International issues in Management Accounting

Congratulations on your appointment as trainee management accountant for Mercury Australasia Ltd. A diversified FMCG (Fast Moving Consumer Goods) sector manufacturing company Mercury were recently purchased by Sino Production Co, a large a multi-national Chinese firm which originated in Shanghai. Mercury is now are a wholly-owned subsidiary of Sino Production. This is Sino Productions first acquisition of a business based in a Western democratic country. You are based at the firm’s Australian operations head office in Sydney, however your graduate year training will include working in a variety of management accounting roles across the various product divisions that Mercury Australasia operates across Australia and New Zealand. As part of your role with Mercury Australasia Ltd you will be expected to provide advice around strategic and operational issues to management and production teams as well as develop management accounting solutions for reporting within the group. At the commencement of each question you are referred to the subject Topic Modules which cover the material in the question. As an aspiring management accountant you are expected to research and read beyond the material provided within the text and the subject Interact site. Question 1 International issues in Management Accounting (25 marks). Resources to assist students to conduct research and answer this question will be provided in the subject Interact site at the start of the session. This question relates specifically to the subject’s 3rd and 5th learning outcomes. The purchase of Mercury Australasia by Sino Production has recently been completed and the Accounting and Finance Group at Mercury’s Sydney head office are expecting a visit from the CFO (Chief Financial Officer) of Sino Production Ltd. Mr Zhang Yong Xian. Ahead of his trip Mr Zhang has requested a briefing be provided about the differences that can be expected between Chinese and Western approaches to management of costs, budgeting, and staff. You have been asked to provide a draft of such a briefing to the CFO of Mercury Australasia, Hannah Murray. Hannah has provided some points she would like addressed in your 600 to 750 word draft response. (i) Identify potential differences in approaches to management accounting between Chinese firms and Australasian firms; (5 marks) (ii) Research the role of ‘Guanxi’ in Chinese business and identify how this practice will fit in with a Western ethical approach to accounting; (10 marks) (iii) Review the concept of ‘power-distance’ as a cultural phenomenon and how the difference approaches undertaken by Australia/New Zealand managers compared to Chinese managers. (10 marks