Galaxy Software, Inc., specializes in arcade video and

PC-based games. Their technology is unique in that

each time a game is played, the outcome is different.

Icons are three-dimensional, play is interactive, and

various publications view their offerings as no less

than magical. New game announcements are

anticipated with excitement, and the imaginative

games enjoy high popularity with children of all ages.

Earnings estimates have been exceeded. The

company's management thinks that its unique

competitive position in the marketplace would sustain

a public offering much sooner than originally

expected.

Because of the unique qualities of the company's

technology, product development is highly protected

internally. Very few people have access to

information about what games are being developed.

Any leak of this information would severely

undermine the company's competitive position as

other companies could "steal Galaxy's thunder" and

probably undercut Galaxy's prices. Although imitative

games would likely be inferior to Galaxy's version,

the magic would be lost.

Potential employees are usually required to undergo

an extensive background check prior to being offered

employment at Galaxy. The check is conducted by an

outside agency and includes reviews of candidates'

credit records, criminal records and previous

employment. The results of this check are included in

each individual's personnel file. Once hired,

employees must sign a detailed confidentiality

agreement. Historically, employees have liked the

company and are very loyal to it. Galaxy is a highly

regarded company in terms of its organizational

practices and its compensation. The employees and

officers are close-knit and frequently socialize outside

of work as a group. In fact, some of the best game

ideas have surfaced in these informal gatherings.

Galaxy's management is proud to have

retained some of the best and brightest in the

industry.

There is much excitement in the air over the product

development team's latest creation, a game called

"Alvin in Wonderland," an extra-terrestrial's jaunt

through the Milky Way galaxy that is full of fun and

surprises. The program is also educational, relative to

introducing children to astronomy and other physical

sciences. It took thirteen months to develop the

program. The final prototype is in the last phase of

testing. It is scheduled for release within the next

sixty days. The timing of the release, coincidentally,

couldn't be better relative to two upcoming movie

releases. Extensive marketing research by Galaxy

indicated a true liking for the Alvin character. As a

result, toy rights are in the process of being

negotiated to take advantage of the upcoming holiday

shopping season. There is also talk of a lucrative

series of videos. If sales proceed as well as expected,

Galaxy's initial public offering will occur in January,

well ahead of schedule.

Very early this morning, the network administrator

discovered a sequential backup tape of some of the

information contained on the Alvin server. This

server contains all relevant technical material,

including design, documentation, code, and marketing

material for the Alvin project. Finding this tape was

highly unusual, as it was a Wednesday morning and

full backups (i.e., from the network servers) are not

normally made until Friday. Only incremental

backups are done on a daily basis.

Although any software engineer is capable of making

a backup from the servers, it would be highly

suspicious for one to do so. The network

administrator is the only individual at Galaxy who is

authorized to make full backups of entire databases.

Since there was no sign of a break-in, it seemed clear

to the network administrator that an employee had made the backup. There is no technical or justifiable

reason why a full backup would have been made on a

Tuesday night.

The network administrator takes his job extremely

seriously and is meticulous and conscientious

regarding his responsibilities. He knew that three

tapes would be required to make a full backup of the

Alvin server, and wondered why he found only one

tape. He had no choice but to assume that an

employee had attempted to steal proprietary company

information and that there were two other tapes that

must be found. The network administrator

immediately contacted Blair, the vice president of

R&D. Blair contacted Galaxy's president, who

immediately called for an investigation.

Needless to say, any leak relative to the Alvin

program could have a significant effect on sales and

related ventures. Additionally, a leak might force a

premature release of the program, which, if not

bug-free, would tarnish Galaxy's image and

reputation for excellence. Galaxy's management will

take whatever action deemed necessary to protect its

future.

In a situation like this, a company could issue an

all-points bulletin to industry competitors warning

them that a theft has occurred and that any use of the

copyrighted material would result in prosecution to

the full extent of the law. Galaxy will not do this until

more facts are known, and would prefer not to issue a

bulletin at all. There is no need for adverse publicity

that might harm the negotiations relating to the Alvin

release. However, Galaxy also faces a threat of

external investigation, independent of Galaxy's

management, if word of this problem leaks. If the

internal investigation indicates that a theft definitely

or probably occurred, Galaxy will issue the all-points

bulletin.

Dallas, the company's vice president of Finance, is

leading the investigation and intends to get to the

bottom of this. Blair is an integral part of the

investigation and is conducting interviews with all

employees. Blair must make a final report to Dallas

as to what happened and recommend what action, if

any, Galaxy should take.

You are an up-and-coming executive in this company,

one of the youngest, and you have the potential to go

far. You love your job, and the company is a terrific

place to work. Under your direction Galaxy's

development team has created some of the most

innovative and well-loved games on the market.

Within the games industry and within Galaxy, you are

known for your vision, your management capabilities

and, above all, your unfailing integrity.

You got a call at seven this morning from your

network administrator, who had discovered a backup

tape of the Alvin server. Company policy dictated

that you contact the company president, who

immediately called for an investigation. Personally,

you feel there is no need for an investigation, as you

immediately suspect Pat, the newest member of the

team. Your worst fears have just been realized.

Six months ago, you were at a party where you

bumped into Charley Moss, one of Pat's previous

co-workers. Charley expressed surprise that Pat had

been hired at Galaxy. When you probed further,

Charley reluctantly informed you that Pat had been

fired from a previous job and brought up on criminal

charges for stealing company secrets.

You were shocked and angry. When you approached

Pat with this information, Pat swore that it had been a

one-time thing and that it would never happen again.

You reluctantly accepted this, mostly because it

would reflect poorly on your judgment to hire Pat, but

also because Pat was a brilliant software engineer.

The worst part of this is that you put yourself on the

line by using your influence within the company to

authorize your Human Resources Department to

circumvent the usual pre-hire background checks. In

graduate school, where you both met, Pat's reputation

was stellar and you had no reason to suspect that Pat's

background was anything less than exemplary.

In hindsight, it is obvious that this was poor judgment

on your part, as the background check on Pat would

have revealed the criminal history. Unfortunately, by

not facing this situation when it originally presented

itself, you have compounded it. You cannot simply

plead ignorance of the facts, since you were well

aware of Pat's history. You believe that in any

investigation, these facts would come to light. You

are hesitant to admit it, since this theft could

potentially ruin your career at Galaxy. You are sure

you would be held responsible for any problems, as

your management would take the position that the

theft never would have occurred if you had only faced

your responsibility in dealing with Pat's history as

soon as you had become aware of it. Besides Pat, you

are the only individual at Galaxy who currently

knows about Pat's criminal history.

You face quite a dilemma. Your options are limited

and are as follows:

You can cover for Pat. You would also have to lie to

Dallas about personally having conducted a

background check on Pat that revealed nothing

unusual, and you simply neglected to fill out the

paperwork. Dallas would not question this. However,

there would be repercussions. If this ever came out

you would most likely be finished not only at Galaxy,

but in the interactive game industry, since your name

would be MUD. You feel somewhat at odds, since it

was Pat's involvement that was critical to the success

of the last three games that Galaxy put on the market.

In some ways it would be nice to keep Pat, but will

your conscience allow it?

You can also tell Dallas what you know about Pat's

history and the background check. You can either

hope that good fortune is smiling upon you, or you

can resign. Pat would be fired (for falsifying the

Galaxy application relative to leaving the previous

employer in good standing). In this case, Galaxy

would have no recourse but to issue an all-points

bulletin to its competitors. If the two missing tapes

could be retrieved, Pat could be allowed to resign and

your career at Galaxy may not be completely ruined.

Of course, your discussion with Pat might raise other

options.

You have interviewed everyone except Pat, and no

new information has surfaced. Your priority is to try

to recover the tapes (as you are sure Pat has them).

However, if this is not possible, you will have no

choice but to recommend that an all-points bulletin be

issued to competitors. Your recommendation must

also include what to do about Pat and an explanation

of why the background check was not performed,

since Dallas has already mentioned this.

Regardless of what anyone else does, you are the one

whose decisions will determine the outcome of this

ethical dilemma. The

decisions you make today will be with you for the rest

of your career.

Question 1 - What are the issues in the upcoming negotiation?

Question 2 - Based on a review of all the issues, what is the bargaining mix? (Which issues do we have to cover? Which issues are connected to other issues?)

Question 3 - What are my interest?

Question 4 - What are my limits - what is my "walkaway"? What is my alternative?

Question 5 - Defining targets and openings - where will I start? What is my goal?

Question 6 - Who are my constituents and what do they want me to do?

Question 7 - Who are the opposing negotiators and what do they want?

Question 8 - What overall strategy do I want to select?

Question 9 - What protocols needs to be followed in conducting this negotiation?