#2 Sustainability

(c) Michael Kraten, All Rights Reserved.

Here is the link to the introduction of the game.
Here is the link to the first module of the game.
This is the second module of the game.
Here is the link to the third module of the game.
Here is the link to the fourth module of the game.

Purpose of Conversation: To re-assess the initial valuation process in consideration of new concerns that have arisen about the blue frog. To discuss the Audit Committee’s perception of the environmental risk that confronts the firm in regards to this sustainability concern, as well as the risks and costs of relocating or protecting the endangered species.

New Information: Jacques Plui is the Director of the Audit Committee at WOW. Jacques comes from a wealthy French family that is publicly known for supporting oceanic protection projects, though he is less familiar with land-based and freshwater-based environmental programs. Much of his personal family wealth is invested in WOW stock, and he is torn between his commitment to the environment and his need to protect his family fortune.

Choice a: Do nothing and proceed with project.
There will a 25% chance that the blue frog will become extinct, resulting in a public relations nightmare that bankrupts the company and causes $1 billion in shareholder losses

Choice b: Maintain the project scope and relocate the blue frog.
This will cost the company $10 million and there is still at 10% chance of extinction.

Choice c: Reduce the project scope and protect the blue frog.
This will also cost the company $10. In addition, the value of the project is expected to be reduced by $50 million. The chance of extinction will drop to 2%.