Guillermo Risk Capital Budgeting for Guillermo Furniture Guillermo Furniture has an uncertain road ahead, with several options that its owner can select from in an attempt to bring his company into the twenty-first century as a profitable and productive entity. Industry changes and changes in the regional economy have made it impossible for Guillermo to continue running his high-end hand-made furniture with the same laborious and highly skilled process while remaining competitive

Guillermo Furniture Store is facing a difficult operating environment. The cost of labor -- a key input -- is increasing rapidly. The company is facing intense competition from a foreign competitor that has the ability to undercut Guillermo's low-end lines with better-quality goods. In order to save his business, Guillermo has sought out three different alternatives and is subjecting these alternatives to financial analysis. The results of the financial analysis

Guillermo Capital Budgeting Guillermo is faced with a difficult operating environment. Competition has intensified, and this is driving down his margins. At the same time, labor costs are rising. This is putting a squeeze on Guillermo. At present, it does not look like he can compete head to head against his new rival, as that rival is using a technological competitive advantage to outcompete Guillermo. As a result, Guillermo is now

By focusing measurement on cycle time, productivity, quality and profitability, Guillermo will have better information that can help guide his decision-making with respect to the different strategic choices with which he is faced. If he chooses to continue making furniture, he will be better equipped to improve his processes in the future as this information forms the basis of a much stronger control system than is currently utilized at Guillermo. Break-Even

Guillermo has a number of choices and will have to decide whether to implement the same technology as his competitors (which will result in a decrease of employees, an ethical conundrum he does not wish to face). A different choice might be to parlay his distributor network for another competitor who wishes to expand its base, and a third choice might be to diversify his offerings away from the custom

Guillermo Furniture Store is facing a challenging operating environment. He is facing strong new competition that is threatening the company's margins and market share. The competitor is able to do this by utilizing state-of-the-art technology that allows the company to undercut Guillermo considerably on price, with a fairly low perception of quality drop-off in the eyes of the consumer. The second environmental challenge that Guillermo faces is that the cost