Question 1 (no more than 500 words)
Harvey Norman is an example of an Australian family dominated company that has been successful in expanding overseas. They have stores in 8 countries and despite Covid 19 have plans to expand further.
Bunnings Warehouse is an example of an Australian company that, apart from its success in New Zealand, has been unsuccessful in expanding overseas. In fact, in 2018 Wesfarmers abandoned its attempt to expand Bunnings Warehouse into the United Kingdom and Ireland, selling the business for 1 British pound.
Evaluate the differences between the international business strategy and global business environment of Harvey Norman and Bunnings Warehouse. Advise what led to the international success of Harvey Norman over Bunnings Warehouse.
Question 2 (no more than 500 words)
This question refers to a real company (names and details changed to protect the guilty).
Rebecca’s “Sea Farmed Salmon” is an Australian company which farms salmon in ocean tanks off the Port Stephen’s coast of NSW (Australia) and currently sells domestically to IGA supermarkets. Rebecca has decided to start exporting her salmon to Malaysia.
Briefly discuss the following considerations Rebecca should be aware of
• Regulatory requirements
• Taxation considerations
• Operational considerations
• Foreign currency movements
Question 3 (no more than 300 words)
Part A: On 1st February 2020 an Australian Company purchased inventory from an overseas customer for a price of FC$100,000. Payment was made on 1st June. Exchange rates were: 1st February $A 1.00 = $FC 2.50, 1st June $A 1.00 = $FC 2.00
Record the journal entry/entries for the purchase on 1st February.
Then record the journal entry/entries for on 1st June (when payment is made, remembering there may be a gain or loss as well as the payment).
Part B: On 1st January 2020 Edward Enterprises (an Australian business) contracted to sell inventory to a buyer in the USA. The inventory is to be delivered on 22nd March 2020. $100,000 USD is receivable on delivery. Edward Enterprises takes out a forward contract on 1st January 2020 to sell $100,000 USD on 22nd March 2020 at AUS/USD of $1.45. At 22nd March the spot rate is $1.75 (actual rates are being used).
Record the journal entry/entries for Edward for the receipt from the sale on 22nd March when the inventory is delivered.
Then record the journal entry/entries for the cash settlement of the hedge (the derivative) on 22nd March.
With hindsight, discuss if Edward Enterprises made the ‘right’ financial decision in taking out a hedge (derivative, forward contract).
Question 4 (no more than 400 words)
Chevron is an example of a multinational company that received media attention in relation to the Federal Court full bench unanimously dismissing its appeal against the Australian Taxation Office’s $340m assessment.
Discuss why Chevron was required to make this payment and the implications for taxing of multinationals in Australia.
Question 5 (no more than 500 words)
Please use the company: The Star Entertainment Group
1. What are the business models of the company?
2. What goods/services do they provide? What are the sources of their income?
3. What is the main comparative strength, weakness, opportunity or treats of the company?
4. Can their sources of income be identified by geography and by the taxing authorities?
5. What is the effective tax rate each paid as a percentage of its net income? How do their effective tax rates compare to the corporate tax rates in Australia, U.K., and the U.S.A.?
Question 6 (no more than 500 words, 250 words each)
This question refers to a real company (names have been changed to protect the guilty).
T&T Pty Ltd is a small private company headquartered in Australia specialising in engineering steel fabrication solutions. T&T has three offices in Australia (Newcastle, Sydney and Wollongong) and one small international office (New York USA). As part of the company’s global expansion strategy, it requires USD $30 million in financing over the next 24 months to support ambitious growth. T&T is considering engaging a registered company auditor to audit the end-of-year financial reports for the company.
Advise: T & T on the advantages/disadvantages of having the financial reports for the company audited.
Advise: T & T on the precautions they should take in borrowing USD $30 million given the expansion is into a new market in Dubai UAE.
