Eventually, Obadiah grows tired of the "for Tony" part and makes a deal with the terrorists to have Stark executed. However, the terrorists fail to keep up their end of the bargain and hold Tony hostage instead of killing him, forcing him to build a free missile for them. Tony uses the materials to build an Iron Man suit instead and kicks all of the asses.
"We locked a disgruntled weapons designer alone in a room full of parts! How could this have backfired?"
Why It Doesn't Make Sense:
Let's set aside for the moment the fact that Obadiah is a pretty smart guy who still somehow bases his entire plan on the assumption that a bunch of terrorists won't screw him, even though they're, well, terrorists. Maybe they seemed really trustworthy on the phone.
Even then, Obadiah knows that these guys are only in business with him because he has missiles, so he ... sends them the guy who invented the missiles and completely trusts that they won't keep him to themselves? To just make them some missiles? That would be stupid even if his partners weren't terrorists.
And that's the other thing. How exactly was Obadiah planning to keep the company afloat after killing the guy who invents all the weapons?
"We're in the scarf business now."