In our required reading, the first area that is discussed is the Competitive Economic Environment. This is the main basis behind this scenario. Because Mr. Navallez owns his own furniture business, he is now facing increased competition because of a developing economy. When a new oversees competitor and one of the largest retailers entered the market, Mr. Nacallez had to form a new strategy for staying in business. He could no longer continue to run his business the way he always did. In a competitive environment, businesses must be willing to adapt to changes in the economy, competitive forces, and customer needs and wants.
The Behavioral Principle is a direct application of the Signaling Principle. The Signaling Principle says that actions convey information. The Behavioral Principle says, in essence, “Let’s try to use such information.” (Emery, Finnerty, and Stowe, p.23). With changes to the surrounding market, Guillermo was able to apply the Behavioral Principle to address some of the challenges he was facing. In other words, he looked at what his competition was doing in order to make the best possible business decisions he could for his own company.
Mr. Navallez also applied the principle of Diversification to his new business strategy. Although he focused primarily on making specialized furniture, Mr. Navallez considered becoming a representative for another manufacturer and use his existing distributor network. Because he did not to take on the responsibility of merging with another company whether through a buyout of his company or him purchasing another, he was willing to look at other options within the industry. By doing this, he applied the principle of Valuable Ideas which states that extraordinary Returns Are Achievable with New Ideas. “The Principle of Valuable Ideas says you—like the founder of eBay—might find a way to get rich! New products or services can create value, so if you have a new idea, you might then transform it...