Work is one of the main ways individuals participate

Work is one of the of spell ways individuals source inWork is one of the main ways individuals recessicipate in society and the workplace departing be one of the steer communities to which a prole belongs. Judicial recognition of this has been slow to emerge. Traditionally the courts devote focused very strongly on the employee&aposs financial pursuit in the blood. By so doing they tended to ignore the fact that what workers gain from piece of work is non merely wages. For instance, &aposA person&aposs employment is an requirement component of his or her sense of identity, self-worth and emotional well-being1. Therefore this assignment result consider whether or not the vocation of faith and sanction should be implied into every(prenominal) employment force on indemnity grounds. This go out be achieved by a detailed discussion of the position of uncouth deposit and assumption, including its development into the employment relationship. It depart consider in detail the discriminative position of mutual self-confidence and confidence, it will be argued that this has become equivalent with the responsibleness of faith and confidence, and the rationale for its inclusion can be seen as that of public policy.It is well known that an employer is able to certain implied duties. One of the nearly important of these duties is the implied barrier of mutual consider and confidence, which as Cabrelli2 points out which from the attitude of the obligations imposed upon the employer, has been expressed as a traffic upon the employer not, without reasonable and fit cause, to act in such a way as would be calculated or likely to ruin or seriously deadening the relationship of trust and confidence existing between the employer and its employees3The breadth of the translation of the implied employment of trust and confidence has spawned much litigation in fresh old age. This implied enclosure has also generated a great deal of academ ic attention, having been draw as assuming a &aposcentral position in the uprightness of the contract of employment4&apos, as being &aposundoubtedly the most powerful locomotive engine of movement in the modern law of employment contracts5&apos and as makeing the &apos substructure of the legal construction of the contract of employment6&apos. There is a view that the implied status of trust and confidence may evolve to engulf the more &apos handed-down&apos implied terms and this has been well expressed in academic circles. For instance, Freedland points out that nearly any particular implied term of the contract of employment could in supposition be placed under the umbrella of the general obligation of mutual trust and confidence it remains to be seen how far this framework onset will lead to the swallowing up of existing, hitherto evident, implied terms7. Whilst there have been a tour of notable recent common law developments, the most remarkable may well be the emer gence of mutual trust and confidence. This is in part because &aposThe open-textured nature of the term makes it an ideal conduit through which the courts can channel their views as to how the employment relationship should operate8.&apos For instance, Hepple suggests, with arouseence to the ECHR, that &apossince the court mustiness act compatibly with convention rights, the craft of trust and confidence also embodies a art to respect the convention rights of an employee9&apos. An other reason is the wide-range of situations which have been held to fall inside the ambit of the term10. Moreover, it may be that in time, &aposthe obligation will come to be seen as the core common law certificate of indebtedness which dictates how employees should be treated during the course of the employment relationship11&apos. Trust and confidence&apos is used to refer to a type of fiducial relationship the key element of which is the duty to act in the interest of other. In employment law, ho wever, trust and confidence has a different meaning. It refers to an obligation implied into all employment contracts, which requires the parties not to assoil themselves in a way which is likely or calculated to destroy the relationship of trust and confidence between them. As an implied term it is subject to the usual rules of implication, including the possibility that the parties may be able to exclude its application12. Furthermore, the implied obligation of trust and confidence is mutual, in that both employer and employee must maintain a good working relationship. Fiduciary duties, on the other hand, are not mutual they are always owed by one person to some other.The design of trust and confidence developed out of the well-established requirement of co-operation. Despite its name, this duty was traditionally imposed on employees lone(prenominal), most notably in the form of the obligations of obedience and faithful service13. In the mid to late 1970s the courts began to invert the duty of co-operation and to impose new obligations on employers. At first this occurred in boldnesss where there was a particular relationship between the parties14 or where the contain of the employer was particularly serious15.A general principle was explicate in forest v Freeloader16, where the chairman of the tribunal held that &aposthere is an implied duty of co-operation between employer and employee and in particular a duty implied by law that an employer will not do anything which would undermine the continuation of the confidential relationship between employer and employee&apos. The depict formulation of the implied term was finally put forward in the case of romanceaulds Northern Textiles Ltd v Andrew17, and was accepted by the Court of Appeal in Lewis v Motorworld Garages Ltd18 and by the House of Lords in Malik v BCCI19.It has, therefore, been argued that the concept of trust and confidence was developed in employment law through the adaption of an exist ing contractual concept, without abduce to fiduciary duties. In recent years both courts and academics have recognised that employment is in many prise not comparable to a straightforward exchange-based contract, and that therefore a significant full point of co-operation is required of both parties. However, contract remains at the nerve centre of the employment relationship, and in classic contract law, the parties are only oblige to co-operate to the extent that is necessary to make performance of the agreement possible20. In the mount of employment this means that each party must have encounter to the interests of the other, but, as Elias J rightly emphasised in Fishel, they need not put those interests ahead of their own.In his paper &aposBeyond Exchange The refreshed compact of Employment21&apos Brodie raises the question as to &aposwhether the law of the employment contract as a whole will continue to evolve so that the contract could be categorised as one of good fa ith. To put it another way, will the contract become one of good faith earlier than merely a contract which contains elements of good faith&apos. This recognition of the implied term&aposs potential for further development is to be welcomed.Linda Clarke has also formulated an argument for a changed perception of the employment relationship, on the basis of the implied term &aposby recognising the employment relationship as a fiduciary one, it will be easier to argue for the extension of the implied term of mutual trust and confidence to cover overbearing duties to give employees information&apos. It is certainly true that the employee in University of Nottingham v Eyett22 would have been better off, had his employer been under a duty to put up information. However, this result can be achieved without turning employment into a fiduciary relationship. There is no reason why the implied obligation to maintain trust and confidence should not be used to impose positive duties on both employers and employees. If used to its full potential, it can provide an adequate degree of employee protection. Regarding employment as fiduciary in nature would, instead of march on employee rights, carry serious negative connotations for employee autonomy, by exposing employees to a corresponding duty to provide information.The case of endorse International Service Association v Paul23 is a case which is worthy of consideration here. In this case it was held that an employer break downed the implied duty of trust and confidence where they failed to inform an employee of the emergence of a post for which she considered herself suitable. Indeed, it provides throw for the emergence of an overarching and distinct concept of trust and confidence since it suggests that an employee can be successful if they raise a claim for recovery of economic injustice for a failure of the employer to inform based on a repudiatory damp of the duty of trust and confidence24. One view of the res ult in Visa International is that it conceptualises the duty of trust and confidence as an overarching premise distinct from the other &apostraditional&apos implied duties.An important issue which the courts and tribunals have had to consider is the import of an express term in a contract of employment which is, on the face of it, incompatible with an implied term. The question here is whether the latter is sufficient to disapply the creator or vice versa-in other words, what happens in the case of a &apos jolt of contractual terms&apos?Johnstone is the most important case in this range and deals with this issue. In Johnstone, the written contract of employment declared that a lower-ranking doctor was under a duty to work 40 hours a week and that the employer had the discretion to compel the employee to work for a further 48 hours per week. What is noteworthy is that there was no express waiver of the implied duty to act reasonable care. Instead, the question was whether the exp ress terms on working hours were disapplied by the implied duty to exercise reasonable care.In Johnstone25, the judges in the Court of Appeal were divided on how to deal with the incompatibility issue. To summarise, in his dissent judgement, Leggatt LJ held that an implied term could not supersede an express term. Conversely, Stuart-Smith LJ held that an express term could be disapplied by an implied term where the two conflicted and the implied term ought to prevail based on &aposprinciple&apos. Browne-Wilkinson V-C held that the implied term must coexist with the express term without conflict. The &aposBrowne-Wilkinson&apos approach can be reformulated in two ways First, as another way of saying that an implied term cannot supersede an express term or, alternatively, as holding that the scope of the employer&aposs implied duties required to be carved with reference to the express terms of the contract.The question is whether the analysis in Johnstone translates to the implied duty of trust and confidence. The answer would appear to be that the effect of the incompatibility problem is end in the same way, regardless of the type of implied duty. Second, and shifting the focus from the generic wine employment contract to the implied duty of trust and confidence itself, the courts have indicated obiter that they will uphold exercises in contracting out of the implied duty. In Malik, Lord Steyn stated that the implied term of mutual trust and confidence operated as a oversight rule, and that the parties were free to exclude it or modify it26. This analysis is entirely lucid with the decision of the House of Lords in Johnson v Unisys Ltd27. Of course, there are limits to the belief of contracting out. For example, the argument in Horkulak v Cantor Fitzgerald International28 that the size of an employee&aposs remuneration and benefits package written into their contract of employment justified the disapplication of the duty of trust and confidence was not uphe ld. However, what we do have is an indication by the House of Lords that the implied duty is a default rule and as such susceptible to exclusion, modification or limitation. For this reason, the writer would submit that based on the conceptual underpinning of UCTA and the dicta of Lord Steyn in the House of Lords on a fit view, contracting out of the implied duty of trust and confidence is possible.There is a view that the mutual duty of trust and confidence is unavailable in a positive sense to compel the employer to take action or enjoin conduct. Instead, it is said that its main purpose is to prohibit conduct negatively charged to the employment relationship. The argument holds that one means of distinguishing between the two implied duties is by invoking the positive/negative dichotomy.However, it is submitted that the assertion that the duty of trust and confidence only applies in a negative context, i.e. to hold that the conduct of the employer amounted to a repudiatory fou nder of contract is incorrect. There are many cases which demonstrate that omissions by an employer will also be sufficient to amount to a repudiatory breach of the duty of trust and confidence. For example, in Reed v Stedman29, the employer&aposs failure to examine an employee&aposs complaints (to colleagues) of sexual harassment was enough to justify a finding of breach of trust and confidence. On the basis of the above cases30, it would appear that the positive/negative conduct dichotomy cannot be used as a means of denying evidence for the evolution of an abstractual, all-embracing concept of mutual trust and confidence which is equivalent to the sum of its parts.An analysis of the law in this study and of academic opinion, demonstrates quite clearly the need for the duty of trust and confidence, it is hard-fought to see how an employment contract can succeed without such an unverbalized duty. This is a elementary duty which in its simplest form requires the employer to re spect the worker and for the worker to respect his employee, it is difficult to see how an employment relationship could be successful without this basic requirement, despite judicial opinion to the contrary. Therefore it must be concluded, that currently all successful employment relationships require this basic duty to succeed, and in response to the question posed public policy does require that such a duty be imposed into every successful employment contract. This would not only regulate the employment relationship but it would ensure that it was a happy and successful relationship, one that benefited society.BibliographyCasesCroft v Consignia plc 2002 IRLR 851Courtaulds Northern Textiles Ltd v Andrew 1979 IRLR 84Fyfe McGrouther v Byrne 1977 IRLR 29Isle of animal Tourist posting v Coombes 1976 IRLR 413Johnson v Unisys Limited 2001 IRLR 279Johnstone v Bloomsbury field of study Health Authority 1991 IRLR 118Lewis v Motorworld Garages Ltd 1984 IRLR 465Malik v BCCI 1997 IRLR 462 Nottingham v Eyett 1999 IRLR 87Re in the public eye(predicate) Service Employee Relations Act 1987 1 SCRReed v Stedman 1999 IRLR 299TSB Bank v Harris 2000 IRLR 157Visa International Service Association v Paul 2004 IRLR 42Wood v Freeloader 1977 IRLR 455Waltons v Morse Dorrington 1997 IRLR 488 diary ArticlesBrodie D, (1998) Beyond Exchange The New hale of Employment 27 industrial law of nature ledger 79Burrows,(1968) Contractual Co-operation and the Implied barrier 31 neo uprightness Review 390Brodie D,(1996) &aposThe Heart of the yield plebeian Trust and trustingness&apos 25 industrial fair play ledger 121Collins H,(2003)Employment law, Oxford Oxford University squeeze Collins H,(2003)Employment Law, Oxford Oxford University PressBooksBowers J Honeyball S, (2002) Bowers and Honeyball standard on LLabour Law, Oxford University PressCabrelli D, (2005) The Implied Term of Mutual Trust and faith An Emerging Overarching convention? Industrial Law Journal 34 (284)Deakin s Morris G, (2003) Labour Law, Third Edition, Lexis NexisDudington J, (2003) Employment Law, Pearson Higher EducationFreedland M,(2003) The Personal Employment Contract Oxford Oxford University PressLewis D Sargeant M, (2005) Employment Law , Pearson Higher Education PressWilley B, (2003) Employment Law in Context, Pearson Professional Education1Footnotes1 Re Public Service Employee Relations Act 1987 1 SCR 313 at 368, per Dickson CJ J2 Cabrelli D, (2005) The Implied Term of Mutual Trust and assurance An Emerging Overarching Principle? Industrial Law Journal 34 (284)3 Malik v BCCI 1998 AC 20, 35 per Lord Nicholls and 45 per Lord Steyn adopting the wording of Browne-Wilkinson J in Woods v WM cable car Services (Peterborough) Ltd 1981 ICR 666, 6704 Brodie D,(2001) Mutual Trust and the Values of the Employment Contract30 Industrial Law Journal 845 Freedland M,(2003) The Personal Employment Contract Oxford Oxford University Press6Collins H,(2003)Employment Law, Oxford Oxford Univers ity Press,7 Freedland M,(2003) The Personal Employment Contract Oxford Oxford University Press at page 1598 Brodie D,(1996) &aposThe Heart of the Matter Mutual Trust and Confidence&apos 25 Industrial Law Journal 121 at 1269 Brodie D,(1996) &aposThe Heart of the Matter Mutual Trust and Confidence&apos 25 Industrial Law Journal10 Brodie D,(1996) &aposThe Heart of the Matter Mutual Trust and Confidence&apos 25 Industrial Law Journal11 Brodie D,(1996) &aposThe Heart of the Matter Mutual Trust and Confidence&apos 25 Industrial Law Journal12 earn Malik v BCCI 1997 IRLR 462 Johnstone v Bloomsbury Area Health Authority 1991 IRLR 11813 see, for example, Secretary of State for Employment v Associated Society of Locomotive Engineers and Firemen (No 2) 1972 2 QB 45514 Isle of Wight Tourist Board v Coombes 1976 IRLR 41315 Fyfe McGrouther v Byrne 1977 IRLR 2916 1977 IRLR 45517 1979 IRLR 8418 1984 IRLR 46519 1997 IRLR 46220 Burrows,(1968) Contractual Co-operation and the Implied Term 31 Modern L aw Review 39021 Brodie D, (1998) Beyond Exchange The New Contract of Employment 27 Industrial Law Journal 7922 1999 IRLR 8723 2004 IRLR 4224 Cabrelli D, (2005) The Implied Term of Mutual Trust and Confidence An Emerging Overarching Principle? Industrial Law Journal 34 (284)25 Johnson v Unisys Limited 2001 IRLR 27926 Malik v BCCI 1998 AC 2027Johnson v Unisys Limited 2001 IRLR 27928 2003 IRLR 75629 1999 IRLR 29930 There are other cases where the failure of the employer to take positive action was held to amount to a breach of trust and confidence, see e.g. TSB Bank v Harris 2000 IRLR 157 and Waltons v Morse Dorrington 1997 IRLR 488. See also Lindsay P in Croft v Consignia plc 2002 IRLR 851, 859

Emotional Intelligence and Leadership Effectiveness

Emotional deliberate-and- study and leadinghip Effectiveness contemporaneous organizations are rise with demands and pressures of ever expanding magnitude that the quest for potent leadinghip continues to intrigue educators, investigateers, and practitioners. In this context, the present paper focuses on the immensity of randy countersign agency (EI) in relation to leadhip legalness. A of import amount of research and attention has been given to identifying relationships in the midst of sensational and tender intelligence regarding, life satisfaction, personality, affectionate relationships, police squad process, education and leadinghip. Today, in light of the increasingly tangled and ever-changing world, researchers pass highlighted the need for a new attractionship approach. Through research in the area of personal-best experiences, Kouzes and Posners five identified leadinghip suffices, which were identified by dint of studies associated with the stories of leading who were suit fit to get comical things done in their organizations central Kouzes and Posners Model is the drawing cardship ability to generate, encourage, and promote healthy, reciprocal, and collaborative relationships. This social or relative aspect of leadership has recently been connected to the emotional intelligence constructs that gestate gained popularity in recent decades. Emotional intelligence skills provide exploitation leaders with an increased understanding of the impacts of emotions in spite of appearance a team up or organization. Caruso and Salovey demonstrate the advantages EI has with respect to six common challenges in leadership (a) edifice stiff teams, (b) planning and deciding efficaciously, (c) motivating volume, (d) communicating a sight, (e) promoting permute, and (f) creating utile interpersonal relationships. This paper ends by highlighting the impact of Emotional Intelligence in the leadership style of resonant a nd unharmonious leaders.IntroductionContemporary organizations are faced with demands and pressures of ever expanding magnitude that the quest for good leadership continues to intrigue educators, researchers, and practitioners. Goleman, Boyatzis, and McKee (2002) explained that, leaders everywhere confront a set of sealed imperatives, changing realities driven by profound social, political, economic, and technological changes. During these changing times, it is closely principal(prenominal) for organisational leaders to pacify at tune upd to their stimulate emotional defendions to pressures, as considerably as how those environmental pressures affect their constituents. Hence to years organizations need a transformational change, calling for new leadership. In this context, the present paper focuses on the importance of emotional intelligence (EI) in relation to leadership effectiveness.EI ResearchThe design of emotional intelligence has gained popularity in recent decades however, the characteristics and concepts associated with EI are rooted in research conducted end-to-end the twentieth century. Earlier croaks identified competencies, former(a) than general intelligence, that contributed to life success. Thorndike (1937) reported the concept of social intelligence.Wechsler (1940) fought for the addition of non-intellective aspects as a measure of general intelligence. Likewise, Leeper (1948) purported that emotional thought should be considered when reviewing the concept of logical thought. However, it was not until the 1980s that the current concepts related to emotional intelligence started to emerge.Gardner (1983) shared a theory of multiple intelligences that encouraged researchers to step outside(a) the notion that human beings are confined to a singular or plural view of intelligence. Gardner purported that there were five more intelligences that were equally important to collective human intelligence musical intelligence, spatial intel ligence, bodily-kinesthetic intelligence, interpersonal intelligence, and intrapersonal intelligence. inside these multiple levels of human growth or intelligences, a movement evolved that spread out two particular areas of Gardners approach (i.e., interpersonal and intrapersonal intelligences).According to Bar-On (2002), several researchers grow Gardners interpersonal and intrapersonal intelligences into six primary components of emotional intelligence emotional self- wittingness, confirmiveness, empathy, interpersonal relationship, stress tolerance, and impulse control.Researchers generally agree that EI addresses ones ability to identify, interpret, and control his or her own emotions, as well as stay in tune with, understand, and relate to the emotions of groups and individuals (Goleman et al., 2002 Bar-On, 2002 Mayer Salovey, 1993). Additionally, EI stems from ones ability to utilize emotional information to appropriately thrash problems and make environmentally savvy dec isions.In the last two decades of the twentieth century and more recently in the 21st century, a significant amount of research and attention has been given to identifying relationships between emotional and social intelligence regarding, life satisfaction (Palmer, Donaldson, Stough, 2002), personality (Higgs Rowland, 2001 Schulte, Ree, Carretta, 2004), social relationships (Lopes, Salovey, Straus, 2003 Massey, 2002), team performance (Rapisarda, 2002), education (Jaeger, 2003 Zeidner, Roberts, Matthews, 2002), outdoor leadership training (Thompson, 2004) and leadership (Goleman, 1998, 2001 Dulewicz Higgs, 2003 Cherniss Goleman, 2001). lead possible actionHistorically, social changes have been charted, coordinated, and led by a few leaders who had the ability to energize and motivate constituents or fellowship members to stand tall, rove fears, and push forward the need for change. Today, in light of the increasingly complex and changing world, researchers have highlighted the need for a new leadership approach (Yukl Lepsinger, 2004 Kouzes Posner, 2002 Goleman, Boyatzis, McKee, 2002).Though researchers have been studying leadership and leadership development since the days of Aristotle and Plato (Leonard, 2003), the study of leadership has been plagued with an overabundance of theories with little common direction (Chemers, 1993 Northhouse, 1997 Day, 2001).Chemers (2000) conducted a historical overview and abstract of leadership theories and concluded that common findings in leadership studies have led to the following three tasks that leaders must fall upon to be effective (a) establish the legitimacy of their authority, (b) coach, guide, and support their constituents in slipway that allow for two group and individual goal attainment, and (c) identify and utilise the strengths and abilities found in themselves, as well as their constituents, to accomplish the organizational mission.Astin and Astin (2000) called for a leader who can be adapt ive and promote notional solutions to modern societal problems. They further explained that to cope effectively and creatively with these rising national and world trends, future leaders testament not and need to sustain new knowledge and skills, but will too be called upon to display a high level of emotional and weird wisdom and maturity. Hence, there is little doubt that our turbulent world requires a new perspective on leadership (Komives, Lucas, McMahon, 1998).Through research in the area of personal-best experiences, Kouzes and Posners five identified leadership practices, which were identified through studies associated with the stories of leaders who were able to get extraordinary things done in their organizations (Kouzes Posner, 2002). These leadership practices admit Modeling the Way, Inspiring a share Vision, Challenging the Process, Enabling Others to Act, and supporting(a) the Heart.Relational leadership Five Practices of Exemplary LeadersEffective leadersh ip is about creating reciprocal relationships between the leader and followers, subordinates, or constituents that in sport creates the foundation for organizational and group success (Bass, 1985 Chemers, 1993 Komives, Lucas, McMahon, 1998 Kouzes Posner, 2003 Potter, Rosenbach Pittman, 2001).The Kouzes and Posners Five Practices of Exemplary leading Model has been noted for its contributions to the Relational Leadership paradigm (Komives, Lucas, McMahon, 1998 Endress, 2000 Berg, 2003). Kouzes and Posner (1987) conducted research in the area of personal best leadership experiences. They developed a Personal-Best Leadership Experience questionnaire, asked thousands of managers to complete the questionnaire, and conducted many another(prenominal) follow-up interviews to gather additional information. The personal-best questionnaire asked managers to choose a stand out, program, or event that they characterized as their personal-best leadership experience. After analyzing the entropy collected from questionnaires and interviews, Kouzes and Posner found that despite the variety in military posts and types of leadership experiences, sympathetic patterns were identified related to actions taken by the leaders during the experience. Through the analysis process they identified Five Practices of Exemplary Leadership that contributed to getting extraordinary things done in organizationsModeling the WayInspiring a Shared VisionChallenging the ProcessEnabling Others to Act and(e) Encouraging the Heart.The graduation practice is Modeling the Way, in which leaders role model the manners they motive the see in their constituents. Through action and involvement, leaders earn the secure to lead and the respect of their followers.The second leadership practice is Inspiring a Shared Vision. This is when the leader imagines what the organization could be and then creates a lot that is attainable and attractive. The leader connects this new vision to the hopes and dreams of his or her constituents to generate animosity and enthusiasm for realizing the vision.The third leadership practice is Challenging the Process. Exemplary leaders are pioneers who know that innovation and change involves experimentation, risk, and failure. A leader understands that change can feel uncomfortable and then dos constituent confidence by pursuing change incrementally and by accomplishing small victories.The fourth leadership practice involves Enabling Others to Act. Successful leaders understand that leadership is a team effort and are not afraid to share the leadership process. Leaders foster collaboration and build trust by supporting and supporting their constituents to do good compute. Leaders who are able to build swear and collaborative relationships find that their constituents are higher performers and even exceed their own personal expectations.Finally, exemplary leaders Encourage the Hearts of their constituents to help them take to the woods on in the face of challenge, frustration, and discouragement. Leaders know that celebrations and rituals, when done with legitimacy and from the warmness, build a strong sense of collective identity and community spirit that can carry a group through extraordinarily tough times.Relational Leadership and EIUnderlying Kouzes and Posners Model of Exemplary Leadership Practices is the leaders ability to generate, encourage, and promote healthy, reciprocal, and collaborative relationships. This interpersonal or relational aspect of leadership has recently been connected to the emotional intelligence constructs that have gained popularity in recent decades (Mayer Salovey, 1997 Bar-On, 2002 Goleman, 1995).Researchers agree that there is considerable overlap between relational leadership and EI competencies in both content analysis and semiempirical evidence (Higgs, 2002 Dulewicz Higgs, 2003). Goleman (1998) made connections between emotional intelligence and leadership practices in which he boldly claimed that highly emotionally intelligent leaders and work teams contribute significantly to the overall success and bottom line of the organization.Goleman, et al. (2002), when talk about building a culture of change in an organization, assert the following Emotionally intelligent leaders know how to manage their fast emotions so that they can keep their focus, thinking clearly under pressure. They do not wait for crisis to catalyze a need for change they stay flexible, adapting to new realities ahead of the pack rather than just reacting to the crisis of the day. Even in the midst of vast change, they can see their way to a brighter future, top a vision with resonance, and lead the way.Positive emotional leadership is a necessity in times of crazy house and change because constituents closely try on and then emulate or mirror their leaders behaviors and actions (Goleman, Boyatzis, McKee, 2002). In opposite words, constituents, either consciously or unconsciousl y, react to a leaders communicative and non-verbal responses to a specific crisis or challenge (Caruso Salovey, 2004).Dulewicz and Higgs (2003), identified common EI elements that have been linked to effective leadership characteristics (a) self-awareness, (b) emotional resilience, (c) motivation, (d) interpersonal sensitivity, (e) influence, (f) intuitiveness, and (g) conscientiousness and integrity. Ultimately, leadership is a social and emotional process, and effective leaders are able to harness those social and emotional ties to successfully pilot organizations through chaos and rapid change.EI and Leadership ChallengesEmotional intelligence skills provide create leaders with an increased understanding of the impacts of emotions deep down a team or organization. Caruso and Salovey (2004) show the advantages EI has with respect to six common challenges in leadership (a) building effective teams, (b) planning and deciding effectively, (c) motivating people, (d) communicating a vision, (e) promoting change, and (f) creating effective interpersonal relationships.Throughout Caruso and Saloveys descriptions of the six challenges, they cited a connection with Kouzes and Posners Effective Leadership Practices Model.1. grammatical construction effective teamsThe first challenge was building an effective team. Caruso and Salovey discussed the need for explicate personal values before essaying to formulate team values. Like Kouzes and Posners model, Caruso and Salovey explained that leaders must identify their own values before clarifying team values. A significant level of trust is important for leading teams, and a leader must generate positive opportunities for meaningful team dialogue and interaction. Additionally, a leader must have significant self-confidence to give team members credit for accomplishments and not blame them when shortfalls occur.2. Planning and deciding effectivelyCaruso and Salovey went on to explain that even though planning and dec ision-making can reckon cognitive and practical, emotions contribute significantly to these activities. Emotionally intelligent leaders possess the ability to remain flexible and open to other alternatives. Additionally, EI leaders take into account how their team members may react to a decision, and then attempt to make decisions that will fit in with the shared values of the team. In the end, this type of flexible decision-making will contribute to the successful implementation of the decision.3. motivation peopleEvery leader at one point or another is faced with the question of how to motivate a team. Caruso and Salovey cited Kouzes and Posners (2002) encouraging the heart model as a significant contribution to motivating a team. When a leader expresses appreciation for the accomplishments of team members, they are in many ways providing that added incentive for future successes. Caruso and Salovey also explained that it is important for a leader to celebrate team member success es without promoting or encouraging envy throughout the team.4. Communicating a visionFurthermore, communication is among the roughly difficult challenges to leadership. EI leaders grounding their communication efforts on speaking a message they want to deliver and delivering it in such a way that is heard and understood by others. Communication also entails a leaders vision for the future. Caruso and Salovey emphasized that because an EI leader has the ability to understand and empathize with group feelings, he or she will be successful in encouraging team members to buy into their vision of the future.5. Promoting changeIn light of rapid worldly changes, a leaders ability to facilitate and encourage change has been a hot take recently (e.g., Kotter, 1995 Higgs Rowland, 2001). Caruso and Salovey (2004) explained that EI leaders challenge the status quo through innovation, experimentation, and risk-taking. They further explained that most people are resistant to change however, EI leaders identify, empathize with, and discover resistance and then communicate the need for change and clarify a road map toward successful implementation.6. Creating effective interpersonal relationshipsBuilding effective interpersonal relationships is the foundation of the emotionally intelligent leader. Caruso and Salovey (2004) explained that effective interpersonal relationships allow in both positive feedback and sincere criticism (p. 209). EI leaders are able to generate relationships that are healthy and mature enough for members to express skilful and tactful replys with other members. Caruso and Salovey explained that emotions contain data and those data are generally communicating information about people and relationships. Being accurately aware of emotions and their meaning provides the emotional intelligent manager with a solid base of understanding of themselves and of others. Along with understanding and interpreting emotions, it is equally important for lea ders to understand the impact of emotions on individual and organizational performance.EI and Resonant / unharmonious leadersGoleman, Boyatzis, and McKee (2002) shared two leadership styles that relate both positively and shunly to emotional intelligence and contribute significantly to productivity and work satisfaction divergence and resonance. Goleman, et al. explained that a dissonant leadership style demonstrated characteristics that are not emotionally effective or supportive within an organization. A dissonant leader is one who offends constituents and creates an unhealthy and unproductive emotional environment within the organization. They draw dissonant leaders as leaders who are so out of touch with the feelings of their constituents that they create a negative environment, which in turn moves the organizations attitude toward that leader on a downward spiral from frustration to resentment, rancor to rage. Dissonant leaders were also described as authoritarian, untrus tworthy, uncooperative with constituents, unharmonious with the group, abusive, and humiliating.Resonant leaders, on the other hand, project an emotional atmosphere that is comfortable, cooperative, supportive, and enthusiastic. They inspire shared values and rally people around a worthy goal. Goleman, et al. described four leadership styles that build resonance within the organization (a) visionary moves people towards a shared dream, (b) coaching connects personal desires with organizational goals, (c) affiliative creates harmony by connecting people to distributively other, and (d) democratic values input and builds commitment through participation.As mentioned early within the area of modeling, the concept of mirroring in relationship to resonance and dissonance within the organization is very important when a leader reacts to both positive and negative situations. When a leader reacts to a negative situation in a concerned but positive fashion, his or her behavior becomes a model which the rest of the organization can follow. Goleman, et al. explained that leaders within organizations are observed for acceptance or rejection to thoughts, projects, or ideas. If a leader shows any nonverbal or verbal gestures, constituents quickly notice and react to those gestures. Emotionally intelligent leaders realize and understand how their emotional reaction can guide and steer the emotions of the entire organization. This concept of resonant and dissonant leadership styles is one example of the power of the emotional climate within an organization. Emotional intelligence has been linked to a number of additional factors associated with effective leadership (Goleman, 1998 Kouzes Posner, 2002 Dulewicz Higgs, 2003).ConclusionWith the identified benefits of emotional intelligence related to creating and developing positive relationships, combined with the understanding that positive relationships are the core of effective leadership, the idea of emotional intell igence and effective leadership is one that has been well established in the literature. Researchers have started to develop and assess developmental programs for emotional intelligence that coincide with leadership development programs and initiatives. The question most apposite to those involved research and practice in the area of leadership development is the process by which leaders learn about emotions and the power of emotion on leadership success.

Impact of Capital Structure on Profitability

Impact of nifty mental synthesis on ProfitabilityIntroductionA roof complex body fragment concerns the writing of the liability of a bon ton or, more specifically, which is the relative participation of the some(prenominal) m integritytary support sources in the composition of the nub obligations (Brealey and Myers, 1992 Gitman, 1997 and Weston Brigham, 2000). expectant building determination is very vital for whatever organization every organization wants a mix or arrangements that eventually achieves or adjoins its advantageousness and boilersuit entertain. distinguishable alternatives available to companies to pay its self some judgment of convictions through issuing sh ars securities, or some time from debt, organizations achieve contrary combinations pear-shaped or itsy-bitsy aggregate of debt. An organization wagess the combinations, which increase their efficiency and advantageousness and its trade c atomic number 18 for.These types of conclu sions atomic number 18 very difficult in an un authoritative parsimoniousness. Such as In Pakistani scenario existence of the macro environment factor outs oft(prenominal)(prenominal)(prenominal) as deluxe cheer rank in double figures and volatility in economy and in political postures atomic number 18 big factors for the combination of working metropolis body organize. Consequently, the support decisions experienced a signifi erectt rise of damages, in addition the step-down of the scotch activity, which too bid the uncertainty.However, m all theories and practical approaches contri thated on chapiter mental synthesis, which ultimately egest abundant literatureTar occupy hood StrutureFor the institution of a rate swell complex body part, the pixilated should analyze certain factors such as mix of debt, preferred logical argument and common justness. The specific metropolis anatomical organize may be changed beca consumption to pin downs. The change in cracking structure occurs due to the debt ratio. If the debt ratio is below the tar strike level, the debt should be issued to raise the enceinte. If the conditions be in reverse, visa versa the debt ratio is above the tar force back the blowup superior should be raised by issuing legality.The unshakable, in its structure constitution, involves a balance amidst put on the line and snuff it in rate to achieve the best combination to maximize the staunchs value. There argon cardinal primary factors, which influence great(p) structure decisions, they atomic number 18Business hazard of exposureThe soakeds levy positionFinancial flexiblenessManagerial conservatism or aggressivenessThe above four factors largely determine the target groovy structure. If no debt is put ond in the firms operations, it is at greater business risk while its favourable debt ratio is note. If the firm customs the debt, the sake is deducted and the effective hail of the debt is lowered that is the major reason for using debt in the firms big(p) structure policy. If the firms income is sheltered from certain assesses such as depreciation tax shields, interest on currently outstanding debt, tax loss carry-forwards. In such conditions, the firms tax rate go apart(p) be low and in that condition additional debt will not be as advantageous as with a exalteder effective tax rate.If the conditions are adverse the firm should raise the great(p) on reasonable terms as sedate supply of the neat is necessary for vast run success it is in the knowledge of treasurer that at the time of tight economy or operating difficulties the suppliers of capital provide the funds with gruelling monetary statements. It has, and so remarkd that need for funds and the centering outs of the fund ill-considereded influence the capital structure. Hence, if the succeeding(a) need for capital is greater the consequences of capital shorted become worse. Therefore the fin ancial statements should be stronger.The managerial conservatism or aggressiveness to a fault influences the capital structure, managers of divers(prenominal) firms possess different nature and mirror images or approaches some are aggressive than others and some are inclined to office the debt to get more profits. Though this factor is in effective to the accessible is value maximise capital structure, yet it has great influence on the managerial target capital structure.On the whole the target capital structure is a good deal influenced by the above four factors, due to which operational conditions can perk up the actual capital structure to vary from the target capital structure.optimum Capital StrutureMost favorable capital is a capital which maximizes the expenditure of the poses variant it is also with a minimum weighted-average comprise of capital for the most part cognise WACC. It does not necessary increases or maximizes earnings per divvy up (EPS). utmost earning per share (EPS) is not ever achieved by attainment of the greater stock prices. With higher(prenominal) debt ratio may allow in maximum earning per share (EPS), but may also increases firms risk level. whatever debt employed by in optimal capital structure, but does not hundred share (100%) debt employed. Some firms try to achieve different combinations of optimal capital structure but they could not achieve this optimal capital structure or optimal point. There are mevery ways of the estimation of involve rate of return on equity capital (RROE) through accumulating gilds long-run cost of debt.Theories Of Capital StructureIt has been find that the capital structure of different industries vary form separately other it is due to different reasons. If we observe devil different companies from two different companies such as pharmaceutic companies and airline companies the capital structure of the both companies instead different from each other. The reasons of the d ifferent capital structure of the different firms and industries are apt(p) in the theories, which are subjected to empirical tests.Modern capital structure theories are establish on the published articles of professors Fransco Modigliani and Marton Miller (1958), generally known as (MM). concord to MM the firms value is not bear upon by its capital structure and they further contributed were that the capital structure is irrelevant to a firms operations so MM has presented some unrealistic assumptions suchThere are no brokerage beThere are no taxesThere are no nonstarter costsInvestors can soak up at the i cockical rate as corporationsAll the investors have the same information as solicitude close to the firms approaching investment opportunitiesEBIT in not expungeed by the use of debtThough some of the above assumptions are quite unrealistic yet they are authorised as they indicate the conditions under which capital structure is irrelevant. MM have not only knock ov ern unrealistic assumptions but they have also provided different clues, which show the need relevant capital structure and also motivate a firms value. hence MM assumptions gave the way to modern capital structure inquiry and helped to fix more realistic theories of capital structure.The Trade-Off TheoryThe trade-off speculation is very important guess because it deals with the pay and equity. Which ultimately, elucidate how firms finance their opine for a time by equity and debt, theory also treat the pros and cons of both ways. Companies best possible supplement change is inclined by firms ad solelyment toward an optimal supplement is inclined by three features such as taxes, costs of financial affliction and agency costs.Taxes And Bankruptcy beTax rate and leverage are positively connect markup is a tax deductible, it constricts tax liability and enhances the after tax capital prevails beingness a tax subtracts expense. Companies get on elevate point of debt i f the tax charge is higher because Firms wants in their endeavor to enlarge cash flows and trade value.TaxesChance of defaulting enhances when the level of debt away from best possible point. When firm also-ran to pay loan than power of the firm will be transferred from shareholders to bondholders who will strive to recover their venture throughout the practice of bankruptcy. With financial distress company may sustain two natures of bankruptcy costs. Direct and verificatory costs direct cost comprise of administrative costs of bankruptcy practice. These costs will be lower proportionality of the summarize cost when the firm surface is large and vice versa with small size firm and may important shifting in choosing the level of the debt. When investment policies of the company change which departs in occurring of indirect costs. Firm can reduce the destiny of bankruptcy with cutting down expenses on training, advertisement, enquiry, and development etc. It also increases the customers reservations about companys offerings, which result in lower gross sales, food market share, customer loyalty, and market share price etc. This entails that the sightive benefits from utilizing leverage are sketch by the latent costs of bankruptcy.Miller And Modigliani TheoryModigliani and Miller (1958) give you an idea about that the value of the firm does not change when any change occur in the capital structure. Firms build aggregate cash flows for all investors are unchanged despite the consequences of capital structure. Altering the capital structure does not amend the total cash flows. Consequently the overall assets value provides will power of these cash flows should not change. MM argue if worth of the firm depends on capital structure which may be result in arbitrage opportunity in the perfect capital market. In addition, capital structure decision may be counteract when investors and firm can have access to at same rate. Despite the fact that MM theor y is stands on numerous impractical assumptions, yet it presents the essentials theoretic background for further interrogation.Agency TheoryJensen and Meckling (1976) discuss about the emf disagreement or kin among companys executives and shareholders, according to theory managers do not have 100% interests in firm. Executives are the representatives of the shareholders and strive to assets away from bondholders to shareholders through captivating more loans and empowering in risky assets.Information be And Signaling EffectsCapital structure can also be elucidate when disparity in information have available to stockholders and unknown quantity regarding the investment opportunities and income allocation of the firm. This information parity may consequence in two separate results for capital structure, it is known as signaling with constituent of debt.Ross (1977) contributed that manager always familiar about the financial position of the company and its return allocation. Whe n executives eat up debt decisions, it produce affirmative signal to stakeholders about the financial position of the organizations and its ability to retire its debts and truthful allocation of return of the company. Managers always try to increase stakeholders or investors confidence, consequently with increasing equity value as result in also using significance amount in the capital structure.Pecking Order TheoryMyers and Majluf (1984) state that shareholders always hypothesise executives employ confidential information when they offer risky securities and also overpriced. This observation guides under pricing of fresh equity offerings, this also may result in significance loss of present shareholders. For these reason organizations keep away from offering revolutionary examines through equity financing and use its inner(a) funds if further financing is required they issue debt last excerpt is equity financing.Factors Affect Capital Structure DecisionsCapital structure deci sions are very important for companies to put forward so there are certain factors which firms take in view when make capital structure decisions and they areSales stability A firm takes this factor under status at the time of capital structure decisions. If compare two firms, one having stable sales and other having unstable sales, the firm whose sales is comparatively stable can safely take on more debt and incur fixed charge in semblance to the company with unstable sales. For instance, the utilities companies use more financial leverage than industrial firms because they have stable salesOperating structure This is another factor which is involved in making capital structure decisions. A firm having less operating leverage can imply financial leverage in better way as it will have less business risk.Assets structure This factor may affect the capital structure decisions there are two types of assets-general purpose assets and special purpose assets. The real state companies usually use general purpose assets as it makes good collateral. While the companies which are involves in technological look for use special purpose assets, as they are not highly leveraged.Profitability The factor of profitability also plays an important role in capital structure decisions because the firms which get high pass judgment of return on investment do not use high debt, but they use relatively little debt, as high evaluate of return on investment make them able to do financing with internally generated funds.Growth rate This factor plays an important role in capital structure decision making. It has been observed that faster growing firms mostly rely on external capital as the flotation costs exceeds those incurred when selling debt this is the reason that rapidly growing firms rely more firmly on debt. It is also possible that the firms relying on external capital may often face greater uncertainty due to which those firms reduce their willingness to use debt.Contro l there is great affect of control situation on capital structure decisions, because in such a situation when attention has 50% voting control in the midst of the debt and equity. If the circumspection is not in a position to buy or purchase any more stock, the other option for it is to use debt for pertly financing. But in the situation when the firms financial position is so week that the use of debt may be the cause of serious risk of default. In this situation the control considerations could persist to use all debt or equity.Taxes As far as interest is concerned it is, no doubt a deductible expense which is oft valuable to firms with high tax rates. It is therefore the firms use much debt because if firms tax rate is higher the advantage is also greater.Management berths different management attitudes may bring different changes in capital structure decisions. Some managements are conservatives and others are aggressive these both managerial styles exercise accordingly to their own judgments and analytical approaches about the proper capital structure. If the management attitude is conservative it uses less debt, where is the management having aggressive approach uses more debt to get higher profitsLender and rating agency attitudes A part from managers analysis of the factors lenders and rating agencies also plays an important role in financial structure decisions. The corporations give much immensity to the lenders and rating agencies and make discussions with them about the capital structure and mostly act accordingly to their advice.Market conditions Capital structure also depends on market conditions, a firms optimal capital structure or favorable capital structure depends on long-run and short-term changes. Low rated companies which are in need of capital either go for the stock market or to the short-term debt market without pickings consideration of target capital structure.Financial flexibility financial flexibility has also a bearing o n capital structure decision. validate or company makes the decision according to its financial flexibility, if a company is financially good it can raise capital with either stock or bond. But when its financial position is week the suppliers of capital make funds available, if that company gives them a secure position in act upon of debt. Seeking all above thoughts in mind it can be said that the companies should maintain the financial flexibility or adequate backlog borrowing capacity because it depends on the factors which are necessary in making capital structure decisions.Firms internal conditions this is also one of the factors which affect the capital structure decisions. If a firm succeeds in completing any project than the probability of higher returns increase in the near future. Due to such internal conditions a company would not issue stock because the new earnings are neither anticipated nor reflected in the stock prices. So in such condition the company or firm wou ld give resource to finance with debt and till the higher earnings are materialized and or reflected in the stock prices.Statement Of The ProblemCapital structure decision is very crucial and important for any organization in any sector or economy. It is always very much difficult for organizations to station or gets the right combination of debt and equity (Capital Structure), which ultimately satisfies them or brings favorable and profitable results for the organizations.So eventually this report in general focusing on right combination of Debt and equity (Capital Structure) in the characteristic of Short-term Debt (SDA), long-term Debt (LDA) and list Debt (LA) for any organization in Pakistan. In Pakistan modest seek has done on such problem.It is important to work on such problem and come up with information, which gives some comfort level to investors and organizations to take correct financing decisions.ObjectiveIt is very important in Pakistani scenario to evaluate or investigate the refer or the influence of capital structure over the firm profitability. In this way the objective of this training is to investigate or evaluate the family family among the rates of return of the listed non-financial firms on Karachi Stock Exchange (KSE-100) index related to composition of the capital structure. more(prenominal) exclusively, this is based on the assertion that whether short-term debt divided by total capital (SDA), long-term debt divided by total capital (LDA), and Total debt divided by total capital (TD) has positive or forbid proportionship with profitability.Research Scope/LimitationsThe scope of assume to analyze impact of capital structure on profitability, also promotes as an aim for future query.Few limitations fixed up in this field of forceThis enquiry would just cramp to secondary data.The admittance would restrict to public information, all organizations would not share information that would confidential in nature.This reflect would not get into the details concerning factors that lead to capital structure or the reasons due to which capital structure comes in different combinations.Thesis StructureThe report is systematized as follows. Phase one (1) introduction of the thesis, which includes the statement of problem, scope and limitations objectives hypothesis etc, this phase, also contains the some of the theoretical perspective regarding the capital structure. In phase 2 we describe methodology that is constitutes the data and we justify the choice of the variables use in our analysis sample, technique and also estimate model used in analysis. In phase 3 we presents and analysis the results which taken after the data processing. The phase 4 contains the results and conclusions and recommendations.Literature ReviewPakistan has not yet got much development in the bond market therefore, many firms of Pakistan give preference to equity or internal financing in comparison to debt, but one day when this d amaging relationship between profitability and leverage of the firm will be removed, the Pakistani firms will realize the importance of debt financing, because it is the debt financing which increases the value of the firm and the wealth of the share holders (Ilyas. 2000).Study conducted (Rafiq, et al., 2008) it has been observed that the chemical sector of Pakistan gives preference to equity over debt and large firms borrow more debt because they have no fear of bankruptcy whereas small firms are afraid of more debt because of the fear of bankruptcy. In chemical sector huge cash flows are needed, therefore, the chemical fabrication of Pakistan uses more debt than equity to finance the new projects because the internal sources are not enough for a new firm, therefore, it depends on the debt because the fixed direct costs of bankruptcy constitutes a small portion of the total value the firm. The other reason for which most of Pakistani firms prefer to equity or internal financing o ver debt is that the bankruptcy process is slow an ineffective in Pakistan due to which firms face no or low bankruptcy costs.Study conducted (Hijazi and Tariq, 2006) study reveals that as for as the firm size is concerned, the Static trade-off Theory suggests that if the firm size is bigger, more debt will be used, but in Pakistan, the case is in reverse, here, the firm size is negatively correlated with leverage and the bigger firm size use less debt which supports the Pecking Order Approach and rejects the Static Tradeoff approach. After the deep observation of Asset structure, it has been concluded that asset structure of Pakistani firms does not depend on their capital structure. As the large firms of Pakistan have no fear of bankruptcy and have less chances to turn back into financial distress or in other words, they are strong enough to bear shocks, so they employ more debt in comparison to smaller firms which have fear of bankruptcy because large firms face lower bankruptc y costs, therefore, there is, in large firms, strong relationship between profitability and leverage. The profitability, in large Pakistani firms, supports the Pecking Order Theory which is careful by net profit before taxes divided by total assets.Research conducted by Abor (2005) supports or investigates the relationship between the capital structure and profitability of listed firms on GSE. Data taken for this between 1998/02, twenty-five listed firms strung-out for this study. Regression analysis methodology used in the assessment of functions involving the return on equity (ROE) with measure of capital structure. Capital structure is the combination of debt and equity used in the firms operations. Capital structure is related to the marketing, because different firms issue different securities in many different combinations, which maximize the market value. The impact of capital structure on profitability had been accounted in a considerable number of studies weather experime ntal or theoretical perspectives. Capital structure decision is very important for any organization to get higher return and profits and meet with the competition, different combinations of capital structure available to organizations they select one which eventually satisfies or maximizes the firms market value. commodious return and profitable firms always use more short-term debt, short term is important part of total debt, and usually firms use 85% of short-term loan against long-term debt. Long-term debt and return on equity have negative relationship total debt and return on equity are positively related.Coleman (2007) conducted study to find out the impact of debt policy on the accomplishment of microfinance firms. Findings of the study demonstrate positive relationship between debt and firms performance. Long-term debt has positive relationship with outreach but not significant where as short-term debt exercise force on management to extend a MFIs outreach. Long-term debt helps management through the time, so that the pressure of refund decreased which ultimately give management flexibility to improve their profitability or returns by manipulating their operations. In microfinance organizations the leverage is positively related with outreach stage when the leverage increase which also result in the increase of outreach level denotation advance leads to higher premium. This premium further converted into companys profitability and income flow which can also be employed to examine the debt. Higher outreach lowers the cost of operation by enabling firms to enjoy the economies of scale. Size is peanut variable and outreach is negatively affected by it. Long-term debt and short-term debt are insignificant basically describe that maturity may not essentially be of spirit with default charge employee as performance variable though total debt ratio determine significant relationship between leverage and default rates. Microfinance organizations which want to improve firms profitability and want to retire its debt obligations management can achieve these results by reducing the annual default rates especially for largely leverage microfinance organizations. Default rate has negative relationship with the size of microfinance organizations for the reason that firms make sure refund of loans advanced and also become aware for future transactions this all happens when firms expands their sizes. There is negative relationship between debt and default rate, greater mean variation result in lower default rate. Though management of the firms try to reduce default rates with the higher mean deviation found in risk level. So ultimate findings of the study reveals that microfinance institutions in Ghana finance their operations through the long-term debt as compare to short-term financing and they tend to be highly leveraged. Microfinance organizations benefit from scale of economies, additional customers when they are significantly leveraged and also understand and increase ability to deal with risk and other alternatives easily and importantly.Study conducted by (Chen et al., 2009) in insurance industry Taiwan, to know the relationship among capital structure, operational risk, and profitability. Factor analysis and roadway analysis methodologies used to examine correlation among the capital structure, operational risk, and profitability sample of listed insurance companies in America was also taken. Result of research was firms values is not related with capital structure, a close relationship shown among operational risk, profitability, capital structure. Capital structure is negatively related with profitability if equity ratio increases or reserve-to-liability ratio decreases which result in higher profits. Capital structure has negative relationship with operational risk, same relationship between the operational risk and firms profitability.Research conducted by Carpentier (2006) Quebec Canada. Objective of stud y was to investigate the changes in capital structure do not affect the firm value. The bivariate tests and multivariate relapsing analysis methodologies are used for this study. Sample size of 243 French firms has taken for this study during the time hitch 1987-96. If all other things equal, then capital structure dont define any changes in the value of business organizations. Investors take debt in the considerations in order to determine the stock prices. Cross-sectional relationship found between the value of firm and debt exists, many factors affect firm value in long run the debt-value relationship. The static trade-off theory posits that the firm value increase (decrease) as the financial structure moves closer to (away from) the target. French companies tend to use a higher proportion of total debt and a higher proportion of institutional debt (non spontaneous funds) than US companies.Study was conducted by (Groth Anderson, 1997). Study explains capital structure and inve stigates its influence on the cost of capital and the value of company. This study sketches practical concerning the choices and management of capital structure. A theoretical and practical pinch of these relationships will support the professional manager in his or her efforts to aggregate added value for shareholders and stakeholders. Firms value and its stock prices does not affected by capital structure, optimal way to finance the firm exists. Capital structure theory is of value even if the arrays of assumptions in the theory do not hold. If an economic variable changes for example interest rates, recessions, and the price of bearing risk affect the management decision of capital structure. Capital structure offer prospect of enhancing value for shareholders, it also time reduction in cost of capital to the economy and the standard of living.Research conducted by Rocca (2007) Italy, main purpose of this research to scrutinize the relationship between capital structure and fir m value. Capital structure represents a corporate governance device that can value corporate governance competence and protect its ability to create value. Methodology or approach used for this study is theoretical approach that can contribute in clearing up the relationship between capital structure and corporate governance. Descriptive, model also used which provides a research proposition and some suggestions, which would be used for future empirical research and precise design given for empirical analysis. Finding of this study is that, relation between capital structure and a firms value needs to take directly into account the role of moderation and/or mediation of the corporate governance. It is also necessary that presence of complimentary between capital structure and corporate governance variables such as managerial self-possession ownership concentration role of board of directors, etc.Study conducted (Ebaid, 2009) study mainly focus on relationship between the differen t debt-equity combinations with companys performance. Multiple regression technique used to find out the impact of debt policy on companys performance. Enormous studies conducted on debt policy alternative on firms performance among them bulk of researches conducted in developed countries just few studies performed in emerging countries or economies one of them is Egypt. The research mainly focus on the relationship between alternative debt policy with firms firms performance data taken from listed Egyptian companies performance is measured through accounting-based perspective such as Return on Assets, Gross Profit Margin, and Return on Equity generally known as (ROA, GPM, and ROE), capital structure is measured with short-term debt and long-term dent and total debt abbreviation as (STD, LTD and TTD). Findings of the study reveal that both (STD and TTD) are negatively related by ROA. Alternatively capital structure including total debt (TTD) in not significantly related with Return on Equity and Gross profit margin (ROE and ROA). Results of the study suggest that the performance of the Egyptian listed companies in not controlled (weak-to-no influence) by capital structure alternatives. Though specially in emerging markets debt policy remains debatable and mystery. Further research might observe determinants of Egyptian firms capital structure such as growth, business risk size and also evaluated with developed economies. The impact of capital structure on Egyptian firms value as well necessitates analyzing empirically. Findings of the study reveal that ROA and firm performance negatively related. It can also be investigated the impact of the maturity structure on its performance and capital structure decisions. Firms performance can jointly be by both ownership structure and capital structure in further studies in listed Egyptian firms.Study conducted (Eriotis et al, 2007) to investigate the firm characteristics that affect debt-equity combination. Data has b een taken from 129 classical listed firms at Athens Stock Exchange five (5) years time have taken under observation from 1997-2001, it is the 63% of listed companies in 1996. by dint of diverse theories companys characteristics are investigated as determinants of capital structure. The firms which employed debt ratio of 50% or more are also categorized in this research with a dummy variable. Results of the research reveal that firms debt ratio is negatively related with its growth rate and also its interest coverage ratio and degraded r

Case Study A Global Investment Marketing Essay

Case Study A Global enthronization Marketing EssayA global investment is a herculean mission that requires the assessment of different aspects of potential drop opportunities in different countries. Moreover, unavoidably serious examination and analysis of success and failure probability. The purpose of this penning is to study the strategy of Etisalat, the United Arab Emirates (UAE) telecommunication company in the Saudi-Arabian-Arabian-Arabian Arabia grocery store as Mobily. Moreover, description, cause and effect of that strategy pull up stakes be discussed at understand Saudis economy and to identify the total investment in the energetic sector. In addition, an attempt to examine the performance of Mobliy and the obstacles it faced was made. A sparely, the difficulty it faced when it started the billet in the Saudi mart bias approximateing to catch a part of mobile ph whizz grocery share, managing its business and communicating with its m early(a) company in the UA E. To overcome these obstacles, Mobily created youthful attend tos for mortalal and companies to add cherish for its subscribers to achieve its strategy target. To develop its success in Saudis market, near business information leave be discussed evaluating its strategy.Table of Contents2- Etisalats globalstrategy3-SAY GOODBYE TO THE MONOPOLY4-Mobily Ownership Structure5-Mobily Objectives6-STRATEGY7-HAJJ arrange ON PROFITABILITY8-INFRASTRUCTURE9-Effect of macro- environmental and micro-environmental on Mobilys merchandise mix2- Etisalats globalstrategyEtisalat is the largest Arab telecommunications firm in the pump East, with 63 million customers and has launched the most advanced serve to the area.( http//www.etisalat.ae)Etisalats strategy is anchored in expanding in transnational markets and being able to be single of the top-10 telecoms go suppliers in the world. To execute this strategy, Etisalat attempts actually to create the retail of mobile devices some some s tates in Africa, Asia and the shopping centre East as Saudi Arabia and Egypt because these countries study shown an increase in GDP, great increase in tribe and unemployment and Etisalat try to present telecom go and solutions which add appreciate to consumers and facilitates perfect multitude with technology.3-SAY GOODBYE TO THE MONOPOLYIn 2004, the only mobile promoter was Saudi telecommunication keep company (STC). At the analogous time, the mobile sixth sense rate however was 40%,and there were only 9.2 million customers. When Mobily entered Saudi market in 2005, broke the monopoly. The liberalization of the Saudi Arabian telecommunication sector caused the penetration rate to rise to 109% in 2007, toas certainlyof 50% for customers growth.Mobily paid 3.46 jillion USD to have the second mobile license in KSA in 2005. Mobily was winning in covering most of Saudi Arabias land with the GSM coverage 97% of populated areas. It was also the first mobile Saudi operator to set outvalue-added services such as location-based services (LBS) and MMS.5-Mobily ObjectivesTo be the best acidify environment in the KSA by caring for their employees.To be Number angiotensin converting enzyme at enjoyment their subscribers.To sustain hightail itership in data applications and services6-STRATEGYMobily is successful attainment its long term vision to change from a pure mobile operator to a multi-functional telecom operator in KSA. Mobily was granted approval by CITC (Communication and Information Technology Commission) to attained 96% of Zajil International Telecom and 99.9% of Bayanat Al Oula which has a WIMAX license, two data service suppliers in KSA in 2008. Mobily is managing the live of existing operations when its purchase of a 66.6% stake from the Saudi National Fiber Network (SNFN) which substitutes the use of STCs international gateway network. The incomes of the SAR2 billion capital increases are used for funding or upgrading. (http//www.mobily.com.s a)Mobily has built a strong connection with Etisalat of UAE for procurement of resource. This connection magnate be compactificant for presenting one of the best plan networks in the world. The revenue of Mobily Company Q2 2010 recorded as 3,972 million showing an increase of 24% over the same tail last category. Mobilys chairman, ENG. Abdulaziz Alsaghyir mention that the increase of our Q2 revenue is due to the growth in broadband revenues and creating a centre of financial aid more post-paid consumer, in addition, Mobily has approved its strategy for louver year time know as GED planning for expansion, differentiation to supply unite telecom services constructed virtually fixed and mobile broadband technologies.7-HAJJ EFFECT ON PROFITABILITYIt is expected that around 3 million soul visit Saudi Arabia during the Hajj pilgrimage season, which is reflected in Mobilys fourth quarter earnings. Mobily achieved highest quarterly earnings during the fourth quarter.Mobily Quarte rly Earnings8-INFRASTRUCTUREMobily has finished construction its own capacity infrastructure to support itself. On the other hand, when Zain started their business, has rented infection capacity from both Mobily and STC. This produced an additional flow of income for Mobily and STC depending on Zains usage capacity. (http//www.gulfbase.com)9-Effect of macro-environmental and micro-environmental on Mobilys marketing mixThere are many reasons to the macro-environment that will capture the choices of the managers of any establishment. New laws, tax changes, trade barriers, demographic change and governing body policy changes are all instances of macro change. To help analyse these reasons or factors managers can categorise them utilise the PESTEL model. (http//www.oup.com)Kotler (1998) claims that PEST analysis is a assistive strategic fauna for distinguishing market growth or reduction, business position, potential and direction for operations.In analyzing the macro-environment, it is essential to understand the factors that might in turn modify a number of critical variables that are likely to affect the companys engage and supply levels (Kotter and Schlesinger, 1991 Johnson and Scholes, 1993).9.1 Why Saudi ArabiaThere are fewer states to be able to propose secure supplies of inexpensive cleverness, a geographic starting point to a huge market and a customers compulsion to achieve a suitable solution for cutting adventure endeavor or investment. The research has indicated that Saudi Arabia is one of the best 20 destinations for overseas direct investment in the globe. Moreover, Saudi Arabia known as one of the most enterprising nations in the Middle East, Saudis huge natural energy integration with the long-term image and strategic planning to make todays stable, plenteous economy.Saudi Arabia is hoping and arranging for different areas of future which is more comprehensive, expansive, sustainable and unite on both social and economic sector. All of these examples will be improved via Saudis experience financing, assessing to establish a nation of constant development. A massive amount of money has been spent by kingdom of Saudi Arabia to add value proposition to global business. The government of Saudi has think goals of varies faceted reform strategy that lead Saudi Arabia to be one of the suitable position in the global to operate business. (http//www.sagia.gov.sa)Atthesametime, Saudi Arabia is expense tens of billions of dollars to start four economic towns in versatile place of the nation to support economic improvement.9.3The supplier environmentMobily attempts a great deal to depend on several suppliers. Mobliy and its suppliers, both parties depend on the other for their successful commercial. Even though, both parties are looking for security and stableness from their relationship, still they are some reasons to the supplier environment are font to change, such as some disputes on a sudden organize in material or maintenance agreements expenditures which controls by suppliers to increase their prices and this will effect seriously on the company commercial operations.9.4 The immanent environmentMobilys management is placed on marketing intermediaries as agents and distributors to make sure that their products arrive at the final consumer. To Mobilys management, it may seem that the conservative rule of distribution in telecommunication is relatively static. For the reason that changes in the distributive environment happen quietly, and there is a risk of marketing companies impuissance to aware about the commercial change.9.5 The competitive environment.The company must be aware about the potential risk of other players marketing sympathetic and substitute services whether they are of domestic or foreign origin. . In the telecommunication sector in KSA have just three players a potential competitive threat. Whatever the type, size and composition of the telecommunication sector, Mobi lys marketing management has a full understanding of competitive forces. However, Mobily Known with this knowledge, which will have a greater opportunity to compete effectively.http//www.da-group.co.uk/index.php?option=com_contentview=articleid=31micro-and-macro-environmentscatid=2marketing-lecturesItemid=3The marketing mixPriceMobily used some approaches to price a product as the price charged for products and services is set unnaturally down in consideration of gain market share. Once this is attained, the price is increased. In addition, charge a reasonable price when has a strong competitive advantage. On the same time, Mobily attentive about competitors. However, most of their prices it is fair and satisfied for most of the customers.PlaceChannel distributionMobilys distribution strategy is driven by three main conduct whichDirect sales The direct sale channel includes Mobilys 24 flagship stores and clv fully branded stores. The flagship stores are completely owned and empl oyed solely with Mobily personnel, while the fully branded outlets manage as franchises.Indirect sales The Firm depend deeply on its distribution partners to attain simple range distribution at a rapid pace. Mobily has a sign primary distribution contract with seven major distributors, each of which special effects sales through 149 fully branded, 288 co-branded and 4,000 secondary distributor outlets.Co-branded The Company has channelled sales through ATM and the cyberspace for top-up of prepaid cards. So as to focus VIP sector successfully, the Company has begun a separate particle of Corporate and VIP Sales.ProductMobily has been achieving the three levels of product which are the burden product, the Actual product, and finally the augmented product. In addition, another marketing tool for evaluating products as The Product Life Cycle (PLC) which based upon the biological spiritedness cycle, and The Customer Life Cycle (CLC) which focuses upon the production of and delivery of lifetime value to the consumers.( http//marketingteacher.com)Three Levels of a ProductMobily attribute Connect Al Zaeem, Connect Turbo Router, Connect Turbo, Connect Mini WIFI, Ferrari Connect, Connect Foot Ball, Connect hanker Tail, Mini Wi-Fi.Postpaid Mobily Minute buntes , sombre Wave Mada, Najma,Deeraty, Raqi, Fallah Mobily Khatty and Khatty Plus.Prepaid 7ala, Anees, 7ala Plus, Wafeer, Mabuhay Kababayan, Blue Wave, Visitors Line Rihal, fallah, I phone line.Smart phones I phone 3Gs, Iphone 4 , BlackBerry,Nokia N8,Samaung Galaxy Tab, Liquid E Ferrari .Broadband at home, Mobile internet, Internet Roaming(can only be used outside the kingdom of Saudi Arabia). (http//www.mobily.com.sa) promotionMobily is using the promotions mix to deliver a unique campaign as Personal Selling. (Mobily tend to be well trainee for their sales workers in the approaches and techniques of personalised selling to meet high margin in sales).Sales Promotion. macrocosm Relations.Direct Mail.Trade Fa irs and Exhibitions.Advertising.( Mobily paid for communication to develop attitudes and create cognizance for people. Furthermore, Mobily use the advertising in media such as newspapers (local, free, trade), magazines and journals, television (local, national, satellite), open-air(prenominal) advertising (such as posters).Sponsorship (Mobily bought for SR 200 million over the five years to associate their brand with Al-Hilal which is one the leading and well-known football game clubs, not only in Saudi Arabia but in the Middle East and Asia).( http//saudijeans.org)SWOT AnalysisStrengthsThe improvement and concentrate on advance(a) products and value-added services.The experiences shift and indirectly supported from the mother company Etisalat UAE.Mobily have been using an aggressive marketing strategy that enabled it to obtain a 30% market share in less than two years of operation.To decline the cost of operation and improve data revenues flow, Mobily is improving a new Saudi f ibre optic network.Mobily has been improving the company brand and reputation, to attract the corporate sector in KSA.Saudi government avoids currency risks.quickly responded to a new competitor Zain by creating roaming agreements with about 100 operators in 56 countries.Well improved mobile network coverage with 3G services.Weaknesseslow in the increasing postpaid customers in Mobilys subscribersContinuing need for high spending for improve the network servers.High focus of prepaid subscribers, about 90% of customers signalling lower average revenue for parson.STC is ranked first in broadband overallOpportunitiesDue to rising oil prices in the world lead to build a strong economy and high GDP per person in a region.A strong population growth, 69% of the population is under the age of 30.Partnership with parent operator for entering new telecom markets.Increase market share in mobile broadband.Saudi government attempts to capture foreign direct investment in the telecommunications business through improvements in information technology sectors.Purchase of companies in the value chain.ThreatsIntense competition due to the entrance of MTC lately, as the third mobile player, is leading to decreases in average revenue.Due to easier for customers to transfer from one operator to another that lead to increased competition between operators.Low demand response to new services.Decline in margins as a run of price wars.Failure of public to adapt to changing technology.

Tracking Developments in Media Industry

Tracking Developments in Media patienceAbstractThese days the media line of descent is witnessing the undermenti unrivaledd morphologic transformation in its melody precedent. Due to the simplification of r razeues1 from printed media and advertisements, intentness giants argon encountering for other paths for penetrating additional r reddenues. The conventional st calculategy of cost drop-off that was foregoingly widely applied does non seem to be sustainable. On the contrary, roughly key players in the media demesne see the macrogest opportunity in the invention of recent lays which testament summate to the boost of r pull sightues. To a large extent media executives agree that m cardinaltisation of online national is the decision they should go for to a greater extent(prenominal)(prenominal) insistently2. nonp beil of the reasons wherefore online monetization is a financi anyy attractive itinerary of crop is that, it has zero marginal cost, and as opp osed to print media, r relieveue increase leave behind non hotfoot proportional increase in costs3. A nonher advantage which online watch playscript open comp bed to the handed- put through printed media is that they push aside provide intelligence operation program in real duration regime which is extremely important in this particular exertion as intelligence operation is very dear(p) and at the uniform time passing perishable product4.So out-of-the-way(prenominal) on that point gene prise been unless close attempts of online monetization like the Kindle and micro bearments alone these strategies drive outt balance the wholly the losses that the application bears because of the before mentioned reasons.Up to date, unfortunately for the labors decision concordrs, choosing the obligation model for online monetization was not the except challenge they had to face. Challenges like visualise to locomotive railway locomotives, which atomic ga in 18 generating their nitty-gritty and give it out to customers for rid, ar not simple to overcome. In occurrence, bloggers and social ne devilrks like Facebook and Tweeter could be considered as posing mistakable take a chances for handed-down media companies. notwithstanding in chapter 4 we give see that the attempts of transforming these adventure bearing accompanimentors into opportunity and spring upting nigh kind of revenues from them has started, which logically should bear us to exactly close to type of business to business model which leave rent beneficial for close to(prenominal) move.In this thesis, because of varied reasons5 I go forth not statute title to engender found the nonp atomic mo 18il model for subject matter monetization, scarce rather depart present several alternative models for monetizing online media bailiwick, and whats much important, lead discuss the well-nigh winnerful models employed thus cold which be applied by scating players in the industry. I lead comp be their features to each other, analyze their advantages and disadvantages. I set out interchangeablely look empirical data of results of each model to give the reader a better intellect of each models monetary mastery and the importance of online message in their business, to rush better understanding what role kernel monetization might mean for these watch develop providers. Besides I go forth inspection and repair the reader to progress to knowledge about the obstacles which should be taken in consideration by stakeholders, if they call for to find the best match abide model for their b atomic number 18-asss web-site.1. IntroductionThroughout its history the media business, which is one of the well-nigh dynamic and fast-developing industries, has passed through many phylogenesis cycles, each prone to marvellous changes in terms of strategy, structure and model it leand with. The reasons of these changes in u nlike multiplication were distinguishable routinees taking place in parallel, e.g. advances of post-delivery system, facilitating transportation and logistics around the initiation, assorted technological innovations etc. except, without any doubt, the emergence of the Internet and the subsequent increase of digital media is the greatest change of at to the lowest degree last twain decades. It has once again revolutionized the unscathed industry dramatically, to a greater extent than any preliminary development.Currently we atomic number 18 witnessing a transformation influence which might lead a ground for the conceptual change of the full media industry. Due to the reduction of revenues6 from print media7 (one of the reasons of this is decreased circulation of print intelligence activitypapers, Exhibit 1) and online advertisements, industry giants form started to bet new-sprung(prenominal) ways to restructure their portfolios of income, and how to get through their readers put up for the data they draw a bead on online8. The latest financial crisis played a role in accelerating this process. The dealturn of revenues pushed the media companies to sharpen cost cuttings first of all indicated by the massive layoffs of the staff. However as many industry experts like resignlance photojournalist Mike blur believes, massive layoffs itself is not a sustainable strategy for the futurity9. The comparable facet is sh atomic number 18d by management consulting firm Booz Company in their seek about the media industry. They admit that cost cutting is an important tool for managers, plainly in order to stay capable of growing in the keen-sighted run, companies cant centering but on the expenditures side of their income statement.10Media executives be dormant optimistic about the near. As the heap in the like investigate from Booz Company makes, more or less of the respondents (nearly 70%) believe that their companies atomi c number 18 financially healthy. The which even broad(prenominal)er to 80 shargon when it comes to the opinion of integrated players (Exhibits 2), and surprisingly just one forth of the check outed executives expected they would meet the end of recession with a deteriorated situation (Exhibit 3). to a greater extentover, to a greater extent than half of media executives (57%) believe that they salvage hold the wheels to realise situation scorn financial crisis and think that with geomorphologic trends developing in the industry they can outperform the negative results of economic fling offturn. Print executives atomic number 18 even to a greater extent(prenominal) optimistic, this opinion is shared by 67 pct of them. Booz Co sees the coming(prenominal) tense of media companies in their ability to identify the markets where they can debate successfully and the business models which will financial aid them to do so.In the June of 2009, at the Cable Show11 in Washington D .C, American virgins Corps possessor Rupert Murdoch gave a speech, which besides covered the current challenges of media industry, where he specifically underlined the required contract of satisfy monetization. He underlined that clock when mass where reading news online for free should be over, and thus gave a hint to the complete industry that the process of online nitty-gritty monetization is not still non-reversible process, solely so it should accelerate whether roughbody likes it or not. Murdoch mentioned that only online ads cannot cover media companies costs and named impudent York time, as a vivid example of that. NYT has one of the most favorite U.S newspaper websites, nevertheless close up their online ad revenues are not capable for cost coverage12.The signal form the industry guru was correctly understood by other giant players of media world and many of them like Axel springer spaniel and smart York generation13 already second time, started thin king how to turn on their readers for online news in the way not to harm online traffic and ad revenues. Finding the balance among these twain will be the amplegest challenge for the followers of the trend. In the process of monetizing online media choosing the right(a) type of model which will fit to one or other news providers overall strategy and observes is a big deal of question.Currently most news online is free, scarce on that point are slightly(a) exist newspapers successfully charging their readers at to the lowest degree for the part of the selective information they provide to them.1 gives the increased consumer spending (black curve) and penetration (grey curve) in online subject. The essay conducted by Online Publishers connexion shows the aforesaid(prenominal) trend, that the funds spent by consumers on online capacity in United States increase from 1.31 one million million USD in 2002 to 1.78 one million million USD in 2004, which meant annual developing rate of 17%. However this growth occurred in the entertainment area much(prenominal) as adult material, music, free rein and sports14.Currently, among them most successful in terms of revenues generated from online media suffice, are American The fence in channel daybook and the British Financial Times. Both of these newspapers are providing financial news and are most direct competitors of each other. Finance is one of those few areas which experts consider possible to legalize.The Booz Co explore mentioned before makes concentrate on prior experiments of publishers who tried to monetize message and boost gross revenue with which such an in advance(p) tools as Kindle (Exhibit 4) sales, multi-title subscriptions and micro carryments are, but as the results show these methods cant regain all the revenues lost which the media industry faced in the last both years. It also shows that necessary steps are inevitable from the unit industry to look for new busi ness models and as the come in the resembling investigate shows, media executives expect most increase of revenues from the innovations in the digital media, from the new advanced models. (Exhibit 5).Expectations towards online monetization is a great, at least from the side of news providers, however the way on which they will have to go does not seem smooth and clean. There are several(a) challenges monetizing volunteers will have to deal with on the one hand in that location is a problem of search engines and bloggers stealing news from their web sites and oblation them to readers on aggregate web-sites, and on the other hand there is a psychology of plenty and understanding their psycheal motivations, what would make them to ante up bullion in online news. Further more than, it will not be easy to make friendship comport for the information which they were utilise to get for free precedingly15.However disrespect all challenges and obstacles which is expected f or industry players, Booz Co concludes that process of media digitization is on its way and nothing can stop it. Mathias Dphner comes up with aforesaid(prenominal) opinion I do not share this kind of pessimism that capability business is dying. The opposite is right. Thats the formidable opportunity through the digitization.16 one more factor which theoretically should give more hope to media magnates is psychological as mingled studies about mortalality drivers during online purchase show, the experience of employ profits and reading news online are positively correlated with purchase intention. in one nerve the usage of net and reading news online is a growing inclination in current reality, and the age of internet usage is also slip fast, we can say that time works on media companies.In this explore I will analyse existing online applying models which successfully operate and give the hope to industry players for the brighter future in that prospect.2. Re look out o f search methodologyThe aim of this thesis is to find out the features of existing relent models in online news which are already operating successfully. I will also try to measure their effectiveness/importance by mingled criteria, both objective such as existing financial and ranged data, and also more partly-objective, such as contrary expert opinions17.The seek will be developed in three main splitReview of types of bailiwick which can be monetized, where peck show rough willingness to pay money (or are already paying)As related to the previous chapter, depth psychology of the personality drivers and its importance while consumers conduct online purchase psycho compend of existing successful models, their features and their effectiveness in terms of empirical resultsFor the saki of development of this three-pillar structure, the information will be obtained through various lines such as existing publications look intoes, holds, blogs, expert opinions and the consulting project ran by me and my classmates during our normal project18.2.1. microbes for identifying online- wake upable mental object and consumers personality driversThe biggest contribution for the designer in understanding of this let go were insights from consulting project workshop conducted by the ESMT Practice Project of which the indite was a team member19 in the late 2009. During this project, besides analyzing already available belles-lettres regarding yield, the team interviewed different kind of experts and also ran a representative retrospect among 300 German online readers to understand the areas where customers showed some willingness to pay. According to the results, there are not many areas which can be monetized, but onlyDeeper analysis of specific obligates as an addition to the more command one quondam(a) archives plus specific quest areas of some readersLocal newsOnline sports eventsThe point is almost completely shared by Mathias Dphner, the c hief operating officer of German media company Axel customs duty, who held a news around the proceeds at Monaco Media Forum 2009 There are not many areas where people are willing to pay money 1) This is finance, which is related to power 2) Plus sports or games 3) Regional environments, people around you 4) And and so we are coming to dickens existential areas sex and crime, or love and death. These are areas where people are worldwidely gratify in and why should that change in digital business? asks Dphner rhetoric question.The chief operating officer of Axel Springer also commented the fact that before longsighted most news online is free and called this fact a structural mistake which has to be corrected step by step. According to Dphner there is not bear upon of revolution, once most appropriate rules and procedures in legislation already exist. They just quest some moderation and whence execution. Continuing on the hold out Dphner summed up with the hope that i n the long run, for hundreds of years, people are willing to pay for things they are pursuit in. Commodity news will be for free, but special information, added value services, exclusive information should be charged.Currently, there are already obvious movements in the industry towards fixing the structural mistakes Mr Dphner talked about. This will be discussed more expand in chapter 3.2, named challenges.2.2. Personality drivers of consumers to purchase online sagaciousness and analyzing consumer drivers while conducting online purchase, is critical for building pro tapnt, profitable business model. However until immediately there is no perfect study in the area which could withdraw on being perfect in identifying and analyzing of all motivators which make consumers to pay money online, and whats more important, all researchers would agree on that statute title of this study.One of the best researches in this heavens conducted by Wang et al trains that the main factors w hich act consumers willingness to pay money online and are positively correlated with the one, are consumers comprehend convenience, essentiality, added-value and service quality. However other research on the same topic e.g. from Choi, Lee and Soriano focuses on following factors perceived consequences after purchase of product, liberalisation of use of internet, social factors such as environment around person, mirth of the reader after purchase and existing alternative man-made lakes to get the same particular information. As we see on this example both collection academics have completely different approach and beliefs towards one topic.These devil researches are clear evidence how diverse is different researchers approaches to the issue. To all of these factors I looked also form the prospective of researches which are dedicated to analyzing a bit broader subject area consumers purchasing drivers in whole online market rather than only in online media. In these resear ches, some of above mentioned factors are considered to be important but others are doubted.Its hard for someone to persist himself not to criticize some of the factors mentioned above, e.g. the word perceived is already very dubious and at the same time very subjective, however very important one. As Barkhi, Belanger and Hocks form of address in their model of the determinants of purchasing from virtual stores, the notion perceived/ science has already enormous importance itself, as it defines consumers later attitude towards whole online purchase procedure.To continue analysis, factor such as social confederacy is neglected in Bosnjiaks research, where he referring to Senecals 2005 research deals that recommendations made from close lodge make decision make process more complex but it does not affect final choice of consumer.Regarding service-quality we can say that, the word quality itself already excites some confusion because its pretty subjective notion. For different pe ople quality might mean different things. For some people service-quality might mean the urgent delivery of hottest news and the exclusivity of this information, whereas for another person the quality of service might be associated with deeper analysis of the article or the restraint of ways to pay money online.Such an arguing can continue further, but what is more important, arguable are not only factors on which researchers build their different models, but also some general statements which are made by them. For example, the work of Wang et al claim the business model is sustainable if revenue-generating method is accepted by majority of the strength customers. However despite all the respect towards the authors and research itself, such a claim can easily twist a reason of discussions, because still, the success of any model depends on the high-minded proportion of ad revenues and online subscription revenues and for different newspapers the ideal alteration rate of readers to stipendiary customers might be different. even up this research itself contradicts to its statement when brings an example of debate avenue daybook Online and Hoovers Online tell that they managed to make e- satisfy portal profitable by only 10% of diversity rate. While conducting our consulting project, we also got results that some richly circulated newspapers would make their portals profitable even by 3% conversion ratio. Further more, Milwaukee Journal-Sentinel, has only 0,8% conversion rate of subscribers on its recession site for hardcore green Bay Packers fans, devising revenues of 600,000 USD annually. In other words, depending on the confine offered by particular newspaper, and the number and type of readers they have, the effective proportion of online meat and ad revenues should be found. more than analysis should be conducted to understand the price of lost customers occur versus converted ones and the ideal balance of subscription revenues versus lost ad revenues. To this issue has dedicated his discussion Jeff Jarvis, on the blog-web BuzzMachine.Jeff Jarvis is an American Journalist, former television critic, editor, publisher and newspaper towboatist. Among the companies he has been on the job(p) are pertly York Daily News, San Francisco Examiner, New York Times Company, MediaGuardian a subjunction of British newspaper The Guardian. Besides he is an associate professor at the City University of New Yorks Graduate School of Journalism directing its new media program. He is also creator of weblog BuzzMachine20.Jeff Jarvis in his article about compensable topic published on Weblog BuzzMachine is more persuasive about the complexity of the issue21 and based on his vast experience highlights for the readers how many different factors should be taken in consideration for identifying one or another model for particular newspaper. For those who will catch in Jeff Jarvis approach some champion and consciousness will conk c lear that based only on the analysis of psychological traits of people and their purchasing drivers, it will not be easy to find an ideal model, and that the issue gather ups rather hard-nosed approach. Findings of Jeff Jarvis will be discussed more dilate in the 5.1 chapter named Expert opinions and Conclusions. forrader moving to the following chapter, we should conclude the started topic and mention that there is still unavoidable some research in the area of personal motivators for online purchase, in order we could claim by 100% confidence that we are victimisation the best model for identifying the online salaried model.2.3. Discussed models and criteria for their comparison at a time we are analyzing the existing models, the criteria for assessment of one or another method is the time of their innovation and their results shown throughout their lifetime. Besides looking at the thematic differences in the features of the models both in Business to Business (B2B) and Busi ness to Consumer (B2C) models, we will look at their financial results, their generated income through online sales and he dynamics in online subscription centre.The biggest heed the author paid was to the models of Financial Times and Wall bridle-path Journal as the most successful financial players in B2C business. In addition, the author took a look at Bloomberg and Reuters as successful players of B2B model. New York Times was an sidelineing casing for the author because it is a case, when after first ruined trial, they are going to try monetizing online pith already second time. winning in consideration their prior experience it should be important to come home which model they will rent for the second attempt.Finally, the author took a warm look at some other examples of successful and attempted attempts of monetizing online content so far.Information was gathered from reviews of their websites as well as from articles about these news-providers, and various exper t opinions about their models.3. realizable models which can help to monetize online contentTechnological advancement has made most news content widely available for free online, which pushed most newspapers to give up subscription fees in the hope of getting more readers and hence by increasing traffic, get more advertisement revenues. However such movements commit even more to the availability of free content in the web and hence arrive at decrease in print media circulation and advertisement revenues22.Charging for online news is very hard. The biggest danger that media companies face is loosing the visitors, because reduced traffic will perk up less interest of advertisement providers on the particular site. Ads are still major source of revenues for most media companies and it will remain so in the nearest future. As Rupert Murdoch commented previously on the example of Wall path Journal, charging online content is not bad but still its not a gold mine23. However, recentl y after presenting the idea at WSJ to impose premium paid model, Murdoch Justified their decision with impressive that, in their case, ad revenues are no any more critical part in revenues and they pay more assistance to subscription based revenues24.The high riskiness of loosing switching is easily explainable for SearchDNA founder John Straw, who admits that he himself would never pay for online content if he could get it somewhere else25.3.1. Findings from consulting projectWhile working on our consulting project26, our assort consisting from four MBA participants, I and my three classmates, identified four different types of models which could enforce during presenting the pay wall. The consulting project itself and its results is based on the basis of numerous articles and publications about previous experience, industry expert interviews and representative survey conducted among 299 German media readers. In column 1, table 1 explains four different pay-wall models which a re possible to impose on online content in different situation, and column 2 explains the situations in which these different models would have chance to work guardianship other conditions constant. dodge 1 Types of models applicable in monetized online media27Types of thinkable ModelsSituation explaining the feasibility of modelLocking vote mess the whole contentReally unique contentLocking down selected articlesUnique content should be part of broader contentLimiting the number of customersVery high overall quality, breadth of content crackLocking down the box articlesWant to monetize only super specific hidden articles ejaculate consulting PP final draftIts upon news providers which type of model they will strike to match with the content they compulsion to lock down. As we already discussed, there are few things which would motivate people to pay money online for, in other words online readers show at least some willingness to pay in following areas* Deeper analysis of specific articles as an addition to the more general one* quondam(a) archives plus specific interest areas of some readers* Local news* Online sports eventsHere we can provide some examples of successfully using some of these methods of pay-wall. The method of locking down selected articles is utilise by Wall Street Journal. In this case most occasional news including political are considered as commodity information and they are given out for free, however if some specific interest area, e.g. finance, have deeper expert analysis, which you cant meet in other newspapers, the articles are locked down in this case. The method of limiting the number f articles is successfully apply by Financial Times. New York Times decided to go on the same way from 2011. A good example of locking down niche content is Milwaukee Journal Sentinel and its Packer Insider The journal locks down specific information, deep content about football club super C Bay Packers, for its fans. In deep content in this case is counted e.g. blabber sessions with players. As the same Practice project showed, locking down whole content, keeping other conditions equal, is possible if the whole content is authentically unique.Here we have also to mention that during consulting project about online content monetization, we had some more interesting insights about the factors which increase readers willingness to pay To our admiration content is not always the thing which might make readers to pay online 35% of surveyed 299 German readers named following three factors as the possible motivators in increasing willingness to payPromotions/ Give-awaysCustomizationSpecific additional contentAs a conclusion of this chapter we should say many experts predict for the future that, free content will be utilize primarily as a selling ploy a complementary trial period is strictly utilise for purposes of enticing customers to subscribe to a service or buy a product online. (Wang et al). Alternatively some sites attract customers by offering a limited amount of free content. They then hope to convince their customers to dislodge to a variety of premium, fee-based content (Outing 2002). (Wang et al)3.2. ChallengesInnovative online ways of distributing news like news aggregate sites, blogs, social ne 2rks (Facebook, Tweeter, etc.) which are free to access, become more and more of a threat for media companies, because news is a pricey product to bring, as well as it its distribution in traditional way. But distribution of news in online has zero marginal cost, as it takes nothing to the person to copy and paste a particular article or link it to the other page (Exhibit 6).Traditional media companies demand from these innovative conveyrs of news fair ways of playing, which means either they should produce their own information or they should pay to original producers some fees for utilizing their articles. In his interview, Mathias Dphner mentioned that they are not demanding ban ning of these alternative sources. We understand that future is mixed model, mutual human race of both of us declared Dphner. We also do not request something new and innovative. We just need fairness, respecting each other, respecting copyright rules, paying royalties as it is supposed to be do and for of all this playing rules are already there, we just need to make them better and then follow to.Rupert Murdoch went even further and called search engine Google stealers, as they take others information without permission and put it on their pages. Regarding this phenomenon, Axel Springer CEO Dphner told very appropriate example to the Huffington Post co-founder. If you want to give others your beer for free, please brew your own beer and then you are welcomed to do so, but please stop taking my costly beer and then well-favored it to others for free.Recently there is a clear evidence of scratch changes in this regard Google agreed with several news-provider companies to restric t their articles readerships through Google to supreme amount of five. Another web-site YouTube started removing from their site unlicensed videos. In other words, Mathias Dphners prediction that the current reality would start changing step by step has obviously started to become true. Thus in nearest future we should anticipate emergence of new pay-models, when media companies will have to think, how to share the taproom with news aggregate web-sites, social ne 2rks and bloggers. We are witnessing enormous changes not only because of monetization, but because of establishment new type of relationships between industry participants, which ideally should bring in new opportunities. (Exhibit 9)4. Existing paying models, analysisStudies claim28 that in order managers found ideal subscription business model for online monetization they need to understand their subscribers personality drivers, their cognitions and attitudes, what makes them purchase news online? In fact there is not breadth of information about consumers personality drivers, indeed the researchers actively continue investigating this area and thus provide us with new and new models. Non-existence of ideal model in this area is one of the reasons why we cant predict ideal online pay model. The other reasons are ambient to business.Referring to Jeff Jarvis argumentation in his article about paid content models, there are plenty of criteria which determine the success of one or another model. Once these criteria are individual and very specific for each newspaper, no one can/should claim yet, on identifying one general ideal model which will fit to all news-providers.As director of standstill of online publishers, Lee Baker commented in News Media, half of their members already charge for online content and another 19% is going to do so in the nearest 12 months. Paid content modelling is important to our members, continues Mr. Baker. Our members are trying to penetrate new areas such as mobile apps. to a greater extent than half of them express desire to create paid-for apps.Despite we cant claim on building the ideal model as a delegate for the future, we can cover the most successful news providers and their models which are currently successfully use, both in B2C and B2B business.4.1. Financial Times VS The Wall Street JournalCurrently the most distributed B2C pay models in online media are deuce one is Financial Times way restricting the definite amount of free articles for subscribers and then charge the readers if they exceed this amount, and another is Wall Street Journals way offering readers only one or two split for reading and making available the rest only for subscribers29.To compare these two models in more details lets take a more detailed look at the ways which they are used by their most successful implementers. Of course there is some room for deviations and different news providers can apply to some minor changes, e.g. in the amount of textbook e dition which should be given out for free, but the concept remains the same. postpone 2 below shows clear specializations between the features of these two models in the case of FT and WSJ. The essence of difference of these two models is the amount of information provided for free and the ways how it is doThe Wall Street Journal makes clear tuberosity between commodity and high-value content. The so caTracking Developments in Media IndustryTracking Developments in Media IndustryAbstractThese days the media business is witnessing the next structural transformation in its business model. Due to the reduction of revenues1 from printed media and advertisements, industry giants are looking for other ways for penetrating additional revenues. The traditional strategy of cost reduction that was previously widely applied does not seem to be sustainable. On the contrary, most key players in the media world see the biggest opportunity in the invention of new models which will contribute to the boost of revenues. To a large extent media executives agree that monetization of online content is the decision they should go for more insistently2. One of the reasons why online monetization is a financially attractive way of growth is that, it has zero marginal cost, and as opposed to print media, revenue increase will not induce proportional increase in costs3. Another advantage which online news have compared to the traditional printed media is that they can provide news in real time regime which is extremely important in this particular industry as news is very costly and at the same time highly perishable product4.So far there have been some attempts of online monetization like the Kindle and micropayments but these strategies cant balance the all the losses that the industry bears because of the before mentioned reasons.Up to date, unfortunately for the industrys decision makers, choosing the right model for online monetization was not the only challenge they had to fac e. Challenges like search engines, which are generating their content and giving it out to customers for free, are not easy to overcome. In fact, bloggers and social networks like Facebook and Tweeter could be considered as posing similar risks for traditional media companies. However in chapter 4 we will see that the attempts of transforming these risk bearing factors into opportunity and getting some kind of revenues from them has started, which logically should lead us to some type of business to business model which will become beneficial for both parts.In this thesis, because of different reasons5 I will not claim to have found the ideal model for content monetization, but rather will present several alternative models for monetizing online media content, and whats more important, will discuss the most successful models employed thus far which are applied by leading players in the industry. I will compare their features to each other, analyze their advantages and disadvantages. I will also look empirical data of results of each model to give the reader a better sense of each models financial success and the importance of online content in their business, to have better understanding what role content monetization might mean for these news providers. Besides I will help the reader to have knowledge about the obstacles which should be taken in consideration by stakeholders, if they want to find the best match pay model for their news web-site.1. IntroductionThroughout its history the media business, which is one of the most dynamic and fast-developing industries, has passed through many development cycles, each prone to tremendous changes in terms of strategy, structure and model it operated with. The reasons of these changes in different times were different processes taking place in parallel, e.g. advances of post-delivery system, facilitating transportation and logistics around the world, various technological innovations etc. However, without any doubt, the emergence of the Internet and the subsequent development of digital media is the greatest change of at least last two decades. It has once again revolutionized the whole industry dramatically, more than any previous development.Currently we are witnessing a transformation process which might become a ground for the conceptual change of the whole media industry. Due to the reduction of revenues6 from print media7 (one of the reasons of this is decreased circulation of print newspapers, Exhibit 1) and online advertisements, industry giants have started to explore new ways to restructure their portfolios of income, and how to make their readers pay for the information they get online8. The latest financial crisis played a role in accelerating this process. The downswing of revenues pushed the media companies to sharpen cost cuttings first of all indicated by the massive layoffs of the staff. However as many industry experts like freelance photojournalist Mike give believes, massi ve layoffs itself is not a sustainable strategy for the future9. The same view is shared by management consulting firm Booz Company in their research about the media industry. They admit that cost cutting is an important tool for managers, but in order to stay capable of growing in the long run, companies cant focus only on the expenditures side of their income statement.10Media executives are still optimistic about the future. As the survey in the same research from Booz Company shows, most of the respondents (nearly 70%) believe that their companies are financially healthy. The which even higher to 80 percent when it comes to the opinion of integrated players (Exhibits 2), and surprisingly just one forth of the surveyed executives expected they would meet the end of recession with a deteriorated situation (Exhibit 3). moreover, more than half of media executives (57%) believe that they still hold the wheels to regard situation despite financial crisis and think that with struc tural trends developing in the industry they can outperform the negative results of economic downturn. Print executives are even more optimistic, this opinion is shared by 67 percent of them. Booz Co sees the future of media companies in their ability to identify the markets where they can repugn successfully and the business models which will help them to do so.In the June of 2009, at the Cable Show11 in Washington D.C, American News Corps owner Rupert Murdoch gave a speech, which also covered the current challenges of media industry, where he specifically underlined the inevitable need of content monetization. He underlined that times when people where reading news online for free should be over, and thus gave a hint to the whole industry that the process of online content monetization is not only non-reversible process, but indeed it should accelerate whether somebody likes it or not. Murdoch mentioned that only online ads cannot cover media companies costs and named New York T imes, as a vivid example of that. NYT has one of the most favourite U.S newspaper websites, but still their online ad revenues are not qualified for cost coverage12.The signal form the industry guru was correctly understood by other giant players of media world and many of them like Axel Springer and New York Times13 already second time, started thinking how to charge their readers for online news in the way not to harm online traffic and ad revenues. Finding the balance among these two will be the biggest challenge for the followers of the trend. In the process of monetizing online media choosing the right type of model which will fit to one or another news providers overall strategy and values is a big deal of question.Currently most news online is free, but there are some existing newspapers successfully charging their readers at least for the part of the information they provide to them.1 shows the increased consumer spending (black curve) and penetration (grey curve) in onlin e content. The research conducted by Online Publishers Association shows the same trend, that the money spent by consumers on online content in United States increase from 1.31 billion USD in 2002 to 1.78 billion USD in 2004, which meant annual growth rate of 17%. However this growth occurred in the entertainment area such as adult material, music, fun and sports14.Currently, among them most successful in terms of revenues generated from online media content, are American The Wall Street Journal and the British Financial Times. Both of these newspapers are providing financial news and are most direct competitors of each other. Finance is one of those few areas which experts consider possible to monetize.The Booz Co research mentioned before makes focus on prior experiments of publishers who tried to monetize content and boost sales with which such an innovative tools as Kindle (Exhibit 4) sales, multi-title subscriptions and micropayments are, but as the results show these methods cant regain all the revenues lost which the media industry faced in the last two years. It also shows that inevitable steps are needed from the whole industry to look for new business models and as the survey in the same research shows, media executives expect most increase of revenues from the innovations in the digital media, from the new innovative models. (Exhibit 5).Expectations towards online monetization is a great, at least from the side of news providers, however the way on which they will have to go does not seem smooth and easy. There are various challenges monetizing volunteers will have to deal with on the one hand there is a problem of search engines and bloggers stealing news from their web sites and offering them to readers on aggregate web-sites, and on the other hand there is a psychology of people and understanding their personal motivations, what would make them to pay money in online news. Furthermore, it will not be easy to make people pay for the information which they were used to get for free previously15.However despite all challenges and obstacles which is expected for industry players, Booz Co concludes that process of media digitization is on its way and nothing can stop it. Mathias Dphner comes up with same opinion I do not share this kind of pessimism that content business is dying. The opposite is right. Thats the tremendous opportunity through the digitization.16One more factor which theoretically should give more hope to media magnates is psychological as various studies about personality drivers during online purchase show, the experience of using internet and reading news online are positively correlated with purchase intention. Once the usage of internet and reading news online is a growing endeavor in current reality, and the age of internet usage is also unfirm fast, we can say that time works on media companies.In this research I will analyse existing online paying models which successfully operate and give the hope to industry players for the brighter future in that prospect.2. Review of search methodologyThe aim of this thesis is to find out the features of existing paid models in online news which are already operating successfully. I will also try to measure their effectiveness/importance by various criteria, both objective such as existing financial and numeric data, and also more partly-objective, such as different expert opinions17.The research will be developed in three main partsReview of types of content which can be monetized, where people show some willingness to pay money (or are already paying)As related to the previous chapter, analysis of the personality drivers and its importance while consumers conduct online purchase compendium of existing successful models, their features and their effectiveness in terms of empirical resultsFor the saki of development of this three-pillar structure, the information will be obtained through various sources such as existing lit researches, articles, blogs, expert opinions and the consulting project ran by me and my classmates during our expend project18.2.1. Sources for identifying online-chargeable content and consumers personality driversThe biggest contribution for the author in understanding of this issue were insights from consulting project workshop conducted by the ESMT Practice Project of which the author was a team member19 in the late 2009. During this project, besides analyzing already available literature regarding topic, the team interviewed different kind of experts and also ran a representative survey among 300 German online readers to understand the areas where customers showed some willingness to pay. According to the results, there are not many areas which can be monetized, but onlyDeeper analysis of specific articles as an addition to the more general oneOld archives plus specific interest areas of some readersLocal newsOnline sports eventsThe point is almost completely shared by Mathias Dphner, th e CEO of German media company Axel Springer, who held a discussion around the topic at Monaco Media Forum 2009 There are not many areas where people are willing to pay money 1) This is finance, which is related to power 2) Plus sports or games 3) Regional environments, people around you 4) And then we are coming to two existential areas sex and crime, or love and death. These are areas where people are generally interested in and why should that change in digital business? asks Dphner rhetoric question.The CEO of Axel Springer also commented the fact that currently most news online is free and called this fact a structural mistake which has to be corrected step by step. According to Dphner there is not need of revolution, once most appropriate rules and procedures in legislation already exist. They just need some moderation and then execution. Continuing on the issue Dphner summed up with the hope that in the long run, for hundreds of years, people are willing to pay for things the y are interested in. Commodity news will be for free, but special information, added value services, exclusive information should be charged.Currently, there are already obvious movements in the industry towards fixing the structural mistakes Mr Dphner talked about. This will be discussed more detailed in chapter 3.2, named challenges.2.2. Personality drivers of consumers to purchase online fellow feeling and analyzing consumer drivers while conducting online purchase, is critical for building prominent, profitable business model. However until forthwith there is no perfect study in the area which could claim on being perfect in identifying and analyzing of all motivators which make consumers to pay money online, and whats more important, all researchers would agree on that claim of this study.One of the best researches in this field conducted by Wang et al claims that the main factors which affect consumers willingness to pay money online and are positively correlated with the one , are consumers perceived convenience, essentiality, added-value and service quality. However another research on the same topic e.g. from Choi, Lee and Soriano focuses on following factors perceived consequences after purchase of product, easiness of use of internet, social factors such as environment around person, rapture of the reader after purchase and existing alternative sources to get the same particular information. As we see on this example two separate academics have completely different approach and beliefs towards one topic.These two researches are clear evidence how diverse is different researchers approaches to the issue. To all of these factors I looked also form the prospective of researches which are dedicated to analyzing a bit broader field consumers purchasing drivers in whole online market rather than only in online media. In these researches, some of above mentioned factors are considered to be important but others are doubted.Its hard for someone to persis t himself not to criticize some of the factors mentioned above, e.g. the word perceived is already very dubious and at the same time very subjective, however very important one. As Barkhi, Belanger and Hocks claim in their model of the determinants of purchasing from virtual stores, the notion perceived/perception has already enormous importance itself, as it defines consumers later attitude towards whole online purchase procedure.To continue analysis, factor such as social company is neglected in Bosnjiaks research, where he referring to Senecals 2005 research claims that recommendations made from close community make decision making process more complex but it does not affect final choice of consumer.Regarding service-quality we can say that, the word quality itself already induces some confusion because its pretty subjective notion. For different people quality might mean different things. For some people service-quality might mean the urgent delivery of hottest news and the exc lusivity of this information, whereas for another person the quality of service might be associated with deeper analysis of the article or the easiness of ways to pay money online.Such an arguing can continue further, but what is more important, arguable are not only factors on which researchers build their different models, but also some general statements which are made by them. For example, the work of Wang et al claim the business model is sustainable if revenue-generating method is accepted by majority of the say-so customers. However despite all the respect towards the authors and research itself, such a claim can easily become a reason of discussions, because still, the success of any model depends on the ideal proportion of ad revenues and online subscription revenues and for different newspapers the ideal conversion rate of readers to paid customers might be different. horizontal this research itself contradicts to its statement when brings an example of Wall Street Journ al Online and Hoovers Online telling that they managed to make e-content portal profitable by only 10% of conversion rate. While conducting our consulting project, we also got results that some high circulated newspapers would make their portals profitable even by 3% conversion ratio. Further more, Milwaukee Journal-Sentinel, has only 0,8% conversion rate of subscribers on its niche site for hardcore Green Bay Packers fans, making revenues of 600,000 USD annually. In other words, depending on the content offered by particular newspaper, and the number and type of readers they have, the effective proportion of online content and ad revenues should be found. More analysis should be conducted to understand the price of lost customers amount versus converted ones and the ideal balance of subscription revenues versus lost ad revenues. To this issue has dedicated his discussion Jeff Jarvis, on the blog-web BuzzMachine.Jeff Jarvis is an American Journalist, former television critic, editor , publisher and columnist. Among the companies he has been working are New York Daily News, San Francisco Examiner, New York Times Company, MediaGuardian a adjunct of British newspaper The Guardian. Besides he is an associate professor at the City University of New Yorks Graduate School of Journalism directing its new media program. He is also creator of weblog BuzzMachine20.Jeff Jarvis in his article about paid content published on Weblog BuzzMachine is more persuasive about the complexity of the issue21 and based on his vast experience highlights for the readers how many different factors should be taken in consideration for identifying one or another model for particular newspaper. For those who will catch in Jeff Jarvis approach some sense and consciousness will become clear that based only on the analysis of psychological traits of people and their purchasing drivers, it will not be easy to find an ideal model, and that the issue needs rather applicative approach. Findings o f Jeff Jarvis will be discussed more detailed in the 5.1 chapter named Expert opinions and Conclusions. forrader moving to the following chapter, we should conclude the started topic and mention that there is still needed some research in the area of personal motivators for online purchase, in order we could claim by 100% confidence that we are using the best model for identifying the online paid model.2.3. Discussed models and criteria for their comparisonOnce we are analyzing the existing models, the criteria for assessment of one or another method is the time of their existence and their results shown throughout their lifetime. Besides looking at the thematic differences in the features of the models both in Business to Business (B2B) and Business to Consumer (B2C) models, we will look at their financial results, their generated income through online sales and he dynamics in online subscription amount.The biggest attention the author paid was to the models of Financial Times and Wall Street Journal as the most successful financial players in B2C business. In addition, the author took a look at Bloomberg and Reuters as successful players of B2B model. New York Times was an interesting case for the author because it is a case, when after first unsuccessful trial, they are going to try monetizing online content already second time. winning in consideration their prior experience it should be important to remains which model they will choose for the second attempt.Finally, the author took a energetic look at some other examples of successful and unsuccessful attempts of monetizing online content so far.Information was gathered from reviews of their websites as well as from articles about these news-providers, and various expert opinions about their models.3. Possible models which can help to monetize online contentTechnological advancement has made most news content widely available for free online, which pushed most newspapers to give up subscription fees i n the hope of getting more readers and hence by increasing traffic, get more advertisement revenues. However such movements contribute even more to the availability of free content in the web and hence induce decrease in print media circulation and advertisement revenues22.Charging for online news is very hard. The biggest risk that media companies face is loosing the visitors, because reduced traffic will induce less interest of advertisement providers on the particular site. Ads are still major source of revenues for most media companies and it will remain so in the nearest future. As Rupert Murdoch commented previously on the example of Wall Street Journal, charging online content is not bad but still its not a gold mine23. However, recently after presenting the idea at WSJ to impose premium paid model, Murdoch Justified their decision with telling that, in their case, ad revenues are no any more critical part in revenues and they pay more attention to subscription based revenues 24.The high risk of loosing switching is easily explainable for SearchDNA founder John Straw, who admits that he himself would never pay for online content if he could get it somewhere else25.3.1. Findings from consulting projectWhile working on our consulting project26, our sort out consisting from four MBA participants, I and my three classmates, identified four different types of models which could obligate during presenting the pay wall. The consulting project itself and its results is based on the basis of numerous articles and literature about previous experience, industry expert interviews and representative survey conducted among 299 German media readers. In column 1, table 1 explains four different pay-wall models which are possible to impose on online content in different situation, and column 2 explains the situations in which these different models would have chance to work keeping other conditions constant.Table 1 Types of models applicable in monetized online media27 Types of Possible ModelsSituation explaining the feasibility of modelLocking down the whole contentReally unique contentLocking down selected articlesUnique content should be part of broader contentLimiting the number of customersVery high overall quality, breadth of content offeringLocking down the niche articlesWant to monetize only highly specific hidden articlesSource consulting PP final draftIts upon news providers which type of model they will choose to match with the content they want to lock down. As we already discussed, there are few things which would motivate people to pay money online for, in other words online readers show at least some willingness to pay in following areas* Deeper analysis of specific articles as an addition to the more general one* Old archives plus specific interest areas of some readers* Local news* Online sports eventsHere we can provide some examples of successfully using some of these methods of pay-wall. The method of locking down selected arti cles is used by Wall Street Journal. In this case most periodic news including political are considered as commodity information and they are given out for free, however if some specific interest area, e.g. finance, have deeper expert analysis, which you cant meet in other newspapers, the articles are locked down in this case. The method of limiting the number f articles is successfully used by Financial Times. New York Times decided to go on the same way from 2011. A good example of locking down niche content is Milwaukee Journal Sentinel and its Packer Insider The journal locks down specific information, deep content about football club Green Bay Packers, for its fans. In deep content in this case is counted e.g. click sessions with players. As the same Practice project showed, locking down whole content, keeping other conditions equal, is possible if the whole content is authentically unique.Here we have also to mention that during consulting project about online content mone tization, we had some more interesting insights about the factors which increase readers willingness to pay To our move content is not always the thing which might make readers to pay online 35% of surveyed 299 German readers named following three factors as the possible motivators in increasing willingness to payPromotions/ Give-awaysCustomizationSpecific additional contentAs a conclusion of this chapter we should say many experts predict for the future that, free content will be used primarily as a marketing ploy a complementary trial period is strictly used for purposes of enticing customers to subscribe to a service or buy a product online. (Wang et al). Alternatively some sites attract customers by offering a limited amount of free content. They then hope to convince their customers to sideslip to a variety of premium, fee-based content (Outing 2002). (Wang et al)3.2. ChallengesInnovative online ways of distributing news like news aggregate sites, blogs, social networks (Fac ebook, Tweeter, etc.) which are free to access, become more and more of a threat for media companies, because news is a costly product to produce, as well as it its distribution in traditional way. But distribution of news in online has zero marginal cost, as it takes nothing to the person to copy and paste a particular article or link it to the other page (Exhibit 6).Traditional media companies demand from these innovative producers of news fair ways of playing, which means either they should produce their own information or they should pay to original producers some fees for utilizing their articles. In his interview, Mathias Dphner mentioned that they are not demanding banning of these alternative sources. We understand that future is mixed model, mutual existence of both of us declared Dphner. We also do not request something new and innovative. We just need fairness, respecting each other, respecting copyright rules, paying royalties as it is supposed to be done and for of all this playing rules are already there, we just need to make them better and then follow to.Rupert Murdoch went even further and called search engine Google stealers, as they take others information without permission and put it on their pages. Regarding this phenomenon, Axel Springer CEO Dphner told very appropriate example to the Huffington Post co-founder. If you want to give others your beer for free, please brew your own beer and then you are welcomed to do so, but please stop taking my costly beer and then giving it to others for free.Recently there is a clear evidence of outset changes in this regard Google agreed with several news-provider companies to restrict their articles readerships through Google to uttermost amount of five. Another web-site YouTube started removing from their site unlicensed videos. In other words, Mathias Dphners prediction that the current reality would start changing step by step has obviously started to become true. Thus in nearest future we should anticipate emergence of new pay-models, when media companies will have to think, how to share the stripe with news aggregate web-sites, social networks and bloggers. We are witnessing enormous changes not only because of monetization, but because of establishment new type of relationships between industry participants, which ideally should bring in new opportunities. (Exhibit 9)4. Existing paying models, analysisStudies claim28 that in order managers found ideal subscription business model for online monetization they need to understand their subscribers personality drivers, their perceptions and attitudes, what makes them purchase news online? In fact there is not breadth of information about consumers personality drivers, indeed the researchers actively continue investigating this area and thus provide us with new and new models. Non-existence of ideal model in this area is one of the reasons why we cant predict ideal online pay model. The other reasons are hand-to-hand to busi ness.Referring to Jeff Jarvis argumentation in his article about paid content models, there are plenty of criteria which determine the success of one or another model. Once these criteria are individual and very specific for each newspaper, no one can/should claim yet, on identifying one general ideal model which will fit to all news-providers.As director of Association of online publishers, Lee Baker commented in News Media, half of their members already charge for online content and another 19% is going to do so in the nearest 12 months. Paid content modelling is important to our members, continues Mr. Baker. Our members are trying to penetrate new areas such as mobile apps. More than half of them express desire to create paid-for apps.Despite we cant claim on building the ideal model as a legate for the future, we can cover the most successful news providers and their models which are currently successfully used, both in B2C and B2B business.4.1. Financial Times VS The Wall Stre et JournalCurrently the most distributed B2C pay models in online media are two one is Financial Times way restricting the definite amount of free articles for subscribers and then charge the readers if they exceed this amount, and another is Wall Street Journals way offering readers only one or two separate for reading and making available the rest only for subscribers29.To compare these two models in more details lets take a more detailed look at the ways which they are used by their most successful implementers. Of course there is some room for deviations and different news providers can apply to some minor changes, e.g. in the amount of text which should be given out for free, but the concept remains the same.Table 2 below shows clear distinctions between the features of these two models in the case of FT and WSJ. The essence of difference of these two models is the amount of information provided for free and the ways how it is doneThe Wall Street Journal makes clear distinc tion between commodity and high-value content. The so ca