Samsung Electronics Multinational Conglomerate Company - America Market

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The economic and financial environment

Economic development

For the U.S. economic prospects in 2015, many people have concluded that the economy of U.S. has recovered. Since the markets in March 2009, the S&P 500 index (Standard & Poor’s) has grown roughly 200%, the NYSE (New York Stock Exchange) is up 165%, the NASDAQ (National Association of Securities Dealers Automated Quotations) is up more than 260%, and the DJIA index (Dow Jones Industrial Average) has gained more than 165%. Moreover, unemployment levels have dropped to just 6.1%. (John Whitefoot. 2015, September 23) Federal Reserve is slowing down its bond buying program and will wrap up its QE (Quantitative Easing) strategy this fall. The fact is that the U.S. is gradually doing well.

In 2015, Americans worried about the European economy, because about 40% of the public companies that compose the S&P 500 derive sales from Europe. If the Euro faces a continued economic slowdown, the corporate profits of American companies will suffer. However, it doesn’t mean the stock market won’t continue to do well; it just depends on when the Federal Reserve decides to start increasing interest rates. In early 2015, because of there is too much uncertainty, the Fed chooses not to increase interest rates. There still have a lot work to be down and concern about, and that rates will probably not increase until October in 2015. If this happens, investors will probably keep bullish, sending the stock markets higher over the coming seven months. Until October 2015, the interest rate increase would be expected, and it would allow the U.S. economy more time to set itself on a more stable, sustainable development. Besides, it would also allow the U.S. economy have more time to understand or estimate where the global economy is heading.

As a result, the major U.S. indices would be prepared to assimilate the expected hike. America’s big banks have been the biggest winners of the Great Recession and quantitative easing. When the U.S. financial system was on the edge of collapse, the Federal Reserve and the U.S. government intervened and bailed out America’s big banks. JPMorgan Chase & Co. (NYSE/JPM) has seen its share price enhance almost 350%, Morgan Stanley (NYSE/MS) has seen its share price raise more than 450%, Bank of America Corporation’s (NYSE/BAC) share price is up more than 500% since early 2009, and Wells Fargo & Company (NYSE/WFC) has seen its share price increase more than 625%. Even in the low interest rate environment, America’s big banks have made a lot of money. With the country’s banking industry on strong financial foundation, America’s big banks want interest rates to climb. When interest rates start to increase, lending institutions will enhance the amount they charge for the loans faster than what they pay on deposits. For America’s big banks, these higher rates will convert into higher profits.

Accounting Practices

For both a domestic and international level, achieving fair, liquid and efficient capital markets worldwide is by providing investors with information that is comparable, transparent and reliable. (U.S Securities and Exchange Commission. 2015)

- Large multinational corporations have begun to apply their home country standards, which may allow more than one methods to an accounting issue, meeting other standards bodies such as IASC standards or U.S. GAAP.

- The IASC has been encouraged to develop standards that provide transparent reporting and can be applied in a consistent and comparable fashion worldwide.

- Securities regulators and national accounting standard-setters are increasingly seeking approaches in their standard-setting processes that are consistent with those of other standard-setters.

Foreign trade policies of the host country

After 1944 Bretton Woods accords that created the International Monetary Fund and the World Bank, the General Agreement on Tariffs and Trade (GATT) was signed by 23 countries in October 1947. By 1986, GATT’s membership had expanded to 123 countries, all of which had committed to the principles of lower tariffs, open economies, and freer trade. Over those four decades, global import tariffs on goods fell sharply, from an average of over 30 percent to under 5 percent. (James McBride. 2015, October 5)

In 1986, President Ronald Reagan launched the Uruguay Round of negotiations, which created the World Trade Organization (WTO), an agreement finalized under President Bill Clinton in 1994. The idea of a global institution to regulate trade was first proposed during the Bretton Woods Conference.

The 1994 North American Free Trade Agreement (NAFTA) further integrated the U.S. economy with those of Canada and Mexico. In addition to recent bilateral deals with Colombia, Panama, and South Korea, the United States has concluded free trade agreements (FTAs) with seventeen other countries. The Obama administration has sought to advance U.S. trade interests through its 2010 National Export Initiative, a package of trade advocacy and export financing measures, as well as two pending deals, TPP and TTIP.

Culture Issue

Hofstede’s Dimensions of Culture

Hofstede’s five dimensions of culture differences between different countries and it is an effective value-oriented framework as well. Hofstede’s five cultural dimensions theory are including power distance, individualism/ collectivism, masculinity/ femininity, uncertainty avoidance, and time orientation.

First, power distance is the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally (Hofstede, 2001). It has divided two distances; there are low distance and high distance. Low distance means it has equal power those with status and those without status. High distance means it has extremely unequal power distribution between those with status and those without status (Castellano, 2014). It shows high power distance has a hierarchical society. On the contrary, low distance has more equal chance than high power distance.

Second, individualism means their actions are prefer to act like individual rather than groups. And the collectivism means they prefer to expect people in a group and take care of each other so that to have a tight relationship. That is to say, these two frameworks reflect the degree to which group actions are either independent or dependent on each other (Castellano, 2014).

Third, masculinity means societies