1. Discuss the international benefits of harmonization of the IFRS and the United States generally accepted accounting principles.
2. Why is the analyst report important to an investor?
3. What has been the impact of the key provisions in the Sarbanes Oxley Act on the way financial reports are currently done?
4. Discuss the difference between rules based and principle based approach towards standard settings. Which method would you recommend and why?

Traditional retail in the United States, the kind you find at the malls, and urban department stores, is in trouble. The very large retailers such as Walmart, Macys, Kohls, Sears, and Nordstrom all have reported about 1% to 2% sales growth since the recession of 2008. In 2016, Target, Macys, Sears, JCPenny, and others are closing hundreds of stores. Since 2000, consumers have been shifting away from traditional retail goods like apparel and electronics(the mainstays of retail stores), and buying more services like vacations, exercise, dining, and health care. The much bigger threat to traditional retail is coming from online retail, mostly Amazon, that has gobbled up the lion’s share of online retail (about 25% of all online retail), and has been growing at astounding rates like 15% to 20% a year since 2008. Apparel and electron-ics are also the largest sales items for online retailers, so the physical stores and the online giant all compete selling the same goods. Traditional retailers have spent over a billion dollars in the last decade trying to become online retailers, and meet consumers wherever they want to buy, online, or at the store. It’s called an “omnichannel” strategy: using multiple channels like physical stores and online Web and mobile apps to sell products. Many traditional large retailers such as Walmart, Macys, and Costco, have wound up in the top ten online retail rankings. But so far the omnichannel strategy has not been especially successful in keeping up with Amazon’s growth. In what promises to be the online battle of the decade, the two biggest players, the heavy weights, Walmart and Amazon, are going head to head for the consumer dollar. In a broader sense, it’s the online-business model versus the physical- department-store busi-ness model which was invented by Macy’s in 1870. But to be fair to the traditional retailers who have developed their online and mobile sales channel, it’s more accurate to say it’s the omnichannel model versus the pure-online digital model of Amazon. Here’s how the two heavy weights shape up. Walmart’s revenues in 2015 were $485.6 billion (the largest Fortune 500 company), it had earnings of $15 billion (about a 3% margin) , and e-commerce sales of 13.7 billion (around 3% of total sales revenue). Walmart has about 5,200 stores of all kinds in the U.S. It produces around $15 billion in free cash flow a year, and has about $9 billion cash on hand. In 2016 Walmart’s market value is in the area of $230 billion. It’s sales growth in 2015 was 1.8%. Walmart employs about 2.1 million people (1.4 million in the U.S. alone), making it the largest employer in the world and the U.S. That works out to $231,000 of revenue for each employee. Amazon’s revenues in 2015 were $107 billion (the largest e-commerce company, but only 35 in the Fortune 500), it had earnings of $596 million (about a 1.8% margin), and e-commerce sales of $92 billion. Amazon has about $8 billion in cash on hand. In 2016 Amazon’s market value is about $366 billion, and its sales growth in 2015 was about 20%. Amazon employs about 222 million people. That works out to $481,000 of revenue for each employee. The retail battle of the decade shapes up as a contest between a giant traditional retailer that is growing very slowly, and has only a tiny online presence, versus the largest online retailer which is growing very rapidly, and has no physical store presence. Both companies have significant financial assets, and nearly limitless credit, to build or acquire whatever capabilities they choose. Walmart needs to develop new systems and capabilities both in-house, and through acquisitions. In 2016 Walmart bought the start up Jet.com, and small but fast-growing Amazon competitor. Videos 1 and Video 2 describe Walmart’s senior management strategy for developing a competitive online presence. The outcome will in part be determined by how well Walmart can develop a competitive logistics system to compete with Amazon. The Instructional Videos for this chapter describe how both Walmart and Amazon are devel-oping their fulfillment systems, and their plans to compete on delivery and fulfillment.

1. What are the three key assets that Walmart can leverage (build on) to compete with Amazon and other online retailers?

2. What is Walmart’s e-commerce strategy?

3. Why isn’t Walmart worried about the channel conflict between its online sales and its store sales?

Imagine you are the treasurer of a Japanese company exporting electronic equipment to the United States. All revenues are received in USD and all other expenses (e.g., R&D costs, costs of employees etc) are incurred in Japanese Yen.

Required:

(i) Discuss whether you need to hedge the foreign exchange risk and factors you need to consider when designing contracts to hedge the risks.

(ii) If the company is able to raise the price of its product in USD if Yen appreciates without affecting the sales volume, how would you adjust your recommendation in part (i) and sell your strategy to other executives?

Hint: If the company is able to raise the price of its product in USD if Yen appreciates, what does it tell you about the company’s foreign exchange exposure? Which derivative security (securities) could be used to hedge this risk? There is no model answer to this question, you just have to provide reasoned explanations.

Do you think that the United States is tolerant of “difference?” Our country was founded on the concept of religious tolerance, but...Wikipedia defines religious intolerance as:

Religious intolerance, rather, is when a group (e.g., a society, religious group, non-religious group) specifically refuses to tolerate practices, persons or beliefs on religious grounds (i.e., intolerance in practice).

What do you think? Are there some cultures more tolerant/less tolerant?

Are the U.S. experiences any different than that of other cultures? Frame your discussion within the context of the sociological perspectives.

The United States has been experiencing a dramatic spike in opioid use and overdose in the past few years, tied, in part, to prescription pain medication use. Concerns have been raised that the country has not responded quickly enough to this crisis. What role do you see for psychologists and those in related fields in halting this epidemic?

The distribution of wealth and income in the United States has grown increasingly unequal over the last forty years.  This may soon get worse, for engineers and programmers are now developing new forms of automation, including robots and artificial intelligence, which will replace human labor and eliminate some jobs.  You can already find devices on the table in some restaurants that take the place of a server to come get your order; there are still servers, but fewer of them, for part of their job has been automated. Travel agencies have largely disappeared; their work is now handled mostly by websites run primarily by computer. Self-driving cars and trucks threaten to throw huge numbers of taxi drivers and truck drivers out of work. Factories require fewer workers than ever before, and this trend is continuing.  To sum things up, a new report from Oxford University concludes that nearly half of all jobs in America may disappear due to automation in the next 20 years (though the authors suggest that some of those people may find new work elsewhere in the economy—like a former factory worker who gets a job at Walmart.)

In the past, new industries arrived to employ people who lost their jobs due to mechanization.  Factories, for example, employed people who no longer worked on farms or made craft goods by hand.  However, some experts believe we might not be so lucky this time, for the new industries that are coming along use relatively few workers.  (For example, Google has roughly 74,000 workers and dominates the web browser market, while General Motors, which shares the auto market with several other huge companies, has 180,000 workers.)

For purposes of this part of the exam, we’re going to imagine that, 20 years from now, 3 out of 10 working Americans are permanently unemployed due to automation.  That may or may not happen, but for the sake of discussion let’s imagine a world where it does.

Many people have proposed to deal with such a situation by giving people a “universal basic income.”  Here is one common version of this idea: you get $1700 a month if you have no income or assets, and progressively less the more you make, with nothing at all for people making more than $30,000.  (In other words, if you made $20,000 a year, you would get something in addition to that, but less than $1700 a month.)  Imagine that this would be funded from the profits of businesses who have automated and laid off workers (so that part of what they used to pay workers is now paid in taxes to support the basic income for others).    

For purposes of your discussion, assume that we are considering instituting a universal basic income just like the one described above, paying for it in the way described above, and that this will go to the 3 out of 10 Americans who are permanently unemployed due to automation.  

Is this solution to the problems created by automation consistent with justice?  Why/why not?

Discuss this issue using the Utilitarian theory of distributive justice.  Here are some concepts you might use in your answer:

Utility and the Principle of Utility

What a distribution must be like to be just, according to Utilitarianism

Discuss this issue using Nozick’s version of the Libertarian theory of distributive justice.  Here are some concepts you might use in this part of your answer:

Liberty (autonomy, self-determination)

Principle of original acquisition

Principle of justice in transfer

Principle of justice in rectification

What a distribution must be like in order to be just, according to Nozick’s version of Libertarianism

Discuss this issue using Rawls’ version of the Egalitarian theory of distributive justice.  Here are some concepts you might use in this part of your answer:

The liberty principle

The difference principle

The fair equality of opportunity principle

The mean cost of domestic airfares in the United States rose to an all-time high of $385 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and fees. Assume domestic airfares are normally distributed with a standard deviation of $105. Use Table 1 in Appendix B.

a. What is the probability that a domestic airfare is $560 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $250 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $300 and $470 (to 4 decimals)?

d. What is the cost for the 2% highest domestic airfares? (rounded to nearest dollar) $ or Select your answer 1. More 2. Less

The mean cost of domestic airfares in the United States rose to an all-time high of $380 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and fees. Assume domestic airfares are normally distributed with a standard deviation of $120.

a. What is the probability that a domestic airfare is $530 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $260 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $310 and $470 (to 4 decimals)?

d. What is the cost for the 3% highest domestic airfares? (rounded to nearest dollar)

The basic purpose of the United States legal system is to ensure fairness in balancing individual and societal needs, while at the same time preventing excessive government power. Some people think balancing these interests has become too complicated and justice has been compromised. What do you think? Please explain your view, giving at least two examples that support it.

1. If a country such as Malaysia scores much higher than the United States on Power Distance (one of Hofstede’s cultural dimensions), how can this information help a manager who plans to operate in both countries? State one area of management that differences in Power Distance is likely to be relevant.
2. Describe the type of political risk a firm in a specific industry would face in any one of today’s emerging markets you are familiar with or have some knowledge of. Select a country and make an assumption that may help in you answering this question, based on the firm’s size or products, among others)