The Capital And Liquidity Risks Of NAB And Bank Of Queensland - 3025 Words

The Capital And Liquidity Risks Of NAB And Bank Of Queensland (Essay Sample) Content: Capital and Liquidity Risks of NAB & Bank of Queensland Name: Institutional Affiliation: Capital and Liquidity Risks of NAB & Bank of Queensland Capital Risk Introduction The capital risk is the possibility that a loss will occur on a portion or on the entire business’s investment. Capital risk applies to all the assets, which firms cannot be sure of their complete return of the initial capital. Investors such as banks have the challenge of capital risk whenever they put their money in shares, bonds from private entities, properties, foreign exchange commodities, and other securities (Lebedeva, Akhmetshin, Dzagoyeva, Kobersy, and Ikoev (2016). Additionally, once, a corporation invests in a specified project, it enters into a risk because it cannot be sure whether that project will produce adequate future returns or not in order to cover the capital that the firm invests. The Australian Prudential Regulation Authority  (APRA) requires that any authorized deposit-taking organization especially the banks plans for making their capital requirements strong. The insti tutions should be prepared to increase the capital given the outstanding concerns that comprise the essential evaluation of the trading book in order to tackle the capital requirements and the local market risk, and the loss that absorbs capital to deal with the ‘too big to fail’ recovery and resolution. Additionally, the banks should increase the capital following the Basel Committee’s suggestions to change the risk weights in many of the components. Furthermore, the Australian Prudential Regulation Authority  requires that the advanced Basel II banks should have more capital,  which is why APRA improved the risk weight for the residential mortgage lending (Castelnuovo, Lim, & Robinson, 2016). In order to improve the capital efficiency, APRA has made many banks to focus on making their businesses simple with less risks through the restructuring of departments including the management delayering. Furthermore, the banks simplify their businesses through the discontinuation of the businesses with low profits. The banks also divest the assets that yield low returns and the dealings that require substantial capital such as the life assurance. Therefore, the banks prioritize the dealings that require less capital and concentrate on profitable loaning, such as residential mortgages. Capital Adequacy Ratio  (CAR) Organizations measure their capital risk using the capital adequacy ratio, which is the capital to risk ratio  of financial institutions such as the  bank.  A good bank's capital adequacy ratio shows that the bank can absorb high losses and has enough capital as required by the law. Capital adequacy ratio = (Tier 1 capital + Tier 2 capital)/ Risk-weighted assets. Tier 1 capital can absorb high losses with the  bank  still continuing with its trading activities while Tier 2 capital can absorb the  bank‘s losses during its winding-up, hence, does not protect the depositors fully (Curcio & Hasan, 2015). For the risk -weighted assets, the bank regulators assign the credit risk’s degrees in terms of percentage weights (Laeven, Ratnovski, & Tong, 2016). The following are the percentage weights.    Asset Risk weighting (%) Cash  and  government bonds 0 Residential  mortgage loans 50 Other assets and loans 100 Capital Adequacy Ratio  for NAB (National Australia Bank Ltd, 2018). Tier 1 capital = Common Equity (Total) – (investment in unconsolidated subsidiary + intangible assets + Loan Loss Allowances (Reserves) Tier 2 capital= Preference shares Tier 1 capital (AUD Millions) = 48,386– (549 + 5,601 + (3,224)) = 45, 460 Tier 2 capital (AUD Millions) = 2,920 Risk-weighted assets for National Australia Bank Ltd is given as follows (AUD Millions). Total Cash & Due from Banks =6,269 X 0% =0 Consumer & Installment Loans =13,082 X 100% =13,082 Interbank Loans =37,066 X 100% =37,066 Real Estate Mortgage Loans =329,534 X 100% =329,534 Lease Financing Loans =11,674 X 100% =11,674 Unspecified/Other Loans =189,474 X 100% =189,474 Investments – Total =183,793 X 100% =183,793 Other Assets (Including Intangibles) = 9,453 X 100% =9,453 Risk-weighted assets 774,076 Capital adequacy ratio = (Tier 1 capital + Tier 2 capital)/ Risk-weighted assets = ([45, 460 + 2,920] /774,076) X 100 = (48,380/774,076) X 100 = 6.25% Capital Adequacy Ratio  for Bank of Queensland (Bank of Queensland Ltd, 2018). Tier 1 capital = Common Equity (Total) – (investment in unconsolidated subsidiary + intangible assets + Loan Loss Allowances (Reserves) Tier 1 capital (AUD Millions) = 3,788 – (15 + 872+ (227)) = 3,128 Tier 2 capital= Preference shares The Bank of Queensland does not have the Tier 2 capital Risk-weighted assets for Bank of Queensland is given as follows (AUD Millions). Total Cash & Due from Banks = 705 X 0% =0 Consumer & Installment Loans = 555 X 100% =555 Interbank Loans = 58 X 100% =58 Real Estate Mortgage Loans = 29,853 X 100% =29,853 Lease Financing Loans = 4,780 X 100% =4,780 Unspecified/Other Loans =0 X 100% =0 Investments – Total = 5,880 X 100% =5,880 Other Assets (Including Intangibles) = 1,295X 100% =1,295 Risk-weighted assets 42,421 Capital adequacy ratio = (Tier 1 capital + Tier 2 capital)/ Risk-weighted assets = (3,128/42,421) X 100 = 7.37% According to Shingjergji and Hyseni (2015), the percent threshold of the capital adequacy ratio differs from one bank to the other, but the bank regulators require the percent threshold to be at least 10%. Both the National Australia Bank Ltd and the Bank of Queensland CAR percentages are less than the 10% threshold. Since, the two banks’ CARs are low, it means that they are somehow weak financially looking at their capital and assets. Therefore, the banks should try to maintain higher levels of both Tier 1 and Tier 2 capitals in order to make their depositors safe and promote the institutions’ stability. The Bank of Queensland has a higher capital adequacy ratio (7.37%) than that of National Australia Bank Ltd (6.25%). Therefore, the Bank of Queensland is safer and probably able to meet its financial obligations better than National Australia Bank Ltd. On the other hand, the Bank of Queensland does not have the Tier 2 capital, hence, i t might not be able to absorb losses if by bad luck the bank is liquidated or  wound up.   Both banks are more likely to be bankrupt in the unforeseen circumstances of arising of losses. Conclusion From the calculations above, the two banks’ thresholds are below the 10% that is required, hence, are financially weak. Therefore, there is some relative riskiness in the two banks and the management should begin deliberating on the way forward in order to increase capital adequacy ratios for them to have enough cushion. When the banks have enough cushion, they will be able to absorb a lot of losses before becoming bankrupt, hence, lose monies for their depositors. The banks will then become more efficient and stable as their risk of becoming insolvent reduces. The riskiness in the bank of Queensland is higher than that of National Australia Bank Ltd that the former does not have the Tier 2 capital, hence, it might not be able to absorb losses if by bad luck the bank is liquidated or  wound up.  Since, when a bank is liquidated, the law allows the depositors’ monies to get the first priority than the capital of the bank. Depositors will not lose their mon ey if by chance the Bank of Queensland gets a loss that is more than its total capital, which will make the bank to close its doors for the lack of cash to continue operating. The Bank of Queensland should bring on board more Tier 2 capital to increase its capital adequacy ratio, hence, protect the assets of the depositors. From the below the 10% CARs, both banks are more likely to be bankrupt in the unforeseen circumstances of arising of losses. Therefore, the banks need to increase items such as the ordinary and preference share capitals to be on the safe side. So, the low capital to risk-weighted assets’ ratios of the two banks will be enhanced because of the improved capitalization of the institutions. Capital will become efficient and then think of improving the assets quality.   The two banks have not fully met the Australian Prudential Regulation Authority’s requirements  because it seems like they do not prioritize the transactions that would require them t o use less capital and concentrate on profitable loaning, such as residential mortgages. The balance sheets of both banks do not have any residential mortgages, hence, showing that the institutions are not aggressive to have them on board to increase their revenue. There are some areas that the two banks have met the Australian Prudential Regulation Authority’s requirements  like divesting the transactions that require substantial capital such as the life assurance because in the balance sheets of the two banks, no one shows any participation in the life assurance business. Liquidity Risk Introduction Liquidity risk  occurs when an institution such as a  bank  becomes not able to meet its current financial demands. This inability typically happens because of the inability of the bank  to change solid assets or securities to liquid money without losing the rev...

An Introduction to Virtue Ethics

â€Å"Virtue ethics† describes a certain philosophical approach to questions about morality. It is a way of thinking about ethics that is characteristic of ancient Greek and Roman philosophers, particularly Socrates, Plato, and Aristotle.   But it has become popular again since the later part of the 20th century due to the work of thinkers like Elizabeth Anscombe, Philippa Foot, and Alasdair MacIntyre. The Central Question of Virtue Ethics How should I live?   This has a good claim to being the most fundamental question that you can put to yourself.   But philosophically speaking, there is another question that perhaps has to be answered first: namely, How should I decide how to live? There are several answers available within the Western philosophical tradition:   The religious answer:  God has given us a set of rules to follow. These are laid out in scripture (e.g. the Hebrew Bible, the New Testament, the Koran). The right way to live is to follow these rules. That is the good life for a human being.Utilitarianism: This is the view that what matters most in the world in the promotion of happiness and the avoidance of suffering.   So the right way to live is, in a general way, to try to promote the most happiness you can, both your own and that of other people– especially those around you–while trying to avoid causing pain or unhappiness.Kantian ethics: The great German philosopher Immanuel Kant argues that the basic rule we should follow is neither â€Å"Obey God’s laws,† nor â€Å"Promote happiness.† Instead, he claimed that the fundamental principle of morality is something like: Always act in the way that you could honestly want everyone to act if they were in a similar situation. Anyone who abides by this rule, he claims, will be behaving with complete consistency and rationality, and they will unfailingly do the right thing. What all three approaches have in common is that they view morality as a matter of following certain rules. There are very general, fundamental rules, like â€Å"Treat others as you’d like to be treated,† or â€Å"Promote happiness.† And there are lots of more specific rules that can be deduced from these general principles: e.g. â€Å"Don’t bear false witness,† or â€Å"Help the needy.† The morally good life is one lived according to these principles; wrongdoing occurs when the rules are broken. The emphasis is on duty, obligation, and the rightness or wrongness of actions. Plato and Aristotle ‘s way of thinking about morality had a different emphasis. They also asked: How should one live? But took this question to be equivalent to What kind of person does one want to be? That is, what sort of qualities and character traits are admirable and desirable. Which should be cultivated in ourselves and others? And which traits should we seek to eliminate? Aristotles Account of Virtue In his great work, the Nicomachean Ethics, Aristotle offers a detailed analysis of the virtues that has been enormously influential and is the starting point for most discussions of virtue ethics. The Greek term that is usually translated as â€Å"virtue† is arà ªte.  Speaking generally, arà ªte is a kind of excellence. It is a quality that enables a thing to perform its purpose or function. The sort of excellence in question can be specific to particular kinds of thing. For instance, the main virtue of a racehorse is to be fast; the main virtue of a knife is to be sharp. People performing specific functions also require specific virtues: e.g. a competent accountant must be good with numbers; a soldier needs to be physically brave. But there are also virtues that it is good for any human being to possess, the qualities that enable them to live a good life and to flourish as a human being. Since Aristotle thinks that what distinguishes human beings from all other animals is our rationality, the good life for a human being is one in which the rational faculties are fully exercised. These include things like the capacities for friendship, civic participation, aesthetic enjoyment, and intellectual enquiry. Thus for Aristotle, the life of a pleasure-seeking couch potato is not an example of the good life. Aristotle distinguishes between the intellectual virtues, which are exercised in the process of thinking, and the moral virtues, which are exercised through action.   He conceives of a moral virtue as a character trait that it is good to possess and that a person displays habitually.   This last point about habitual behavior is important.   A generous person is one who is routinely generous, not just generous occasionally. A person who only keeps some of their promises does not have the virtue of trustworthiness. To really have the virtue is for it to be deeply ingrained in your personality. One way to achieve this is to keep practicing the virtue so that it becomes habitual. Thus to become a truly generous person you should keep performing generous actions until generosity just comes naturally and easily to you; it becomes, as one says, â€Å"second nature.† Aristotle argues that each moral virtue is a sort of mean lying between two extremes. One extreme involves a deficiency of the virtue in question, the other extreme involves possessing it to excess. For example, Too little courage cowardice; too much courage recklessness. Too little generosity stinginess; too much generosity extravagance. This is the famous doctrine of the â€Å"golden mean.†Ã‚   The â€Å"mean,† as Aristotle understands it is not some sort of mathematical halfway point between the two extremes; rather, it is what is appropriate in the circumstances. Really, the upshot of Aristotle’s argument seems to be that any trait we consider a virtue as to be exercised with wisdom. Practical wisdom (the Greek word is phronesis), although strictly speaking an intellectual virtue, turns out to be absolutely key to being a good person and living a good life. Having practical wisdom means being able to assess what is required in any situation. This includes knowing when one should follow a rule and when one should break it. And it calls into play knowledge, experience, emotional sensitivity, perceptiveness, and reason. The Advantages of Virtue Ethics Virtue ethics certainly didn’t die away after Aristotle. Roman Stoics like Seneca and Marcus Aurelius also focused on character rather than abstract principles. And they, too, saw moral virtue as constitutive of the good life– that is, being a morally good person is a key ingredient of living well and being happy.   No-one who lacks virtue can possibly be living well, even if they have wealth, power, and lots of pleasure. Later thinkers like Thomas Aquinas (1225-1274) and David Hume (1711-1776) also offered moral philosophies in which the virtues played a central role.   But it is fair to say that virtue ethics took a back seat in the 19th and 20th centuries. The revival of virtue ethics in the mid-late 20th century was fueled by dissatisfaction with rule-oriented ethics, and a growing appreciation of some of the advantages of an Aristotelian approach. These advantages included the following. Virtue ethics offers a broader conception of ethics in general.  It doesn’t see moral philosophy as confined to working out which actions are right and which actions are wrong. It also asks what constitutes well-being or human flourishing. We may not have a duty to flourish in the way we have a duty not to commit murder; but questions about well-being are still legitimate questions for moral philosophers to address.It avoids the inflexibilities of rule-oriented ethics.  According to Kant, for instance, we must always and in every circumstance obey his fundamental principle of morality, his â€Å"categorical imperative.† This led him to conclude that one must never tell a lie or break a promise.   But the morally wise person is precisely the one who recognizes when the best course of action is to break the normal rules. Virtue ethics offers rules of thumb, not iron rigidities.Because it is concerned with character, with what kind of person one is, virtue ethics pay s more attention to our inner states and feelings as opposed to focusing exclusively on actions. For a utilitarian, what matters is that you do the right thing–that is, you promote the greatest happiness of the greatest number (or follow a rule that is justified by this goal).   But as a matter of fact, this is not all we care about. It matters why someone is generous or helpful or honest. The person who is honest simply because they think being honest is good for their business is less admirable that the person who is honest through and through and would not cheat a customer even if they could be sure that no one would ever find them out.Virtue ethics has also opened the door to some novel approaches and insights pioneered by feminist thinkers who argue that traditional moral philosophy has emphasized abstract principles over concrete interpersonal relationships. The early bond between mother and child, for instance, could be one of the essential building blocks of moral l ife, providing both an experience and an example of loving care for another person. Objections to Virtue Ethics Needless to say, virtue ethics has its critics. Here are a few of the most common criticisms leveled against it. â€Å"How can I flourish?† is really just a fancy way of asking â€Å"What will make me happy?†Ã‚   This may be a perfectly sensible question to ask, but it really isn’t a moral question. It’s a question about one’s self-interest. Morality, though, is all about how we treat other people. So this expansion of ethics to include questions about flourishing takes moral theory away from its proper concern.Virtue ethics by itself can’t really answer any particular moral dilemma. It doesn’t have the tools to do this. Suppose you have to decide whether or not to tell a lie in order to save your friend from being embarrassed. Some ethical theories provide you with real guidance.   But virtue ethics doesn’t. It just says, â€Å"Do what a virtuous person would do† which isn’t much use.Morality is concerned, among other things, with praising and blaming people for how they behave.   But what sort of character a person has is to quite a large extent a matter of luck.   People have a natural temperament: either brave or timid, passionate or reserved, confident or cautious. It is hard to alter these inborn traits. Moreover, the circumstances in which a person is raised is another factor that shapes their moral personality but which is beyond their control.   So virtue ethics tends to bestow praise and blame on people for just being fortunate. Naturally, virtue ethicists believe they can answer these objections. But even the critics who put them forward would probably agree that the revival of virtue ethics in recent times has enriched moral philosophy and broadened its scope in a healthy way.

The Rise And Fall Of Bernie Ebbers - 787 Words

Introduction One of America’s famous corporate leaders rose to prominence like a whirlwind and, then years after the euphoria, he fell from grace. Bernard Ebbers, a Mississippian native, became the face of America’s corporate world just for a short time. Then, his glory ended only to face allegations of fraud, abuse, and other corporate malpractices. The rise and fall of Bernie Ebbers shocked the business world for he lived, then, in modesty, supported education and contributed to his community. Ebbers’ community called him â€Å"responsible business leader† (Trevino Brown, p. 90) and author George Gilder described him as â€Å"one of the most fascinating, improbable, and inspiring in North American business† (p. 90). What went wrong? Discussion†¦show more content†¦He generously loaned this select group without documentation, a patronage behavior rampant in developing countries. Just a strong showing of social learning and social exchange wrapped in ethics and morality would have done the tricks (Trevino Brown, 2005). Q3. Identify some theoretical linkages between Ebbers’s leadership style as practiced and the behavior that occurred within WorldCom. Answer: Ebbers’ self-inflicted, self-centered, transactional leadership style paved the way for the firm’s demise. He loaned subordinates to ensure compliance, loyalty, and cooperation. A transformational leader leads subordinates to achieve goals for all. The main issue is trust, a trait that is higher in transformational than in transactional leadership (Principles of Management, 2015). Ebbers decided otherwise. He surrounded himself with a select group of people and kept others in the dark on decision-making. Q4. The law firm report identified Ebbers as the source of a culture that resulted in the company’s accounting fraud. How did Ebbers’s leadership style contribute to the values and actions of key managers? How could key managers perform their jobs effectively and ethically in the WorldCom culture? Answer: Ebbers promoted a culture of patronage and a disdain for openness and contrary opinion. He had a select group that made all the decisions. He rewarded them by personallyShow MoreRelated WorldCom and The Mississippi Scheme Scandals Essay1704 Words   |  7 Pagesstock prices and dubious practices within the organizations to keep the public unaware. Bernie Ebbers was the founder and CEO of WorldCom. He took a small telecommunications firm and transformed it into an industry giant before it collapsed into bankruptcy in 2002. The stock prices of WorldCom began to fall in 2000 and in order to prevent the price from falling further WorldCom made mass loans to Ebbers to stop him from selling his stock. He initiated the fraud and false reporting. He did notRead MoreEssay about Worldcom: Organizational Culture and Unethical Safeguards1195 Words   |  5 Pagesrelatively small amount of people, are completely wrong. Bernie Ebbers, Chief Executive Officer, and Chief Financial Officer, Scott Sullivan’s classical view of social responsibility was the beginning of the end for WorldCom; this classical view shaped WorldCom’s organizational culture, and blinded how WorldCom should have safeguarded against unethical accounting breaches. Ebbers and Sullivan’s Classical View of Social Responsibility Ebbers was one of nine investors of Long Distance Discount ServicesRead MoreAccounting Fraud at Worldcom 21405 Words   |  6 PagesWorldCom The break up of ATT opened the long distance service market to small companies during the mid- to late-1980s and 1990s. Long Distance Discount Service (LDDS) opened in 1983 with moderate growth until its stock went public in 1989. CEO Bernie Ebbers decided to grow the organization through acquisitions (70 companies over the course of its lifetime) with its largest in 1998, the acquiring of MCI for $37 billion. The acquisitions caused the company’s stock to increase and WorldCom used thisRead MoreWorldCom Fraud Case Essay2223 Words   |  9 PagesIn 1983, while in a small coffee shop in Hattiesburg Mississippi, Bernard Ebbers developed the business concept that would eventually become the second largest long distance telephone company in the United States, WorldCom (Romar and Calkins). In 2002, the company that Bernard Ebbers grew from the ground up declared the largest bankruptcy in United States history. The unethical and illegal accounting treatments that WorldCom par ticipated in eventually led to the demise of the company and a newRead MoreThe Fraud Triangle And Fraud Scale3490 Words   |  14 PagesFraud Scale to analyse the actions of Bernie Ebbers and Scott Sullivan. What does your analysis suggest? As Albrecht et al. (2012) illustrate, there are many ways to commit fraud but common to all frauds are the following three elements, which make up the fraud triangle: 1. A perceived pressure 2. A perceived opportunity 3. A rationalization of the fraud as acceptable These three elements are almost always present in every fraud and are interactive. This gives rise to the fraud scale. As Albrecht etRead MoreLong Distance Discount Services ( Ldds )1460 Words   |  6 Pagesand Jickling 2002). This report examines and analyses the underlying reasons behind how and why such a massive fraud took place, how it went unnoticed through the years and the actions taken by senior management at Worldcom that led to the rise and subsequent fall of the company. This report also provides recommendations that could have helped prevent this scandal from taking place as a result of ethical accounting practices and having a strong corporate governance system in place. 2. Earnings ManagementRead MoreEnron And Its Impact On Enron s Downfall Essay1492 Words   |  6 Pagesthe most innovative company in the United States; it exemplified the transition from the production to the knowledge economy. Many lessons can we learn from its collapse. In this paper we present an analysis of the factors that contributed to Enron’s rise and failure, underlying the role that energy deregulation and manipulation of financial statements played on Enron’s demise. We summarize some lessons that can be learned in order to prevent another Enron and restore confidence in the financial marketsRead MoreAudit and Wall Street13173 Words   |  53 Pagesfor his internal insight into the case. Thank you. iii Dedications For my family, who fed me, clothed me, and distracted me, all to make sure I stay sane during this knowledge gaining experience. For the numerous cups of tea that made me fall asleep and saved me from information overload. For my grandfathers: the businessmen. iv Contents Introduction ..............................................................................................................................Read MoreEvolution of Corporate Governance3567 Words   |  15 Pagesway, Bernie Ebbers became the scapegoat in the Worldcom â€Å"scandal†. He was greatly influenced by Jack Grubman and other leaders from banks and investing firms. There were emails showing how he was coached on speeches by these very people. When it came time to place blame though, Bernie Ebbers was the biggest loser. Other individuals involved were only fined monetarily. This turned out to be a minor portion of the overall gain they had received from their involvements in the rise and fall of WorldcomRead MoreCorporate Governance Benchmarking Paper6593 Words   |  27 Pagescollapse or disarray of many organizations. Team A will provide a brief synopsis of specific organizations experiencing unethical challenges and how these organizations experience total collapse and devastation or how these organizations have come to rise above these unethical challenges by changing the corporate culture. By identifying the key course concepts, comparing and contrasting the practices of the various organizations will also provide insight of how each organization was able to react to

Corporate Responsibilities and Ethical Problem †Free Samples

Question: Disccuss about the Corporate Responsibilities and Ethical Problem. Answer: 1.The present problem is based on the ethical issue raised during the course of business. The case is evolved with hotel management, hotel development opportunities and the ethical problem that can be raised from the issues (Velasquez Velazquez, 2015). It is very hard to pin down the ultimate definition of ethics. Ethics consists of certain moral principles that should be maintained for the betterment of the society. The term ethics can be raised regarding the every possible grounds. There are certain professional ethics that can be taken place during the commencement of a business. In business ethics, there are a confliction between the morality and ethics cropped up (Hoffman, Frederick Schwartz, 2014). Business ethics developed through the conduct of the parties and from the nature of the business. It has two different aspects that are used to regularise the effect and consequence of the ethical issue of business. The two wings of business are the normative and descriptive. In the present case, an ethical problem arose regarding the establishment of a hotel in an island of Caribbean. There are many opportunities present if the hotel can be established. However, certain ethical issues cropped up regarding the same. According to the words of Adam Smith, people who are involved in the business sector, often go against the public policies. Similar situation has arisen in this case as if the hotel be established there, the living environment of the locals may hamper and even it can cause degradation in the environment. Such a problem is needed to be resolved at the earliest stage. The problem can be resolved by taking certain measures that can be useful for the locals and for the business. This is a case of ethical dilemma and to solve the problem, ethical approaches are needed to be adopted. There are certain theories present that can be present the idea of ethics from various dimensions. The most appreciable methods in this case is social responsibility ethics (Melissen, Ginneken Wood, 2016). The main theme of this theory is to fulfil the duties without hamper the society. It is intended to maintain a balance between the economic growth and the betterment of the society. The measures that can be adopted here are as follows: If there is a hotel be established in the sector or that area, certain land is needed. Land can be taken from the locals but the problem is whether they will give their consent where they are residing for centuries. That problem may be solved if a replacement or relocation of them can be possible. The second problem is to gain the government assent. There are certain advantages present if a hotel can be established there. The place can be a good tourist place that can be held profitable for the economical growth of the country (de Grosbois, 2016). Government can get a lump sum tax from the hotel authorities. If the hotel can be established, there can be an opportunity regarding the appointment of the employees necessary for the works of the hotel be cropped up. It will develop the living condition of the locals. 2.There is a term regarding the facilitation fee used here. Certain amount can be used to facilitate certain administrative procedure. It is paid to the government officials to complete certain job or work for the benefit of the payment making party. In this case, an attractive amount of facilitation fee can be played an important role for the betterment of the project (Fee Roulston, 2014). Facilitation fee are payable to the officials of the lower level where the clerical process are go on and it is not a kind of bribery. It is different than that. An ethical issue is lying in this case. In some countries, facilitation fees are considered as bribe and therefore unethical in nature. The main reason behind it is this payment is not intended to use for the benefit of the business, rather they are used as a fees to obtain the assent of the government work. It also used to obtain certain license or permit for some project. In the countries like United Kingdom and Germany, the process of taking facilitation fee is considered illegal to prohibit the corruption in the government sector. In this case, there is a situation arose regarding the payment of facilitation fee. In the provinces of Caribbean, there is a lean for the smooth inflow regarding the foreign direct investment is present to develop the economies of the country (Lian, Rahman bin Alas, 2015). The country is providing several opportunities to the foreigners who want to do business in their land and in this criteria, the government is adopting certain friendly policies. Therefore, if there is ground to pay the officials any facilitation fee, it can be considered as ethical approach for the establishment of business there. 3.It is the utmost duty of an entrepreneur to start up a hotel business with a developed customer responsibility management and to provide the customers with certain facilities (Polite Santiago, 2017). In case of establishment of any hotel, a huge amount of money is needed. Therefore, the main target of the hotel authorities is to earn money that can be held profitable for them. Money will help them to meet their targets so that they can be able to repay the loan if any and to provide certain benefits to the customer for the betterment of the hotel in subsequent event (Weaver, 2014). In this case, it has been observed that the authorities who want to open a five star hotel in the island, decided to open a casino in the hotel to attract the customers (Wang, 2014). There are certain reasons behind the decision that can be categorised as follows: The customers, who will come to the hotel, invest their money in the casino and there is a scope for the hotel authority to earn a huge amount of money during the process. Casino can be an attraction regarding the customer orientation program and there is a scope to make the economic base of the hotel strong (Walker, 2016). Casinos are one of the main entertainment products for the customers who will come to the island to spend the holidays and it is a common mentality of people to earn money by luck. They will definitely try to check their luck and that could be the ultimate checkmate for the hotel authorities. One of the key metrics of the hotel business is the economic gain and casino will be helpful for the purpose. The customers include the common people, tourists and the business personnel. Apart from that, there is an opportunity arise regarding the appointment of new employees and a scope can be arisen for the locals to be appointed in that hotels that will indirectly help th e economic background of the country. The tax that will be imposed on the hotels and on the casino will be lump sum in nature. Therefore, the implication of the casino on the promotion of the hotel is positive in nature. 4.As a business development Director of a firm, it is the utmost duty to analyse all the scope, both positive and negative and come into a conclusion regarding the investment process of the development firm. It should be kept in mind that there are a lot of be invested into the business. Therefore, the decision should be kept by analysing all the respective procedures. There are certain things that are to be considered for that purpose. Certain ethical issues are also involved in this case. The first issue is that if a five star hotel is to be concocted in the area, there is a need of land that are to be collected from the locals. Henceforth, if there is no scope for the replacement of the locals in any alternative place, that could be affect the project vehemently (Barsky Maier, 2015). It is the first and optimum duty for the authority to make them give assent for the same to meet the requirement of the hotel business. Theory regarding the social responsibilities is applicable in such place. It is possible that a hotel in such place can be affect the environment and the social life of the local inhabitants. Therefore, certain ethical approaches should be adopted to maintain a link between the ethical issues. There should be no ethical dilemma or environmental degradation takes place regarding the same. An acceptable interaction between the local governments is needed in such case. If there is a provision that does not make the process of facilitation fee illegal, then the problems can be resolved by way of providing an attractive amount of money to the government official. The friendly atmosphere of the island will help to catch the customers and therefore, the hotel authorities should provide facilities to the customers. A bold step regarding the same can be taken by way of opening a casino in the hotel. That can be proved as a customer-oriented step where they will invest money to check their luck and due to this, the hotel will gain infinity of profit. Therefore, an investment in the project can be helpful in these area but that should be meet the ethical approaches regarding the business without hampering the locals and the environment. Reference: Barsky, J., Maier, T. (2015). WIN OR LOSE, IT'S THE CASINO EXPERIENCE THAT GAMBLING HOTEL GUESTS VALUE MOST.International Journal of Business, Marketing, Decision Science,8(1). de Grosbois, D. (2016). 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