but to search for the best financial concepts to help his company adapt and survive.
After reviewing the scenario, it has been determined that they type of financial decisions a business owner in this situation would make is usually self-serving to the individual or the corporate strategy. Hence, financial concepts and principles are usually based upon a person’s desires; whereas inmost cases the decision to enter a financial situation will be based on how the decision will impact the person involved. Being in the center of this exact type of situation, having to decide whether or not money would be better spent in becoming a distributor opposed to a manufacturer, Guillermo had to explore options of doing future business.
Overall, Guillermo’s situation houses issues of principles of finance, financial self-interest, incremental benefits and costs, actions and options. According to Emery, Finnety and Stowe, “the principals of finance describe typical behaviors in financial transactions and provide guidance for decision making”. Self-interested behavior, a principal mentioned earlier, is applied when parties make decisions based on the best interest of one’s self. This principals became applicable when Gulliermo decided to distribute furniture for another competitor by coordinating his existing distributor network and work as a representative for the competitor (University of Phoenix, 2010).; a decision that is beneficial more so for Gulliermo than the competitor, whereas the only perk for the competitor in this case in the ability to distribute their goods in North America. Concurrently, Gulliermo is increasing revenues by extending a hand through his network connection.
Another concept present in Gulliermo’s situation is incremental costs and benefits. According to Emery, Finnety, & Stowe, “incremental costs and benefits are those that will occur with a particular course of action but will not occur without that same course of action”. Pertaining to Gulliermo’s situation, he has the willingness to network with a competitor because of the benefits his proposes to his profit, however, his concerns about competition and the...

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