Finance

Guillermo has a small furniture shop in Sonara, Mexico. He has been successfully running the business for a while now, but hes now facing immense competition from both local and international front. His profit margins have been shirking because his rivals are able to provide the furniture at a lower cost. This paper will discuss the options that Guillermo has to fight the competition, and then recommend the best solution.

There are three options that can be used by Guillermo to fight the competition. Firstly, he has a patent for a coating process that makes the furniture flame-retardant, and stain resistant. However, this wouldnt be work as there isnt much of a demand for finished coating in Sonara, Mexico. (University of Phoenix, 2010)

Secondly, he can become change his business focus from manufacturing to distribution, by becoming a broker for a competitor in Norway who would like to distribute his furniture in North America. This might not be a good idea as Guillermo would have to completely change his business model, and gain expertise in a new line of the industry. (University of Phoenix, 2010)

The last and the best option is that Guillermo can invest heavily in a new technology that will dramatically reduce his production costs. By reducing his costs, Guillermo can lower his prices while maintaining his margins. The only issue with this option is that it will require a huge investment, but Guillermo should be able to get a loan as he has been in the market for a while, and he can easily show the demand for this technology. (University of Phoenix, 2010)

In conclusion, Guillermo should realize that the market is changing, and hell have to keep up with the changes if he wants to survive. Every industry is moving towards newer technology to create their competitive advantage and reduce their prices. Hence, Guillermo will also have to do the same.