Table of Contents
Analysis and Study
About the Company
Industry Related Selection
Country Related Selection
Director’s Discussion – Question and Answers
Investment Recommendation and Conclusion
The financial expansion of a company becomes imperative as the business expands as the business needs to be diversified for the purposes of insulation of risk for the safety of the stake holder investment respectively. It is a natural as well as a gradual process for a multinational to keep seeking new markets as well as new domains / industry areas to park fresh investments as the company grows as well as prospers. This in fact aids additional garnering of nerd markets while making the company safe against economic risks based on geographical divisions as well as industries and the like. This paper peruses three nations respectively and among the industries like telecom, banking or retail of an amount of AUD $800 million. The analysis would be followed by an answering session for the questions by the board of directors.
About the Company
The company taken under consideration for the purposes of this study is BHP which is an Anglo Australian multimillion dollar conglomerate. BHP Billiton , the company was incorporated in the year 2001 vide the merger of the Australian Broken Hill Proprietary Company Limited with the second company named as the Anglo–Dutch Billiton plc. Thus this is considered to be a dual listed company in the Australian Stock exchange respectively. The Australia-registered Limited has been listed on the Australian stock exchange as well as the British wing has been listed in the Britain stock exchange respectively. The company has four main business units namely coal, copper, petrol and Iron ore respectively. The company has been operating in more than six countries across the globe. These parameters would be considered while making a selection with respect to the industry that the company needs to venture into and the countries those would be selected respectively. The selections made at this stage would be immensely crucial as the success of the diversification, the turnaround period of the returns as well as the safety of the principle being invested by all of the stake holder’s f the company respectively.
Industry Related Selection
The industries those have been offered for selection are telecom, banning as well as retail. These three industries are from various corners of the entire spectrum while they have entirely varied dynamics of operations respectively. These industries have various risk and return perspectives while the operational dynamics are also completely different and unique. Every industry has a different manner of market competition inclusive of dynamics related to return on investments which is the primary feature for investment with respect to the stakeholders respectively. In the present case the company is mainly involved in an existing manner in the manufacturing / mining sector. This is a significant factor as the company is used to the structure of large investments for a considerable time for reaping in the future in a sustainable manner. Similarly, the company is also used to understanding the trade cycles related to the long term movement with a number of large competitors across globe. These factors create the foundation of the main rationale leading towards the decision that the company can enter the telecom sector to get success Ian his future. Secondly, the company also has considerable retained profits for reinvestment purposes. The telecom sector needs considerable capital investment which can be undertaken by the company using the retained income for a sustainable returns in the future respectively.
Country Related Selection
Three countries need to be selected from the list offered by the research assignment. The three countries need to be selected from the Anglo Saxon countries (e.g. UK, Australia, Canada, former Commonwealth member countries such as India, Malaysia, Singapore etc. and the Nordic countries of Denmark, Netherlands and Sweden), the Germanic/Latin countries (e.g. France, Germany, Italy, Poland, Czech Republic, Switzerland, Brazil, Chile, Argentina and Mexico); and the Asian countries the Asian countries (e.g. China and Japan). The company is already operating in the sectors across nations namely Australia, countries in the European Union as well as in the Germanic / Latin countries respectively. Hence, in these cases existing countries like Australia as well as Brazil would be selected as the company will be already having considerable ground standing in these market which would be helpful for the new business to launch as well as thrive respectively. Secondly, in case of the Asian countries, Japan would be best suited for the company as the country is a hot bed for new entrants with strong business acumen respectively. These factors are strengthened by the cultural factors such as having a multicultural team elated to these geographies across the globe respectively. The many already is used to the culture related to the nations such as Australia ad Brazil inclusive of the considerable goodwill gathered amongst investors, lending institutions as well as consumers respectively. This would aid the company to have a smooth beginning in the new markets and work in to gaining considerable market share within a very short period of time.
Director’s Discussion – Question and Answers
Provide a comparative analysis of the key (most important) PRE-IFRS development factors of each of the three nations selected
All the three nations have been in the list of the first world countries respectively. Thus the post IFRS era in these countries have been similar to each other. These countries have introduced the IFRS statue as well as accounting principles when these have been made mandatory across the globe. The listed companies in these nations have been following the IFRS statutes as well as principles in a mandatory manner under the companies’ law of the respective geographies. However, prior to the etching of the IFRS applicable to the companies those fell within the respectively ambit, in case of Australia the pre IFRS period has Australian Accounting standards and similar was the case with Japan. However, in case of the other country Brazil the accounting system was considerably unregulated prior to the introduction of the IFRS rules as well as regulations respectively. Thus these countries are at times contrasting to each other in terms of the pre and the post IFRS introduction period respectively.
Provide a comparative analysis of the PRE-IFRS cultural dimensions identified for each nation within the Hofstede model and discuss how the PRE-IFRS development factors outlined in Question two above have impacted on these dimensions
This section analyses Hofstadter model and certain related factors for explaining the pre – IFRS development factors. In case of the countries Australia and Brazil, indulgence and uncertainty avoidance needs to have played a considerable roles in bringing in such rules. These have been implement for safeguarding the investors from various risks related to the investment such as market surges as well as consumer preference changes and the like. As of the case of Japan owing to the Asian cultural traditions of community living and working in a team basis, the statutes of the IFRS has been for the collectivism rationale respectively.
Provide a comparative analysis of the PRE-IFRS accounting values that are then associated with each of these country-based sets of cultural dimensions under Gary Model
To begin with in case of Australia in case of the cultural dimensions under Gary Model, the main triggering forces are related to the harmonisation leading to a collective community that could conduct business across the globe in a comfortable manner. However on the flipside in case of Brazen the main factor hat acted as a cultural dimension is the bridging of the power distances among the various large as well as sell companies across the country. Finally, in case of Japan, stream uncurtaining avoidance after the country has faced a number of war and other natural calamities as a community in the past.
Summarise the major changes in the financial reporting/accounting processes in each of the three nations you have analysed in the POST-IFRS era.
A positive nexus amidst the expansion g global businesses has occurred in Australia after the introduction of IFRS. Whereas in case of Brazil the introduction has led to incremental post tax income being declared by flowing the accounting policies and legal statures leading to more income to the revenue department. However in case of Japan owing to the strict cultural practices in the local community the nation did not experience a revolution owing to the introduction of IFRS respectively.
After consideration of all the cultural and other aspects with respect to the IFRS implementation as well as considering various factors with respect to the company, the recommendation is made to invest in Australia, Brazil and Japan in the telecom sector. This would lead to long standing business with sustainable revenue.
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