I. Current Situation:
A. Current Performance:
International Satellite Images (ISI) had been building a satellite to image the world at a resolution of one meter. At the resolution, a trained photo interpreter could identify virtually any military and civilian vehicle as well as numerous other military and non-military objects. The ISI team had been preparing a proposal for a Japanese government contractor. The contract called for a commitment of a minimum imagery purchase of $10 million per year for five years. In a recent executive staff meeting it became clear that the ISI satellite camera subcontractor was having trouble with the development of a thermal stabilizer for the instrument. It appeared that the development delay would be at least one year and possibly 18 months. When Jim approached Fred Ballard, the President of ISI, for advice on what launch date to put into the proposal, Fred told Jim to use the published date since that was still the official launch date.

II. External Environment:
A. General Environment:
For the problem ofISI satellite camera subcontractor it appeared development delay would be at least one year and possibly 18 months. For that reasonthe level of trust between the parties was very low since the Japanese insisted upon completion guarantees.
External forces include:

 Industry practice is to publicize optimistic completion dates that are rarely met.
 The financial industry that has profitability expectations which may be impossible to meet if realistic information is provided.

B. Industry Environment:
Companies from four nations, the United States, France, Russia, and Israel controlled thesatellite imaging industry. The US companies had a clear advantage in technology and imageryclarity. In the US, three companies dominated; Lockhart, Global Sciences, and ISI. Each of thesecompanies had received a license from the US government to build and launch a satellite able toidentify objects as small as one square meter.

III. Internal Environment:
Marketing:
ISI had been negotiating with HTC for the past six months. It was no secret that HTC had also been meeting with representatives from Lockart and Global Sciences. HTC had sent several engineers to the ISI to evaluate the satellite and its construction progress. Jim Willis believed that
ISI was currently the front-runner in the quest to sign HTC to a $10 million annual contract. Over five years, that one contract would represent 1/6th of the contracts necessary to insure sufficient venture capital to complete the satellite.Jim was concerned that if a new launch date was announced, HTC would delay signing a contract. Jim was equally concerned that if HTC learned that Jim and his team knew of the camera design problems and knowingly withheldannouncement of a new launch date until after completing negotiations, not only his personal reputation but that of ISI would be damaged.Furthermore, as with any franchise arrangement, mutual trust was critical to the success of eachparty. Jim was worried that even if only a 12-month delay in launch occurred, trust would bebroken between ISI and the Japanese. Jim’s boss, Fred Ballard, had specifically told Jim that launch date information was company proprietary and that Jim was to use the existing published date when talking with client. Fred feared that if HTC became aware of the delay, they would begin negotiating with one of ISI’s competitors, who in Fred’s opinion were not likely to meet their launch dates either. This change in negotiation focus by the Japanese would then have ramifications with the venture capitalists whom Fred had assured that a contract with the Japanese would soon be signed. Jim knew that with the presentation date rapidly approaching, it was time to make a decision.

Finance:
The construction and ongoing operations of each of the programs was financed by venturecapitalists. The venture capitalists relied heavily on advance contract acquisition to insure the Success of their investment. As a result, if any company was unable to acquire sufficient advance contracts, or if one company appeared to be gaining a lead on the others, there was a realpossibility that the financiers would pull the plug on the other projects and the losing companieswould be forced to stop production and possibly declare bankruptcy. The typical advancecontract target was 150% of the cost of building and launching a satellite. Since the cost to buildand launch was $200 million, each company was striving to acquire $300 million in advancecontracts. Advance contracts were typically written like franchise licensing agreements. Each franchisee guaranteed to purchase a minimum amount of imagery per year for five years, the engineered life of the satellite. In addition, each franchisee agreed to acquire the capability to receive, process, and archive the images sent to them from the satellite. Typically, the hardware and software cost was between $10 million and $15 million per installation. Since the data from each satellite was different, much of the software could not be used for multiple programs. In exchange, the franchisee was granted an exclusive reception and selling territory.

Internal forces include:
 Jim Willis’ boss, Frank Ballard, has given Jim a specific instruction not to disclose the
Information
 The company code of conduct does not permit the disclosure of company proprietary
Information without prior approval
 The financial health of the company could be jeopardized.
 Jim Willis’ personal financial well being could be jeopardized.

Research and Development: ISI had been building a satellite to image the world at a resolution of 1-meter. At that resolution, atrained photo interpreter could identify virtually any military and civilian vehicle as well asnumerous other military and non-military objects. The ISI team had been preparing a proposal fora Japanese government contractor. The contract called for a commitment of a minimum imagerypurchase of $10 million per year for five years.

Operations and Logistics: The Company currently working with a project for Japanese Government contractor and that is satellite which is able to take image of the world at a resolution of 1 meter. By this resolution a trained photo interpreter could identify virtually any military and civilian vehicle as well as numerous other military and non-military objects. After a recent executive staff meeting the ISI had been decided that the satellite camera subcontractor was having trouble with the development of athermal stabilizer for the instrument.

Summary of Internal Factors:For the trouble of ISI satellite camera subcontractor with the development of a thermal stabilizer for the instrument the contract is going to fall in jeopardy. In that case, it appeared that the development delay would be at least one year and possibly 18 months. While there is no information as to whether or not the same ordering delay would have happened if Jim Willis had disclosed the information in advance of the negotiations For this reason the level of trust between the parties was very low since the Japanese insisted upon completion guarantees.Therefore, in this case, ISI should either have disclosed the negative information or delayed negotiations.

IV. Analysis of Strategic Factors:
In the US, they are dominated three companies; those are Lockart, Global Sciences, and ISI. All of these companies had received a license from the US government to build and launch a satellite able to identify objects as small as one square meter. The ISI has some strength, weakness, opportunities, threats in their relative field; however, none had yet been able to successfully launch a commercial satellite with such a fine resolution. So ISI has an opportunity to capture the market by launching a satellite with a fine resolution as early from the other companies. Because if one of the other companies launch a satellite before the ISI then it will hampered in the business of ISI. The ethical problem is caused by various factors. On the one hand, the satellite imagery industry is a highly attractive and fast-growing market, so all participating companies heavily rely on acquiring and keeping their clients to be able to compete. On the other hand, all companies depend on venture capitalists who provide the financial means for the companies’ projects. Due to current negotiations with a Japanese client, Jim has to decide of whether to act ethically correct or rather in favor of the company.
V. Recommendations:
Jim Willis was the Vice President of Marketing and Sales for ISI, an aerospace company. Hisboss, Fred Ballard, had asked Jim not to disclose a change in the launch of ISI’s high resolute onsatellite due to a problem with the camera. Fred’s rationale was that disclosure would have anegative effect on contact negotiations and might result in severe financial repercussions.Further; Fred suggested that it is standard industry practice to withhold negative information. Jim’s believed that not disclosing the information might be unethical, and was wondering what to do.