Please note that marks will be deducted for referencing errors. (approximate 600 word limit). The purchase by Neptune International Ltd of the China South Dairy Co, a large dairy distributor network...

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 Please note that marks will be deducted for referencing e
ors. (approximate 600 word limit).
The purchase by Neptune International Ltd of the China South Dairy Co, a large dairy distributor network with wholesale outlets and networks throughout South East China, has led to the parent company looking to develop vertical supply chain security by purchasing dairy producers in Australia.
The Neptune International CFO for Dairy Mr. Davis Nicks is travelling to Guangzhou to hold further meetings with the Chinese born CEO of the newly acquired subsidiary and his senior management team. Ahead of his trip Davis has requested that you provide him with a
iefing regarding the following:
1. Part of Davis Nicks objectives during his trip to China is to assess the veracity of the budget sales estimates for baby infant formula provided by China South on which Neptune are basing the proposed purchase of Kiewa Milk. Davis would like you to provide a critical review of the risks and assumptions underpinning the unit and AUD dollar sales projections provided by China South. What are the dangers inherent in Neptune’s proposed purchase of the Australian milk processing business based on estimates of Chinese domestic sales?   (10 marks)
2. Davis also wishes to understand how the concepts of ‘guanxi’ and ‘power distance’ will impact on his interactions with the cu
ent China South DairyCo executive who will be reporting directly to him and, in particular identify any difference between Chinese and Western approaches to management accounting and budgeting that Davis may encounter in his coming dealings with Chinese-based and trained accounting staff.  (10 marks)
Answered Same DayApr 20, 2021ACC210

Solution

Preeta answered on Apr 21 2021
51 Votes
1. Neptune International Ltd is planning to purchase an Australian company, Kiewa Milk. China South, a subsidiary company of Neptune International Ltd was given the responsibility to make the sales estimate and budget based on which the purchases will be made. CEO of Neptune International Ltd is travelling to Guangzhou to directly interact with CEO of South.
Some risks persist on the assumptions. The sale volume is just an estimate and not the actual figures. This might be true in the future and might not be true. Moreover, since the estimates are made by the Chinese company where as the company to be acquired is the Australian company, so there might be difference in the estimates and the actual figures. Inflation is always different in different countries based on the standard of living there (Okulicz-Kozaryn, 2010). So, inflation for China will be different from inflation in Australia. So, there can be wrong in the estimates of China South regarding the inflation estimates. If the inflation...
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