#4 Ethics and Morality

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

Purpose of Conversation: To assess whether the project should be structured as a long-term investment, sold, or closed down.

New Information: John Formica is ambivalent about the attractiveness of this new client opportunity. Although he is excited by the possibility of establishing a long term relationship with a global energy client, his “risk antennae” are buzzing with the fear that the project has no long term sustainable future.

Choice a: Do nothing and proceed with the project.
There is a 25% chance that bad press, human capital recruiting challenges, and distrust among potential customers and government regulators will result in $250 million in losses of shareholder value.

Choice b: Sell the project.
WOW will receive $200 million for the project up front. There is a 50% chance that the acquirer will claw back $40 million of the purchase proceeds after one year because of performance deficiencies.

Choice c: Close down the project.
We will spend $20 million on closing costs up front. There is a 25% chance that WOW will spend an additional $40 million on site reconfiguration costs after one year to adjust for the impact of post-construction activities.