Running Header: GUILLERMO FURNITURE SCENERIO
Dr. A. Matias
Week 1-April 15, 2010
A large furniture manufacturing location in North America is Sonora, Mexico. Guillermo Navallez has manufactured furniture from this location for several years. This location provided good timber and labor was not expensive. The city is rapidly growing with inexpensive housing, nice weather, upgrade of scenery, an international airport, and development.
In 1990, there were two unpleasant incidents which could negatively impact Guillermo Furniture Store and its distribution. An overseas competitor emerged to the area offering exact furniture at much lower prices. The other incident is that Sonora, Mexico is become a fast growing city (Horngren et all, 2008). Guillermo had several decisions to make for his company. One consideration would be to consolidate into a larger organization and the other is to evaluate his company??™s costs. Guillermos Furniture Store is being drawn against competition from foreign competitors and has put him in the position of rethinking how to maintain a business structure that would allow him to continue to compete in a global market.
Business owners are faced with numerous obstacles which can affect the daily business needs to run a company. Guillermo Navallez is the owner of Guillermo Furniture Store and has found himself dealing with a situation which may cause a threat to his business. One obstacle which poses a threat is that another furniture corporation has moved into the neighborhood, offering similar products at a lower cost. When a business is challenged with economic burdens, what measures should be taken to avoid future mishaps In the following paper, topics to be discussed will be how budget and performance reports affect decision making, influences of ethics for accounting decisions, and the most relevant accounting information to consider while decision making.
The purpose of budget and performance reports is to analyze business trends. A review of statements revealed a pattern of a decrease in sales and an increase in costs. A business measure to consider is to make substantial cuts on wasteful spending. The cuts will allow a better position to discern cost-saving decisions by implementing measures to evaluate the efficacy of the furniture business.
The ability of a business owner to be qualified in accounting while maintaining a degree of professional integrity can be a difficult task. There are general ethical standards which apply to individuals. In an effort to avoid corporate collapses, such as Enron, Guillermo should consider the standards of professionalism and the image he would like his company to demonstrate. Studies have found that a company??™s culture and values may negatively impact overall performance (Riahi-Belkaoui, 1992).
Managerial accounting information provides the essential data in which a corporation controls its operations. This author finds this accounting information to be the most relevant to consider when making decisions. Managerial accounting information focuses on the decisions affecting the future of the company. A detailed segment report regarding departments, products, customers and employees is generated as part of this accounting information (Horngren et all, 2008).
Decision making is entwined with other functions of operating a business. Ensuring a strategic decision is considered in an ethical manner will affect the long-term impact of the business. There will always be affects in the economy as well as business competitors; however, to make the best business decisions, Guillermo would need to accurately weigh the benefits and costs of various alternatives.
Beauchamp, T.L., & Bowie, N.E. (2003). Ethical theory and business. Englewood Cliffs, NJ:
Horngren, C.T., Sundem, G.L., Stratton, W.O., Burgstahler, D., & Schatzberg, J. (2008).
Introduction to management accounting (14th ed.). Upper Saddle River, NJ:
Pearson Prentice Hall.
Riahi-Belkaoui, A. (1992). Morality in accounting. Westport, CT: Quorum Books.