Liquidity Risk And Maturity Transformation In Banks Finance Essay

Liquidity Risk And Maturity Transformation In Banks Finance Essay This research proposal will focus on one of the key area of risk in banking sector which is liquidity risk. There are three definitions which are commonly used for the liquidity. First one is the ease that the financial instruments can be converted in to cash. Second is market concept of the liquidity is the ability to trade the assets or securities without losing its value. The last is the monitory liquidity means the total number or total quantity of the liquid assets which are trading in the economy. (Adrian and Shin, 2008). The purpose of the literature review and dissertation is tried to address the main reasons of mismatching of assets and liabilities in banks. LIQUIDITY RISK. Mismanagement of liquidity can lead to bankruptcy. We cannot differentiate liquidity and solvency in bank. Some time the bank which is illiquid can be insolvent and on the other hand the bank which is insolvent can be illiquid. This is why the capital and liquidity adequacy performance is the major concern of the commercial bank. (Good Hart, 2008). Liquidity and solvency has the strong relationship. In Banking act of 1935 liquidity and solvency practically has become the synonymous terms. (Walter A. Morton, 1939). This is the fact that because of mismanagement of the liquidity the financial market faced some remarkable events in 2007 and 2008. Burnermair presents his view about the crisis of 2007-08. Financial markets experienced extraordinary events in 2007 and 2008. The increase in delinquency rates of subprime mortgages, coupled with the mismatch in the maturity structures of off-balance-sheet conduits and structured investment vehicles (SIVs), led to a sudden drying up of asset-b acked commercial paper and the failure of several banks, including a classic bank run in the United Kingdom. The eruptions in credit and money markets ultimately led to a run on one of the leading investment banks in the United States. (Brunnermeier, 2008). The liquidity cans effects in two ways or it has the two ways impact on the bank. One side is high liquidity ratio send a positive signal to the depositors. This shows that the bank is liquid and it increase the confidence of the depositor and the lower level of the liquidity means the bank is not in strong liquid position and will unable to pay its commitment. But if we see the other side high liquidity shows the inefficient use of the resources. This shows bank will not efficient in investment activities and will lose the profitability. (Gunsel, 2010). This is very broad topic even the word liquidity has many definitions. As Good Hart says in one of his article Unfortunately the word liquidity has so many facets that it is often counter-productive to use it without further and closer definition.(Good Hart, 2008). MATURITY TRANSFORMATION. The key face or side of liquidity which we are going to cover in this research is the maturity transformation which means that the maturity of assets and liabilities in balance sheet of bank. In normal practice bank perform a valuable activity on either side of the balance sheet. On asset side they go for long term investments or make long term loan. They make loan for illiquid borrowers because they want flow of capital in economy. On liabilities side they need liquidity on demand to depositors. There is incompatibility between these two activities. Demand for the liquidity can arise at inconvenient time and can put the banks in trouble. Other activities of the banks can be affected. This is why an army of the regulators always supervise the bank to protect them from their own fragility. (Douglas, 2001). Bank activities are link with all economy and failure of one bank can create a multiplier effect. One of the main or most important reasons for the crisis in financial sector is the failure of the bank because bank failure starts systemic risk. (Douglas W Diamond, 2005). This is why the regulation regarding liquidity and capital requirement has become too much important. REGULATIONS FOR THE LIQUIDITY. There are three main reasons for the regulation of liquidity management. According to Adrian and Shin. First, pure market failures. There are no incentives for banks to hold adequate amounts of liquid assets because: (1) liquidity is costly, especially when competition drives the search for higher returns on equity; (2) liquidity shortages are very low probability events; (3) there is a perception that central banks will step in and provide liquidity support if and when it is needed (the moral hazard argument).Second, liquidity requirements can be seen as a way of sharing the cost of the public good of liquidity and financial stability between the private and the public sectors. This would help and mitigate moral hazard; it would also compensate for other implicit subsidies, such as deposit insurance, granted to the banking sector. Finally, stronger liquidity requirements would reduce the strategic uncertainty affecting banks actions, since they would be able to withstand larger shoc ks. (Adrian and Shin, 2008). Basel committee is working since 1980 to take measures the issue of liquidity in bank. The concern of this committee is to decide what should be the capital adequacy ratio. This mean what should be the minimum level of capital that financial institutions must have to keep. There should be the prior standard regarding to maturity transformation. According to author the standard for the maturity transformation has not been maintained. The proportionate is going to be increased for financing long term assets with short term borrowings. In this aspect what bank do they Conduits financing tranches of securitised mortgages on the basis of three month asset backed commercial paper. An example of this is Northern rock. The important thing which come in our mind who should be responsible to take in to consideration the issue of maturity transformation whether it should be central bank or bank itself. For the case of maturity transformation how long the bank will able to fulfil its commitments just in case the markets on which it relies suddenly dry up. . (Good Hart, 2008). MISMATCHING OF MATURITIES. It has been seen since many years that maturity mismatches in the balance sheet of the bank can lead to liquidity crisis. It was one of the reasons of the East Asian crisis in 1998. (Rajan and Bird, 2001). This is one of the reasons that maturity mismatch and the risk associated in doing this have got the considerable attention in markets. In bank its important is central because banks are in the business of maturity transformation. They take assets and usually repaid on short notice and use these deposits to provide credit facilities to borrower for long period. In simple banks need liquidity to meet the depositor demand or with drawls, to settle whole sale commitment, to provide funds when borrowers draw on committed credit facilities. Under stress condition maturity transformation is quite crucial. Because in crisis it is difficult to raise liquidity from different sources. (Financial supervision commission, 2005). This mean banks need to manage the liquidity but from the above po int of view banks can manage liquidity to give short term loans because banks borrow for short term but this is not so easy. REASONS FOR MISMATCHING MATURITIES IN BANKS. Hendrik explained if the banks go for liquidity preference they will give the short term loans but on the other hand borrowers demand long term loans because they want steady source of debt capital. (Hendrik, 2006). In the same paper Hendrik argued that Economic theory postulates that financial institutions are exposed to a significant interest rate risk which is largely due to their engagement in maturity transformation. Banks set loans on the basis of some standards. Borrowers with low credit ratings bank gives them short term loans and borrowers having high credit rating bank gives long term loan. (Douglas, 1991). So credit rating of borrower is quite considered in maturity transformation. Some time attitude of the managers who are in decision making is really matter in maturity transformation. This phenomena regarding risk is explained by James. He said the idea of risk is embedded, of course, the larger idea of the choice as affected by the expected return of an alternative. Virtually all the theories of the choices assume that decision maker prefer larger expected returns to smaller one provided the other entire factors constant (risk). (Lindley, 1971). In general they also assume that decision maker prefer smaller risk to larger one, provided other factors (expected value) are constant. (Arrow, 1965). Thus the expected value is assumed to be positively associated, and risk is assumed to be negatively associated with the attractiveness of an alternative. (James, 1987). So above argument shows manager risk taking or risk seeking attitude can effect maturity transformation decision. In normal practice during maturity transformation banks prefer high interest or high profit. They mismatch their liabilities and assets means borrow for short term and lend for long term. This practice leads to liquidity risk. This practice of mismatching of assets and liabilities in balance sheets of banks is continued since many years and is the main reason of the liquidity crisis. This mismatching of liabilities and assets has the significant part in East Asia crisis 1997-1998. Bank pays insufficient attention to maturity transformation because they prefer high risk and high return. This self interest behaviour leads to liquidity crisis. It is to reconfirm that liquidity crises can occur in the absence of bail out provisions and can result simply from maturity mismatches that themselves reflect the outcome of self-interested optimising behaviour by commercial banks. (Rajan and Bird, 2001). Bank capital structure also influence on maturity transformation. Some bank have excess capi tal this mean their capital to asset ratio is good. So this thing also affects the lending behaviour of the bank. By considering their capital structure they take the risk and mismatch the maturities of assets and liabilities. (Gambacorta and Mistrulli, 2003). From the above paragraph the different views of the authors come in front regarding reasons for the mismatching of the maturities. Following important reasons have been indicated. Borrowers demand for the long term loan, credit rating of the borrowers, risk taking behaviour, high profitability and banks capital structure. MATURITY TRANSFORMATION STRATEGIES BY THE FINANCIAL INSTITUTIONS. Most of investors prefer the loan having short maturity or terms. Now the commercial banks have created the off-balance sheet vehicle that converted or shorten the maturities of the long term products. Investment banks now rely on overnight repo markets to finance their balance sheet. So the question is what these off- balance sheet vehicles are. Off balance sheet vehicles are the structured investment vehicle. This means invest in long term illiquid assets and issue short term maturity paper in the form of asset backed commercial paper which have an average maturity of 90days and medium term notes which having the average maturity of one year. Asset backed commercial paper was very popular in 2006. The off-balance sheet vehicles strategy of investing in long-term assets and borrowing using short-term paper exposes them to funding liquidity risk, since the commercial paper market might suddenly dry up. To ensure funding liquidity, the sponsoring bank grants a credit line, or a so-cal led liquidity backstop.3 Thus, the banking system still bears the liquidity risk from the maturity transformation-like in the traditional banking model of banks, in which commercial banks take on short-term deposits and invest in long-term projects. (Brunnermeier, 2008). While transforming the maturities the banks or financial institutions has to see the concern of the investors. Investors are concerned with return which they can obtain on short notice. Because they are uncertain about the need of the funds. So the activities of the bank to provide the liquid investment opportunity. Banks do this through two channels. First bank deposits offer an option to obtain funds on short notice at lower opportunity cost as compare to market. (James, 1987). IMPORTANT OF LIQUIDITY W.R.T MATURITY TRANSFORMATION. Above views of the authors shows that how important is the management of liquidity in banks. No doubt it is important in banking sector because of different reasons but this not means that other sectors not face liquidity risk. All sectors combine to make economy and failure of one sector will affect overall economy of country. Holmstrom has explained in his article that management of liquidity for both real and financial sector is important. If both sector will manage their liquidity need, will be better able to run their operations efficiently and effectively without facing liquidity shortages. (Holmstrom, 2000). Liquidity risk management is important because liquidity shortfall affect the whole system and effect the overall economy. (Basel Committee on Banking Supervision, 2008). CONCLUSION. We have discussed the liquidity which means the ease that the financial assets can be converted into cash. Liquidity is very important and mismanagement of the liquidity can lead to bankruptcy. Banks can be insolvent because of the liquidity mismanagement. This is the reason that capital adequacy ratio has the greater concern for the regulatory bodies. Basel committee is working since 1988 to overcome the issue of capital adequacy. Because the stability of the financial institution is the concern of overall economy. In banks how they transfer their maturities means assets and liabilities in balance sheet of banks so that to avoid liquidity risk. Because the reason for the financial crisis in past this maturity mismatching structure of the banks. They finance long term loans with short term borrowings and when the time come to fulfil their commitments they are unable to generate liquidity. Why these institutions go for this mismatching structure because there are different reasons bor rowers demand for the long term loan, credit rating of the borrowers, risk taking behaviour, high profitability and banks capital structure. So the financial institutions must have the proper strategies regarding liquidity. BIBLOGRAPHY. Tobias Adrian and hyun song shin. (2008). Liquidity and financial contagion. Financial stability review-special issue of liquidity. No.11. Feb. 2008. Charles Good hart. (2008). liquidity risk management. Financial stability review-special issue of liquidity. No.11. Feb. 2008. Markus K. Brunnermeier. (2008). Deciphering the 2007-08 Liquidity and Credit Crunch Nil Gunsel. (2010). The deteminants of the bank failure in north cyprus. Journal of the risk finance, vol 11, NO . 1. Douglas W. Diamond and Raghuram G. Rajan. (2005) Liquidity Shortages and Banking Crises. The Journal of Finance, Vol. 60, No. 2 (Apr., 2005), pp. 615-647 Walter A. Morton. (1939). Liquidity and Solvency. The American Economic Review, Vol. 29, No. 2 (Jun., 1939), pp. 272-285 Hendrik Schulz, Stephen Simon, Marko Wilkins. (2006). Maturity Transformation Strategies and Interest Rate Risk of Financial Institutions: Evidence from the German Market. Oct 2006. Ramkishen S. Rajan and Graham Bird. (2001). Banks, Maturity Mismatches and Liquidity Crises: A Simple Model Leonardo Gambacorta and Paolo Emilio Mistrulli. (2003). Does bank capital affect lending behavior? Bengt Holmstrom and Jean Tirole, 2000). Liquidity risk management. Journal of money, credit and banking, Vol. 32, No. 3 (Aug., 2000). Financial supervision commission, 31 January 2005. A Consultative Paper on Liquidity Risk Management Policies for Banks. Douglas W. Diamond. (1991). Debt Maturity Structure and Liquidity Risk. The Quarterly Journal of Economics, Vol. 106, No. 3 (Aug., 1991), pp. 709-737 James G. March and Zur Shapira, (1987). Managerial Perspectives on Risk and Risk Taking Management Science, Vol. 33, No. 11 (Nov., 1987), pp. 1404-1418 Basel Committee on Banking Supervision, June 2008. Principles for sound liquidity risk management and supervision. Paul Sharma, 8 October 2004. Financial services authority speech.

Coca-Cola. Quality Management.

1. Introduction. The Coca-Cola Company is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands. The global nature of our business requires that the Coca-Cola system has the highest standards and processes to ensure consistent quality — from our concentrate production to our bottling and product delivery. To ensure such consistency and reliability, the Coca-Cola system is governed by the Coca-Cola Operating Requirements (KORE), a new management system which replaced The Coca-Cola Management System (TCCMS) in January 2010.KORE guarantees the highest standards in product safety and quality, occupational safety and health and environmental standards across the entire Coca-Cola system 2. Quality policies Protecting the Environment: We focus on water, packaging and climate. We are committed to conducting our business in ways that provide all personnel with a safe and healthy work environment. (people issues) We provide substantial training for our associates, using the training requirements defined in TCCSMS(The Coca-Cola Safety Management System) as a global baseline. people issues) Focus on needs of our consumers, customers and franchise partners (customer satisfaction) Get out into the market and listen, observe and learn (continual improvement) 3. List of processes a) acquisition b) Purchases of raw materials c) production d) advertising e) distribution f) quality testing Coca Cola CompanyProcedure no: P08 Advertising PURPOSE: This procedure defines the actions to be carried out for the advertising of Coca-Cola SCOPE: This procedure applies to the advertisingSUMMARY OF THE PROCESS StageMethod Search The advertising manager researches open markets to advertise the products to. AssessmentThe advertising manager studies the culture of those markets to assess the best marketing strategy in terms of: age, local customs, economic situation, and best way to reach the target market. ShapingThe advertising manager determines how Coca-Cola will advertise itself to adjust to the language and lifestyle of the people living in the county they are marketing to.DeterminationThe advertising manager determines what sources of media should be used to reach the largest number of the targeted market, whether it be newspapers, billboards, TV ads, commercials, etc. Strategy The adverting manager will design a strategy that will set them apart from their competitors such as Pepsi Information CollectingThe advertising manager will distribute a customer survey to see where the customer shops and how they chose what brand to purchase.CreationThe adverting manager, based on the customer survey, will create a sales strategy that follows the customers’ responses on the survey. TestingThe advertising manager will conduct trails to make sure there are no accidental flaws in the language and the way the message is received in a different culture Prepared by:Approved by: NAME: DEPARTMENT: SIGNED: DATE:NAME: DEPARTMENT: SIGNED: DATE:

The Between Class And Alienation - 1655 Words

What are the links between Class and Alienation According to Marx? According to Marx the types of alienation are an inevitable outcome of a class structured society, which is why he foresaw communism as the solution to prevent alienation and its negative effects. A communist society could potentially resolve structural economic related alienation between humans by removing class conflict. However it does not account for alienation as a result of other forms of stratification such as gender and ethnicity, or existential alienation as the result of human agency or the unpredictability of human nature. Furthermore Marx s theory only draws attention to those in work and does not consider the unemployed, children, students, or†¦show more content†¦The alienation of the proletariat from the product and the production process enabled the bourgeois to maintain a position of power by selling products made by others for profit thus exploiting workers. This socio-economic alienation, as Marx saw it, could prevent social mobility by keeping wages low a nd guaranteeing an enslaved workforce. Marx s theory of alienation from other humans could maintain existing class divisions as it prevented collective action and opposition by keeping people isolated. Long and tiring workdays enforced by bourgeoisie and petty bourgeoisie mean that the proletariats are unable to commune together in order to mobilise against the bosses. So alienation from species being would perpetuate class divisions because people would be compelled to take the work available to their class rather than personal preference, due to an immediate need for income. Without the resources to own the means of production, a proletariat is forced to sell their labour, thus cementing their position in the social strata. Therefore both class and alienation are the result of the industrialisation of society Marx understood alienation as something rooted in the material world, alienation meant loss of control, specifically

Case Study Of Entrepreneurship In Etisalat Business Essay - Free Essay Example

Sample details Pages: 10 Words: 2899 Downloads: 7 Date added: 2017/06/26 Category Business Essay Type Analytical essay Did you like this example? Etisalat is the UAEs largest telecommunication company. It has around 74 million customers worldwide. It has more than 120 roaming partners in all over the world. Don’t waste time! Our writers will create an original "Case Study Of Entrepreneurship In Etisalat Business Essay" essay for you Create order It provides range of telephony services and internet services. From the individuals, common customers to several big corporate houses depend upon the infrastructure (telecommunication) support provided by Etisalat. Etisalat operates in whole Middle East and Africa and its headquarters is in UAE. It also has operations in Asia and is planning to expand at several places in coming times through mergers and acquisitions. It is provider of voice communication over mobile or fixed line, and data communication, to individuals, enterprises and international telecommunication companies, mobile operators, ISPs, content provider. It is leader in Middle East and Africa region. Etisalat is an organization that believes in continuous innovation in products and its services. It provides high technology facilities to its customers. It is very keen towards the quality of services that is being delivered to them. Etisalat has won several awards for customer satisfaction and thats the reason why it is the leading company of the region. The company management is very good at operating business and expanding in new regions to increase the customer base and also to get the technological support from their partners. It has majority ownership in a leading provider of satellite telephony, Thuraya. Etisalat has good Research Development department. It keeps upgrading the technology presence of the company. Etisalat has deployed 3.75 G network in Egypt at the time when several companies are still implementing the 3G network infrastructure. This is the clear evidence of the dedication of the company towards the quality and the technology advancement. The organization also shows corporate social responsibility and intends to provide sustainable value chain with minimum impact on the environment. Entrepreneurial Activity and Innovation It has become the need of the hour that every company needs to improve on the services that it provides. It is more important for a sector like telecommunications where the competition is so strong that one cant survive on a weaker offering or service delivery. Under the conditions, Etisalat discovered a very important problem that many of its users were facing. Owing to the shortage of time, much of the conversations on the mobile were generally meant to be very small. In spite of talking for less than one-third of a minute, the customers had to pay the same as one would pay had he talked for the entire minute. Now, with huge number of calls, there was a complete wastage of money in this respect. So, Etisalat made an improvement in its services. It introduced the system of pay-by-the-second. Now, the customer would not have to unnecessarily pay when they do not deserve to. This attracted a number of customers towards using the services of the company. As far as classification of thi s innovation is concerned, it would fall under the category of developing new and improved services and ways to deliver them. It got even better for the company, as this form of service was made available in even the smallest denomination card value. So, customer satisfaction which is one of the major issues in any companys success became proficiency with this act. Level of Intrapreneurship As this innovation was made within the organization itself, it certainly was intrapreneurship. It did not lead to the start-up of a business, but the idea was generated from within the system. As far as the effects of this service on the company is concerned, there was great appreciation for the same in the market. Hence, the level of intrapreneurship was really high. If one notices this from innovation, it discovers the fact that an organization would not just find success by mere competing. It would only become justified, if internal innovations are suitable enough to take the business towards competing in the newer market as well. So, this form of intrapreneurship not only provided product modification but also provided a chance for market development. As far as the results of the same are concerned, the company did see a substantial level of market development after introducing this feature. So, it was a successful attempt. Motivational Factors and Rewards Motivation can be classified in two forms. The first one is intrinsic motivation and the second is extrinsic motivation. Looking at the form of innovation that the company has undergone, it would certainly fall under the intrinsic motivational form. The marketing department of Etisalat was responsible for finding out the need for pay-by-the-second functionality. After that, it was the internal system which believed that introducing this feature would be of use for the company. As far as the factors that led to this intrinsic motivation are concerned, they can be mentioned as follows: A belief to extend the market share. A confidence in the internal system of the organization. A level of courage to face the losses of failure (if any). Consistent change in demand of the customers. Talking about the rewards that were associated with this innovation, the company celebrated the launch of this facility in the market. It felicitated the hands responsible for making it a possibility. Also, Etisalat practices a marked performance appraisal system. The company by virtue of its activities has proved that it is essential to link performance with rewards. The reason for the same is that whenever the company sees that its employees are out-performing, it makes all the arrangements such that all those involved are rewarded. This raises the probabilities for intrinsic motivation within the companys staff. This is the reason that much of the employees of the company look to retain themselves for longer periods at the same time, they keep innovating and taking the company forward from its then position. So, we see from this case of Etisalat that it is actually essential for a company to link performance to rewards. Leadership and External Factors Etisalat is one organization which believes in the fact without effective leadership; there is no way the company can find success. A leaders works in this context are as follows: Interpersonal and Informational Roles: It carries the responsibility to provide information throughout the organization working as a figurehead, leader and liaison. The company feels that when the information is actually disseminated by the leaders, it is only then that the employees get motivated enough to carry out the companys work. Similar has been the case with Etisalat as well. The leaders had taken the responsibility to explain the importance of pay-by-the-second to the employees. The marketing department got its motivation from there and hence the functionality was well advertised. This form of communication also makes the leader well recognized in the employee body. With this, there is a unity to carry out all further tasks of the company. Decisional Roles: From the decisional perspective, the leaders of the company are regarded as entrepreneurs (which in this case refer to intrapreneurs), disturbance handlers, resource allocators and negotiators. One can clearly see from the motive of the company behind introducing the feature that it would have to handle disturbances with respect to non-acceptance of the idea in the market. Also, we have seen the entrepreneurship (intrapreneurship) which led to the introduction of this feature. So, one can see that the decisional roles of a leader are justified by introducing this feature. External Factors: Now, an internal likeliness of motivation can only take place if there is an external need of a certain product or service in the market. Here, the external factor was that of the head-to-head competition that the company has with its nearest rival DU. Also, the latent demands of the customers coupled with this form of competition made it look all the more important for Etisalat to take over the pay-by-the-second policy. Personality Characteristics of Entrepreneurs Entrepreneurs are the people who take calculated risk and have confidence in their activities. They look towards creating new standards at their work. They give complete dedication towards their management and try to achieve their target as soon as possible while maintaining the communication with his fellow employees. Although the success rate of entrepreneurship is not very good but this is not because of their mis management, it happens because of some external factors or the loosening after seeing the initial success. In Etisalat the people behind the innovation of the services are the person who is very good at convincing employees and management. They look in the market for the need of time and they innovate their services to fulfill them in best possible way. Etisalat also used to organize regular conferences to share the experience of the entrepreneurs (intrapreneur) with the employees which result in the inspirational effect on them. It provides an opportunity for every empl oyee to contribute towards the innovation at services and products. Company entertains the ideas originated from employees and after analyzing their feasibility implementation may be done. Entrepreneurs at Etisalat are self managed people and they know the extent to which company may allow them to perform. This means they have good understanding of their internal locus of control and try to operate according to the feasibility. They are esteemed people and always keep looking towards progressing to new technology that is evident from the companys continuous improvement in performance. They try to over perform others and Etisalat is leaving their competitors far behind in the level of services they provide. Other companies followed the scheme of pay per second calling system after seeing its popularity. Etisalat also have strategy of expanding in several new regions and their entrepreneurs are surveying these regions where they can exploit the customer base even by merger and acquisi tion with other firms. It clearly shows that entrepreneurs have affiliation of power. Entrepreneurship at Etisalat is a very common paradigm; the company is so much interested in the innovative activities that it always prefers to look at the market in ways to achieve best possible performance. The organization has history of innovations. In telecommunication sector of UAE, Etisalat is a company that leads the way in terms of technology. Other companies in the region always used to follow it. The company is leader of market because of this reason only. It is expanding its operation in newer markets to become international leader. This is pretty clear that company needs a lot of intrapreneurship activities so that it can achieve their vision and mission of providing best possible services. Intrapreneurs at Etisalat are very active people and always keep watching the market for the possible innovation. They are the people who properly communicate with leaders and perform their best. The ideas of innovations and renovation at company keep coming from them and they have u rgent desire for the success. The company support entrepreneurship from the top level of its leadership and management always help in their functioning. The leadership qualities of entrepreneurs are visible at Etisalat and they play a major role in the business development of the company. The expansion plans and the product development runs under their supervision and the marketing department work with them so that they can do exact promotion of the new services. The interaction between the departments is good in Etisalat and it is helpful for the Intrapreneurs. Political and Power-Related Circumstances The leadership at Etisalat is very supportive of the entrepreneurial activities. The company is very keen towards progressing fast and adopting newer services with the passage of time. They give much importance to the innovation aspect in organization. That is why the entrepreneurship at organization very successful in achieving their goal efficiently. The companys management is very good at communicating with their employees and have shown good quality work environment. Employee satisfaction level is good. Also UAE government has several contracts with the company so Etisalat doesnt get much hindrance from there in implementation of their innovative services or in launching new products. And due to need of improvement in its service the organizational leadership adopted a very transparent system and helped entrepreneurs in doing their work by facilitating with financial help and manual resources required. Entrepreneurs were able to analyze the exact performance of company and all th e reports that may help in making improvements in services were shared properly with them. This led to comfort ability of the entrepreneurship with the organizational environment. Success of the Innovation The pay per second plan by Etisalat is a huge success. The company is reaping benefits of its quality improvement and the customer satisfaction. The company is distributing huge dividends and also following several new projects of improving and supporting the innovation and entrepreneurship. The investments made by Etisalat in international market are also giving big profits. The company is seeing larger customer base at UAE and at its other operating locations. The people are going for Etisalat for utilizing the good quality services. The pay per second plan made the company popular in common people too. The competitors also followed the same path to attract the customers but first comers advantage is with Etisalat. Company is also launching the 3.75 G network and has implemented it at several places. They are providing high speed data plans and efficient enterprise solutions too like ISP, VPN etc. This success has created path for much more innovations. The company has its vision of providing the best services with regular technology improvement so that the customers to get the feel of latest innovations in the industry. The entrepreneurs involved in the innovation are given proper rewards which are a very good measure to inspire others in being a part in the innovations. Ethical Implication of the Intrapreneurial Activity Every innovation cannot be implemented for the sake of getting profit in business. The entrepreneurial ideas are welcomed but they need to be analyzed for the ethical and corporate social responsibility aspect. As we can see that Etisalat is growing rapidly but they are simultaneously maintaining their image in the market and society. They launch new services while considering the fact that it should fulfill the requirements of customers. They dont just exploit the demand in the market for their benefit; they also see what type of demand is that. The demand may be for the improvement of service or for the new products. The company should be dedicated for providing the best services while maintaining their profitability. But it also implies that firms have duty toward the society too that they make available the products and services according to customer needs. If a company sees the demand in market and then innovate the technology or services that is easy to produce but does not completely fulfill the customers expectation then this type of innovation cannot be seen as ethically correct. There should be ethical consideration with the every entrepreneurial activity otherwise it may be profitable in shorter duration but later on it will impact the companys business and its image in market. Any development at the organization can said good only when it improves the employees and customers satisfaction. The entrepreneurship is not just to facilitate the monetary benefits, it should consider the every aspect of the activity and locus of impact it creates on implementation. Innovation Approach in own Business Unit At any business unit the innovation or entrepreneurial activities should be treated as projects. These projects should be first analyzed for their feasibility. Also the need of innovation and its urgency should be specified. The company management should then evaluate each project on different parameters like cost involved, preference, relation with the existing business, technology involved, resources required, times needed, risks associated etc. These parameters decide the preference order for the innovation projects that which of the projects to be started first and how much proportion of resources to be allocated to which project. If any business unit treats innovation in this way then its possible that it will get much better result than any other organization. But normally what happens that company management doesnt show that much interest in the innovation projects because no one wants to take risks. The entrepreneurship is about taking risk but in calculated manner. So now it depends upon the capability of entrepreneurs in making the leaders of the business unit to understand the benefits associated with the project. Also the risk associated should be mapped with the alternatives and all the alternatives should be practically tested before making any proposals to leader. In businesses it should be done like organizing regular conferences so that people can present their new ideas in front of leaders and management of the company. This open house discussion is helpful in making them understand the need of the company and the direction in which the company may exploit in better way with good profitability. Entrepreneurs of the company here get opportunity to inspire more Intrapreneurs at the company. The financial planning of the company is also responsible for the approach company adopts towards the innovation projects. When company understands the need of entrepreneurship, it allocates a part of fund towards the research and development in its every financial year. These funds are utilized by entrepreneurs in developing and promoting new services or products. The expansion plans of the firm are also very important for the business development but it is very common for the leaders of the firm to neglect these ideas. It happens because the uncertainty of the market response towards this idea.