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    Guillermo's Furniture Store: Team A: Jason Hussong, Patrick Gengarelli, Kyung Kim

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    Luis Omar Bedoya
    Guillermo's Furniture Store is facing increased competition from companies using modern technology to produce furniture at lower, more affordable prices. The team analyzes three alternatives: maintaining the status quo, investing in new high-tech machines, or changing to a distribution model. They recommend investing in new machines to reduce costs and boost production. A five-year cash flow budget predicts sales growth of 3% initially, rising to 6% annually, and concludes that purchasing rather than leasing new machines is necessary to decrease labor costs and maintain competitiveness.

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    Guillermo's Furniture Store: Team A: Jason Hussong, Patrick Gengarelli, Kyung Kim

    Uploaded by

    Luis Omar Bedoya
    19 views10 pages
    Guillermo's Furniture Store is facing increased competition from companies using modern technology to produce furniture at lower, more affordable prices. The team analyzes three alternatives: maintaining the status quo, investing in new high-tech machines, or changing to a distribution model. They recommend investing in new machines to reduce costs and boost production. A five-year cash flow budget predicts sales growth of 3% initially, rising to 6% annually, and concludes that purchasing rather than leasing new machines is necessary to decrease labor costs and maintain competitiveness.

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    Guillermo's Furniture Store is facing increased competition from companies using modern technology to produce furniture at lower, more affordable prices. The team analyzes three alternatives: maintaining the status quo, investing in new high-tech machines, or changing to a distribution model. They recommend investing in new machines to reduce costs and boost production. A five-year cash flow budget predicts sales growth of 3% initially, rising to 6% annually, and concludes that purchasing rather than leasing new machines is necessary to decrease labor costs and maintain competitiveness.

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    19 views10 pages

    Guillermo's Furniture Store: Team A: Jason Hussong, Patrick Gengarelli, Kyung Kim

    Uploaded by

    Luis Omar Bedoya
    Guillermo's Furniture Store is facing increased competition from companies using modern technology to produce furniture at lower, more affordable prices. The team analyzes three alternatives: maintaining the status quo, investing in new high-tech machines, or changing to a distribution model. They recommend investing in new machines to reduce costs and boost production. A five-year cash flow budget predicts sales growth of 3% initially, rising to 6% annually, and concludes that purchasing rather than leasing new machines is necessary to decrease labor costs and maintain competitiveness.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
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    Guillermos Furniture Store

    Team A: Jason Hussong, Patrick Gengarelli, Kyung Kim, Luis Bedoya, Beverly Browne, Sandra Knight-Mayes FIN 571 / Corporate August 2, 2012 Georg Schlueter

    Agenda
    Introduction Luis Analysis of Alternatives Kyung Financial Recommendation Justification - Patrick Long Term Growth - Jason Five-year Pro Forma Cash Flow Budget - Beverly Close Luis

    Luis

    Introduction
    The Guillermo Furniture Store
    Located in Sonora, Mexico Charges a slight premium for quality Profiting business until 1990s

    Competitors
    Use modern technology Able to produce furniture in mass quantities Affordable prices
    Luis

    Market Changes in 1990s


    Manufacturing/industry trends
    Furniture with precise features at low rates Less unique, more affordable

    Technical improvements
    Machine upgrades found to be more economical Initial expenses incurred, but should see substantial boost in net assets

    Kyung

    Analysis of Alternatives
    Status-quo
    Carry on as is with no modifications

    High-tech
    Buy machines to improve existing operations

    Vendor
    Change the business from one that manufactures to one that distributes
    Kyung

    (Financial) Recommendation
    Best choice: Go high-tech
    Will reduce labor time, direct costs and cost per product

    Ability to invest
    Option to invest earnings in higher yield equity bonds Reduce the cost of liabilities by offsetting sum of interest off investments The value of G.F.S. be boosted, attracts investors

    Leverage patent
    Patrick

    Long-Term Growth
    Look to the future
    May involve short-term sacrifices Paint a future that investors will find appealing

    Use capital wisely


    Purchase essentials that will be immediately fruitful

    Production
    Boost production Maintain reasonable labor costs
    Jason

    Five-year Pro Forma Cash Flow Budget


    Lease or purchase machines?
    Disadvantages of purchasing
    Lack of initial funds for high cost of machinery

    Risk of leasing machines


    Unexpected costs from misplacing, damaging or overuse Interest rates

    Budget sales prediction


    Expected to be 3% during six months Expected to enhance 6%/ per year over 5 years

    Purchase of latest machines


    Necessary to decrease costs of labor as well as benefits
    Beverly

    Conclusion
    Changing markets High-tech option Appeal to investors Purchase rather than lease

    Luis

    Questions?
    Thank you.

    Luis

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