You are currently employed by DPT Holdings Ltd (DPT) one of the world's largest MNEs based in the United Kingdom. DPT is looking to enter into a new phase of global expansion activities via the acquisition of existing, foreign companies. To protect shareholder and creditor interests and to ensure the future sustainability of DPT , the company's Chief Executive Officer (CEO), Peter Hines, is anxious that the investments are only made in highly performing companies.

As the Chief Financial Officer of DPT, and in order not to miss potential new markets, Peter has set you the task of identifying three companies worldwide. These companies must be in the same industry but must be from different countries and cultural backgrounds.

The three different regions identified by the CEO for potential future expansion are:

(a) Anglo American (e.g. UK, Australia, Canada, former Commonwealth member countries such as India, Malaysia, Singapore etc. and the Nordic countries of Netherlands and Sweden);

(b) the Germanic/Latin countries (e.g. France, Germany, Italy, Switzerland, Brazil, Argentina and Mexico); and

(c) the Asian countries (e.g. China and Japan).

As an alternative to one of the three countries/markets above, the CEO would also be interested in a potential investment in the Middle East if suitable information is available from any corporations operating within this region.

In order to assist the CEO in determining whether each of the three companies you have analysed should be acquired or rejected, you have been asked to prepare a summary report for the CEO. In your report you are required to include a summary analysis of the following issues:

(i) In prior years, the CEO has relied heavily on both Hofstede's and Gray's classification models to guide future acquisitions. However, with the current, global movement towards the adoption of international standards in most countries, the CEO is concerned that these old models are now of little value. Set out a plan of how you could use the CEO's request to compare and contrast the performance levels of three different companies from different cultural backgrounds to actually test the current relevance of these models.

In your plan, provide a summary comparison of the development and cultural factors of the three countries you have chosen and explain how these factors could then be used to test both models. Your plan should clearly highlight the fundamental dimensions/values of each model and set out each model's strengths and weaknesses. Your plan should also identify under what circumstances these different development and cultural factors would make it difficult for you to compare and contrast the performance of the three, cross-cultural, annual reports you have selected.

(ii) Having completed your plan, as you work through each of the three annual reports selected, in your report to the CEO, summarise three, key hindrances/limitations to international financial statement analysis that you find in any of the three sets of financial statements reviewed.

(iii) Using any of the available Opacity Indices, determine the relevant Index for each of the three countries you have chosen. In your report to the CEO, list three consequences then for each of your three companies as a result of their country's Index rating in terms of obtaining investment from shareholders and/or banks and/or superannuation funds.

(iv) In comparing and contrasting these three annual reports, set out in your report to the CEO the relationship between development factors, culture and accounting practices internationally. In addition highlight what you believe are the major forces driving the movement towards international harmonisation at both a national and international level. What do you believe are the major forces currently operating AGAINST international harmonisation, again, at both a national and international level? What role do you think the political lobbying of the standard-setting process has played in the harmonisation process?

(v) Use all of the information obtained then from this analysis of the three annual reports, to, firstly, either confirm or reject Hofstede's and Gray's classification models as set out in your initial plan. Provide justifications for your decisions within your report. Secondly, make a recommendation as to whether DPT should acquire any of the three companies analysed, providing reasons for your final recommendations.