Everyone Does It

Everyone Does It

I. Synopsis of the Case: 

ISI is a satellite imaging company. They are currently building a new imaging satellite that is capable of clear images within one meter. In order to complete the project the company needs to secure 150 percent of funding. To build and launch the satellite it will cost roughly $200 million dollars. If financing can’t be secured throughout the launch process ISI will be forced to file bankruptcy. Their industry competition is based in four nations, which the United States based companies have the lead in image quality. These companies include ISI, Lockart, and Global Sciences. ISI leadership includes Jim Willis, which is the Vice President of marketing and sale and Fred Ballard, the companies president.

II. Relevant Factual Information about the Problem or Decision the Organization Faced: 

        A problem has occurred with the development of the satellite. ISI’s subcontractor has stated a developmental delay of the thermal stabilizer for the camera. They have stated to Jim that the delay would be between 12 to 18 months. Each United States competing company are also developing satellites and initially had launch dates within 6 months of ISI. Each of the companies have revised there launch date at least once and Global Science twice. “Each time a company had to revised its launch date, ongoing international contract negotiations with the company had been either staled or terminated” (Wheelen, Hunger, Hoffman, & Bamford, n.d.). With this information know Fred Ballard has told Jim Willis not change the launch date in the proposal paper work. Fred has stated that its customers anticipate and build into their schedule a delay in the launch of any satellite and that there is no reason to express to them a delay that they already assume will happen.

A Japanese buyer for the Japanese government is interested in a $10 million per year contract with ISI. Jim feels that if ISI has prior knowledge of the delayed due to development of the camera and not of the actual spacecraft launch that the Japanese could later found out. If this where to come to light then a possibility can occur of damage relations or worse ISI could loose the contract altogether.

III. Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials:

I would like to relate this story with the Enron scandal. In 1985 the company was formed and I’m sure their opening statement was not, lets see if we can create the largest corporate bankruptcy through scantiest accounting practices. No, “From a pipeline company based in Houston in the 1980's, it grew into the world's largest energy trader”(Oppel & Sorkin, 2001). Somewhere along the way the company lied about its growth and recorded income, which in the end destroyed them selves. What is the different in what ISI is doing? They are willingly taking money from future costumers so they can make their 150% of the project funding, yet are up to a year in half behind due to developmental delays. What if further delays occur? One lie rolls into one and then ISI is forced to file bankruptcy due loosing all its clients in mistrusts.

I feel that Jim is trying to apply good company ethics and corporate governance.

Investopedia.com defines corporate governance as the system of rules, practices and processes by which a company is directed and controlled. Also on investopedia.com it stated “Most companies strive to have a high level of corporate governance. These days, it is not enough for a company to merely be profitable; it also needs to demonstrate good corporate citizenship through environmental awareness, ethical behavior and sound corporate governance practices” (Corporate Governance Definition | Investopedia, 2003). With this said, ISI has two competing companies in there industry. Yes they are having similar troubles with there launch date, but they are also being open about their problems and letting their customers know. Even Jim states this in the reading, “as with any franchise arrangement, mutual trust was critical to the success of each party” (Wheelen, Hunger, Hoffman, & Bamford, n.d.).